TaxTMI 
TaxTMI 
2015 (3) TMI 749
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....ain Agro Industries Pvt. Ltd. (Shamily Party) in a proper manner and has confirmed the additions on account of unexplained investment. It was further contended that the assessee has specifically asked the Assessing Officer to provide an opportunity to cross-examine the third party i.e. M/s J.S. Jain Agro Industries Pvt. Ltd. (Shamily Party), but he was not allowed by the Assessing Officer and the Tribunal has not taken into account these aspects while confirming the additions. The plea of nonmaintainability of the addition owing to non-applicability of section 69B of the Act has been raised on behalf of the assessee with reference to and with the support of material information already on record, but the Tribunal has not taken into account the specific plea while deciding the issue. It was further argued that while deciding the issue, the Tribunal has wrongly shifted the onus upon the assessee/appellant by upholding the findings of the first appellate authority to the effect that the assessee had not furnished any confirmation letter in support of its denial of making purchases from Shamli Party. A letter dated 10.3.2006 filed by the assessee was also not taken into account properl....
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....sessee to recover the said amount from JSJAI if it has not purchased H.R. coils from JSJAI. 5. We have carefully examined the order of the Tribunal and we find that the Tribunal has taken into account all the relevant facts and arguments of the parties and after taking into account all these facts, the Tribunal has concluded that since the assessee has been showing debit balance in the name of JSJAI in its books of account and no purchase was shown in its account, the purchases made by it as per statement of JSJAI is outside the books of account, in which the investment made is to be considered as unexplained investment for which addition is called for. The relevant observations of the Tribunal along with the arguments raised by the parties recorded in the order of the Tribunal are extracted hereunder for the sake of reference:- "4. The brief facts borne out from the record in this regard are that during the course of assessment proceedings the assessee has filed the list of debtors and creditors giving the details of amount/balance as on 31.3.2003 receivable from the debtors and payable to the creditors. A sum of Rs. 17,98,142.70 was shown as debit balance i.e. receivable fr....
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.... in its books of account. The Assessing Officer has also noted that the purchases made from JSJAI and subsequent sales thereof are not recorded in the books of account. He accordingly made an addition of Rs. 17,99,042 towards unexplained investment in purchase and a sum of Rs. 1,79,904 being 10% of Rs. 17,99,042 as profit, was also added to the total income of the assessee. 6. Against the above addition, the assessee preferred an appeal before the ld. CIT(A) and filed written submission stating therein that the evidence collected at the back of the assessee should be tested through cross-examination and also requested the Assessing Officer to summon the responsible Director of JSJAI for cross-examination, but the assessee was not allowed an opportunity to cross-examine the responsible Director of JSJAI. Therefore, the addition made by the Assessing Officer was not sustainable. 7. The ld. CIT(A) re-examined the entire issue but was not convinced with the explanations furnished by the assessee as he was of the view that in its books of account the assessee himself has shown debit balance of Rs. 17,98,142.70 in the name of JSJAI as on 31.3.2002. But till conclusion of the appeal....
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.....3.2006 of the assessee written to the Assessing Officer, in which a specific request was made to allow an opportunity to cross-examine the responsible Director of JSJAI to verify the correctness of the transaction along with books of account. Despite a specific request, the Assessing Officer has not allowed any opportunity to the assessee to cross-examine the responsible person of JSJAI. Our attention was also invited to the affidavit of Shri. S. S. Agarwal, Director of the assessee-company stating therein that the company has not purchased any goods from JSJAI nor sold any goods during the year 2002-03 relevant to the assessment year 2003-04 to JSJAI. 9. The ld. counsel for the assessee has further contended that since the Assessing Officer has made an addition on the basis of the statement and the documents prepared by a third party without affording proper opportunity to cross-examine the third party, the addition made on the basis of that evidence is not sustainable in the eyes of law. It was also contended that the sales declared by the assessee were accepted in the VAT assessments. It was also contended that no sales were made to the assessee as shown by JSJAI in its stat....
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....ding amount of Rs. 17,98,142.70 was squared up by making sales through various invoices during the period 2.5.2002 to 15.5.2002 for a sum of Rs. 17,99,042 and debit was shown at Rs. 899.30 as on 31.3.2003 in the books of JSJAI. These facts were confronted to the assessee and in response thereto, it was contended on behalf of the assessee that it has not made any purchase from JSJAI as shown in the statement filed by JSJAI. On receipt of this information, the Assessing Officer further confronted these facts to JSJAI and JSJAI was asked to furnish necessary evidence about receipt of goods and the details of transport by which the goods have been transported, vide letter dated 20.1.2006. In response thereto JSJAI has furnished the details of invoices along with transport receipts of M/s Deep Goods Carrier, Railway Road, Shamli in order to prove the sales declared in its statement vide letter dated 24.2.2006. All these facts collected by the Assessing Officer from JSJAI were confronted to the assessee vide letter dated 28.2.2003 and a show cause notice was also issued to it. Instead of furnishing any confirmation from JSJAI, the assessee has filed an affidavit along with letter contend....
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....ssessee has made purchases as declared in the books of JSJAI out of its books of account and made sale thereof and earned profit. Since the assessee has been showing debit balance in the name of JSJAI in its books of account and no purchase was shown in its account, the purchases made by it as per statement of JSJAI is outside the books of account, in which the investment made is to be considered as unexplained investment for which addition is called for. Similar is the position with regard to the profit earned thereon on its sales outside the books of account. 13. Under these facts and circumstances of the case, we are of the view that the ld. CIT(A) has properly examined this issue in the light of the given facts and we find no infirmity therein. Accordingly we confirm the same." 14. The scope of provisions of section 254(2) of the Act is limited and only those errors which are apparent from the record can only be rectified. 15. The scope of provisions of section 254(2) of the Act has been repeatedly examined by the Hon'ble Apex Court and various High Courts and it was held that the Tribunal can rectify only those mistakes which are arithmetical or clerical or appare....
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....rt have also held that section 254(2) of the Income-tax Act, 1961 empowers the Tribunal to amend its order passed u/s 254(1) to rectify any mistake apparent from the record either suo moto or on an application. If in its order there is no mistake which is patent and obvious on the basis of the record, the exercise of the jurisdiction by the Tribunal u/s 254(2) will be illegal and improper. An oversight of the fact cannot constitute an apparent mistake rectifiable under section 254(2). This might, at the worst, lead to perversity of the order for which the remedy available to the assessee is not under section 254(2) but a reference proceedings u/s 256. The normal rule is that the remedy by way of review is a creature of the statute and unless clothed with such power by the statute, no authority can exercise the power. 17. The Hon'ble High Court of Allahabad in the case of CIT Vs. ITAT; 143 CTR 446 has held that "sub-section (1) of section 254 confers ample powers on the Tribunal to pass such orders in any appeal filed before it as it thinks fit. Sub-section (2) of section 254 postulates that the Tribunal may amend any order passed by it under sub-sec. (1) of section 254 with a vi....
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.... question is debatable. Moreover, a point which was not examined on facts or in law cannot be dealt with as mistake apparent from record. In the case of ITO Vs. ITAT; 229 ITR 651 their Lordships of Patna High Court have also expressed a similar observation after holding that section 254(2) of the Act empowers the Tribunal to amend any order passed by it under sub-section (1) with a view to rectifying a mistake from record. However, section 254(2) does not authorize the Tribunal to review its order or to sit in appeal over its earlier order. If it is done, it would amount to an amendment of an earlier order with a view to rectify a mistake apparent from record, but it would be an order passed on reappraisal of the material facts and circumstances and on a fresh application of the legal position which is not permissible within the scope of section 254(2) of the Act. 19. In the case of Ms. Deeksha Suri Vs. ITAT; 232 ITR 395 their Lordships of Delhi High Court have held in specific terms that "the Incometax Appellate Tribunal is a creature of the statute. It has not been vested with the review jurisdiction by the statute creating it. The Tribunal does not have any power to review it....