TaxTMI 
TaxTMI 
2014 (2) TMI 850
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.... and 3. Whether the Tribunal is right in law in holding that rectifying the order already passed following the decision of the Supreme Court in CIT v. Prithipal Singh & Co., amounts to review of order? 2. The assessee is engaged in the business of leasing and hire purchase finance and entered into a lease transaction with M/s.Bellary Steel and Alloys Limited, (BSAL) for steel rollers during January,1995 for a sum of Rs.20,96,900/-. The supplier of steel rollers was M/s.B.H.Enterprises, Mumbai and the assessee - company was the financier. The assessee for the assessment year 1995-96 claimed depreciation of Rs.10,48,450/-. On steel rollers, the assessee was eligible for depreciation at 100%. As the assets were put to use after 30th September, 1994, 50% of depreciation amounting to Rs.10,48,450/- was claimed in the assessment year 1995-96 and the balance was claimed in the assessment year 1996-97. In the course of survey conducted in the business premises of the assessee and subsequent investigation, it was found that the lease transactions were bogus and intended to enable BSAL to obtain finance and the assessee to claim 100% depreciation. It was found that there was no deliver....
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....uent penalty does not arise. It is further stated that in the case of Prithipal Singh, (supra), the assessee therein filed return declaring loss and was assessed finally at a figure of loss as in the case of assessee. The assessee also placed reliance on a decision of this Court in the case of Ramnath Goenka vs. CIT, ((2002) 259 ITR 229) and submitted that penalty under Section 271(1)(c) is imposable only and in cases, where tax has been levied and no penalty can be levied when the result of the computation made by the assessing officer is a loss. With the above submissions, the assessee requested the first appellate authority to amend the order dated 17.3.2004 and cancel the penalty of Rs.5,00,000/- levied by the Assessing Officer. The first appellate authority by order dated 12.7.2004 allowed the Miscellaneous application on the ground that the decision of the Honourable Supreme Court in the case of case of Prithipal Singh, (supra) was not and therefore there was a mistake apparent from the record in confirming the penalty under Section 271(1)(c) and agreed with the submission of the assessee and rectified the order dated 17.3.2004 and deleted the penalty. Aggrieved by the order ....
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....r appeal has been preferred. 4. As far as the present assessment year 1996-97 is concerned, learned counsel for the assessee submitted that the Tribunal ought to have followed the decision of the Honourable Supreme Court and failure on the part of the first appellate authority to take note of the decision of the Supreme Court is a mistake and an order passed without following the decision gives rise to a rectifiable mistake and it is not amount to a review. Further it is contended that the Tribunal has erroneously held that there was no mistake in the original order initially passed by the first appellate authority, which is apparent from record, to be rectified under Section 154 and the Tribunal ought to have noted that the authorities are bound by the law laid down by the Honourable Supreme Court. Therefore, it is contended that the Tribunal ought to have rejected the appeal filed by the revenue as against the order passed in the Miscellaneous Application and by applying the decision of the Honourable Supreme Court in the case of Prithipal Singh, (supra), the Tribunal should have deleted the penalty levied under Section 271(1)(c) confirming the order of the Commissioner based ....
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....urt out of an application under Section 254(2) of the 1961 Act. The expression "rectification of mistake from the record" occurs in Section 154 and it also finds place in Section 254(2). The Supreme court pointed out that the purpose behind the enactment of Section 254(2) is based on the fundamental principle that no party appearing before the Tribunal/authority, be it an assessee or the Department, should suffer on account of any mistake committed by the Tribunal/authority. This fundamental principle has nothing to do with the inherent powers of the Tribunal/authority. Further, it was held that the important reason for giving power of rectification is to see that no prejudice is caused to either of the parties appearing before it by its decision based on a mistake apparent from the record. Further, it was held that when prejudice results from an order attributable to the Tribunal/authority's mistake error or omission then it is the duty of the Tribunal/authority to set it right. Atonement to the wronged party by the Court or the Tribunal or authority for the wrong committed by it has nothing to do with the concept of inherent power to review. In the said case, the Tribunal failed ....