ITAT Delhi-B Corrects Error in Limitation Period Calculation for Revenue

Commissioner Of Income Tax. Versus Indo Java & Co.

Commissioner Of Income Tax. Versus Indo Java & Co. - ITD 049, 647, TTJ 049, 466, Issues:
- Barred by limitation of reference applications under section 256(1)
- Correct computation of limitation period for filing reference applications
- Nature of order passed by the Tribunal under section 256
- Power of the Tribunal to rectify mistakes in orders under section 256

Analysis:

The judgment by the Appellate Tribunal ITAT DELHI-B involves several key issues. Initially, the appeals of the assessee for assessment years 1984-85 and 1985-86 were disposed of by a consolidated order, leading to reference applications under section 256(1) being filed by the CIT, Delhi-VII, New Delhi. However, these reference applications were deemed barred by limitation due to a perceived delay. The revenue later filed an application requesting to recall the order based on the argument that the reference applications were not time-barred. This was supported by the interpretation that the limitation for filing reference applications begins from the service of the order upon the concerned Commissioner of Income-tax, not the Chief Commissioner of Income-tax.

The judgment further delves into the contentions raised by the parties. The counsel for the assessee argued that the revenue's application was not valid under section 254(2) as the Tribunal's order did not fall under that section. Additionally, it was contended that the Tribunal's order was not under section 256(1) as the reference application had not been decided on merits but was deemed not maintainable. The Tribunal acknowledged the mistake made by its Registry in computing the limitation period, emphasizing that the date of service of the order upon the concerned Commissioner of Income-tax should be considered for limitation purposes.

Moreover, the Tribunal clarified the nature of its order, stating that refusing to entertain reference applications on the grounds of being time-barred falls under section 256. This distinction was crucial in addressing the objections raised by the assessee regarding the nature of the Tribunal's order. The Tribunal cited relevant case law to support its interpretation of the applicable sections and the nature of the order passed in such circumstances.

In considering the power of the Tribunal to rectify mistakes in orders under section 256, the judgment referred to precedents highlighting the Tribunal's inherent jurisdiction to correct errors that cause prejudice to a party. The Tribunal emphasized that the revenue should not suffer due to incorrect information provided by the Registry, and in exercising its inherent powers, the Tribunal recalled its previous order and restored the reference applications for further consideration on merits.

Ultimately, the Tribunal accepted the application of the Revenue, indicating a favorable outcome for the Revenue based on the detailed analysis and rectification of the initial mistake in computing the limitation period for the reference applications.