ITAT Mumbai recalls order under Section 18(7) after overlooking detailed submissions on US$ 32 lakh addition

ITAT Mumbai recalled its earlier order finding mistake apparent from record under Section 18(7) of Black Money Act. The Tribunal had overlooked detailed written submissions and relevant evidence submitted by assessees regarding addition of US$ 32,13,307.60. Due to non-consideration of these submissions, the orders contained apparent mistakes. The Tribunal directed registry to post both appeals before regular bench for fresh disposal of the specific issue raised by revenue in the respective appeals.

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ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment involve:

1. Whether the Tribunal's failure to consider the written submissions and evidence provided by the assessees constitutes a "mistake apparent from the record" under Section 18(7) of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015.

2. Whether the Tribunal should rectify its order or restore the appeal for rehearing based on the alleged oversight of the assessees' submissions and evidence.

ISSUE-WISE DETAILED ANALYSIS

1. Mistake Apparent from the Record under Section 18(7) of the Black Money Act

Relevant Legal Framework and Precedents: The legal framework involves Section 18(7) of the Black Money Act, which allows for rectification of any mistake apparent from the record. This is akin to Section 254(2) of the Income Tax Act. The assessees relied on precedents from the Bombay High Court, including Sony Pictures Networks India (P) Ltd vs. ITAT and Amore Jewels P Ltd vs. DCIT, which held that non-consideration of submissions constitutes a mistake apparent from the record.

Court's Interpretation and Reasoning: The Tribunal acknowledged the submissions made by the assessees that their detailed written submissions, which explained the source of the funds in question, were not considered in the original order. The Tribunal recognized that this oversight could indeed be classified as a mistake apparent from the record, as supported by the cited precedents.

Key Evidence and Findings: The assessees provided written submissions on 26-10-2021, detailing the source of the funds as maturity proceeds from earlier investments. These submissions were supported by bank and portfolio statements provided by the revenue. However, the Tribunal's original order failed to consider these submissions, leading to the reversal of relief granted by the CIT(A).

Application of Law to Facts: By applying the legal principles established in the cited cases, the Tribunal found that its failure to consider the assessees' submissions and evidence was a mistake apparent from the record. This justified the rectification of the order.

Treatment of Competing Arguments: The revenue argued that the Tribunal had already appreciated the facts and that no mistake was apparent. However, the Tribunal found the assessees' argument more compelling, given the oversight of the written submissions and supporting evidence.

Conclusions: The Tribunal concluded that the non-consideration of the assessees' submissions constituted a mistake apparent from the record, warranting rectification of the order.

2. Rectification or Restoration for Rehearing

Relevant Legal Framework and Precedents: The Tribunal considered whether the oversight warranted rectification or a rehearing. The legal precedents cited by the assessees supported the notion that significant oversights in considering submissions could lead to rectification or rehearing.

Court's Interpretation and Reasoning: The Tribunal determined that the oversight in considering the assessees' submissions was significant enough to warrant recalling the order for rehearing on the specific issue of the addition of US$ 32,13,307.60.

Key Evidence and Findings: The Tribunal found that the assessees had provided substantial evidence and detailed explanations regarding the source of the funds, which were overlooked in the original order.

Application of Law to Facts: The Tribunal applied the principles from the cited precedents to determine that the oversight justified a rehearing to ensure that the assessees' submissions were duly considered.

Treatment of Competing Arguments: While the revenue opposed the rehearing, the Tribunal found that the oversight of the submissions warranted rectification to ensure a fair hearing.

Conclusions: The Tribunal decided to recall the orders and direct a rehearing on the specific issue, allowing the assessees' submissions to be properly considered.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: The Tribunal noted, "none of these submissions is based on copies of any sale or purchase documents produced by the assessee, but only simply based on the bland explanations given by the assessee. There is no evidence whatsoever to support the sale or purchase of a security, the nature of security or any other details." This was identified as an oversight since the assessees had indeed provided supporting documents.

Core Principles Established: The judgment reinforced the principle that non-consideration of detailed submissions and evidence constitutes a mistake apparent from the record, justifying rectification under Section 18(7) of the Black Money Act.

Final Determinations on Each Issue: The Tribunal allowed the miscellaneous applications filed by the assessees, recalling the orders dated 02-11-2021 and directing a rehearing on the specific issue of the addition of US$ 32,13,307.60, ensuring that the assessees' submissions and evidence are duly considered.

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