TaxTMI 
TaxTMI 
2021 (5) TMI 815
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.... the I.T. Act 1961 read with Rule 35A of the I.T. Rules, 1963 in the aforesaid cases, on mistakes apparent on record in order dated 07.02.2020 passed by the Hon'ble Tribunal The Hon'ble Bench has pronounced its order in the above matter on 07.02.2020. A copy of such order is enclosed for reference along with this application as Annexure 'A'. It is submitted by the Revenue that on perusal of the order passed by the Hon'ble Bench, there are certain apparent mistakes of fact and law which deserve to be rectified u/s 254(2) of the Act. The Revenue would like to highlight these apparent mistakes as under: I. Omission to consider the submissions of Revenue with regard to the applicability of the Coordinate Bench's decision in the case of Sh. Brij Bhushan Singal & others i. The Hon'ble Bench, in its order dt. 07.02.2020, passed in the cases of Shri. Sanjay Singal & Smt. Aarti Singal has extensively relied on the decision in the case of Sh. Brij Bhushan Singal & others in ITA 1412-1414/Del/2018. ii. This appears from Para 49 of the impugned order, running from Pages 112-127. The direction to delete the addition made i....
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....ordinate Bench in a similar case (Para 109) i. The reliance on Best Infrastructure is misplaced. In that case, the witness Tarun Goyal was not known to the assessee. In the present case, both SCS and RKK are very well known to the appellants. (Para 108) j. The jurisdictional High Court has held that it would depend on the facts and circumstances of each case to hold whether or not the lack of cross-examination is fatal to the findings arrived at. Reference is invited to the decision of Kusum Lata Thakral, reported in 327ITR 424 at Pages 211-216 of Revenue's CLC k. The basis on which the case of Anil Kumar was distinguished in the said case is clearly absent in the case of the appellant. (Para 103) l. The presumption u/s 132(4) in the cases of SCS and RKK based on material found and their statements is that they acted as entry operators and this presumption in the case of SCS and RKK defining the real nature of their business activities is by itself enough to justify the addition in the present case of the appellant. (Para 121)" The Hon'ble Tribunal has altogether omitted to take note of the aforesaid submissions and these have so....
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....ecision in the case of Sh. Brij Bhushan Singal wholly inapplicable. viii. It is submitted that had the Hon'ble Bench taken into consideration the submissions of Revenue, the decision in the case of Sh. Brij Bhushan Singal could not have formed the basis to delete addition in this case. ix. In Para 49 of the order, the Hon'ble tribunal proceeds to rely on the decision in the case of the Coordinate Bench with a finding that the "facts of the present case are identical to the facts involved in the case of "Sh. Brij Bhushan Singal". This finding could not have been reached by the Hon'ble Bench if the distinguishing features pointed out by the Revenue in its oral and written submissions had been considered. The distinguishing features were elaborately detailed in sub-paras (a) to (T) of Para 6, Part B of final submissions of Revenue dt. 30th September 2019. x. This apparent mistake of omission to consider the valuable submissions of Revenue and the failure to return any finding on such submissions constitutes a mistake apparent on the face and it is therefore prayed that the same may kindly be rectified. II. No cognizance taken by the Hon&....
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....o the tune of Rs. 500 crores. c. BPSL, Sanjay Singal and others * A record of movement offunds by RTGS from BPSL to SCS controlled companies found and seized from the premises of BPSL. The same movement of funds have also been found in the documents found from SCS, RKK and Pintu. A comparative analysis of the correlation of this data with other seized material appears in the Assessment Order on Pages 43-58. The primary counterparties who have bought the shares of Pranneta Industries from Singals are the companies controlled and managed by SCS. (Para 2.4 - Pase 1 0 - Assessment Order) * On being confronted with evidences and statements as gathered from the search operation at the premises of entry operators (SCS & associated entities), Sanjay Singal himself declared an additional income of Rs. 250 crores during the course of search u/s 132(4) and followed it by way of a disclosure letter. d. Praveen Kumar Jain (Pintu) * Pintu was working in tandem with SCS and was responsible for receiving cash for SCS and remitting the same back to SCS controlled companies. He has admitted to this fact that he was in the business of providing accommodati....
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....onsideration is despite the fact that such material found at premises of various co-conspirators have been proven beyond doubt to be corelating with each other and in turn, substantiating the existence of cash transactions involving undisclosed income to avail bogus LTCG. iii. The name of the primary scrip through which a huge amount of bogus LTCG was availed by the Singals, Parrneta Industries, is nowhere whispered in the order. It is pertinent to mention that it is the name of the scrip, by which the transactions were recorded in the seized material, i.e. "Kedia-2" Sheet . "Deepu Cheque/Deepu", "Chopra/BPSL Account" and documents from Pintu. that links the unauthorised transactions between the co-conspirators including Singals. A vital point of such factual matrix is also that the transactions recorded in the seized material relating to the purchase and sale of shares of Parrneta Industries totally corelates with the trade data of Parrneta Industries received from BSE. However, the submissions in this regard seem to have been omitted from consideration. The order also does not acknowledge or consider the statements given by the directors of Parrneta Industries, that thei....
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.... on the question as to what constitutes the incriminating material. This contention was not raised in the case of Sh. Brij Bhushan Singal relied upon by the Hon'ble Bench. In this regard, the Hon'ble Bench has omitted to take into consideration and to adjudicate the said issues raised by the Revenue, having strong implications on the outcome of the present case and on the interpretation of law in general. ii. The Revenue strongly pressed the following contentions: a. There is no requirement that the "incriminating material" cannot include what is found and seized during search at the premises of accomplices or coconspirators. b. The expression "incriminating material" has to be understood in its normal contextual and common-sense connotations. c. The material found from the premises of one may be relevant for making assessment in the case of the other and therefore, the expression "incriminating material" would include all relevant material. d. The incriminating material would also include the material which may on the face of it may or may not be incriminating but when examined along with other material found at one place or the....
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.... assessee, the rules of natural justice stand complied with. Revenue also referred to the case of V3S Infratech in 104 taxmann.com 403 where the Hon'ble Coordinate Bench observed that where the entire statements of the witness was provided to the assessee and there was sufficient corroborative material apart from the statement, the proceedings cannot be vitiated merely on the ground that the opportunity to cross examination was not provided. These submissions were neither raised before nor considered by the Coordinate Bench in the case of Sh. Brij Bhushan Singal. Therefore, the Hon'ble Bench deciding the case of Sh. Sanjay Singal ought to have considered these submissions of the Revenue and returned a finding accepting or rejecting these submissions before deleting the addition by relying in the decision of the Coordinate Bench. V. Revenue submits that the omission to consider and return a finding one way or the other with regard to these vital submissions of Revenue constitutes a mistake apparent from record. The reliance by the Hon'ble Bench on the decision of the Coordinate Bench is of no avail since these vital submissions relate to facts ....
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....ative or executive actions, but they apply with equal force and, in fact, with a greater degree of precision to judicial pronouncements. A judgment without reasons causes prejudice to the person against whom it is pronounced, as that litigant is unable to know the ground which weighed with the Court in rejecting his claim and also causes impediments in his taking adequate and appropriate grounds before the higher Court in the event of challenge to that judgment. Now, we may refer to certain judgments of this Court as well as of the High Courts which have taken this view. " VII. In the light of the above, it is respectfully submitted that the order of the Hon'ble Bench suffers from an apparent mistake of law in not adhering to the principles set out by the Hon'ble Supreme Court. VIII. In view of the above, it is prayed that the Hon'ble Bench may kindly consider the above mistakes which are apparent from record and pass an appropriate order rectifying such mistake. Revenue prays that the aforesaid submissions may kindly be considered and even if these are not acceptable, these may be rejected on merits by explicit findings. 3. Ld. Special Counsel for ....
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....tion under section 254(2) of the Act which is confined rectification of mistakes apparent from the record which is patent, self-evident, glaring, obvious, whose discovery is not dependent on argument or elaboration and does not require complicated process of investigation, argument or proof and that the decision on a debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectification. The reliance was placed on the following case laws : * T.S. Balaram, ITO Vs. Volkart Brothers & Ors. (1971) 82 ITR 50 (SC) * Karan & Co. Vs. ITAT (2002) 253 ITR 131 (Del) * Express Newspapers Ltd. Vs. DCIT & Anr (2010) 320 ITR 12 (Mad) * CIT Vs. Bhagwati Developers (P) Ltd. (2003) 261 ITR 658 * CIT Vs. Vardhman Spinning (1997) 226 ITR 296 (P&H) 4.2 It was submitted that the contention of the Revenue that the ITAT in its impugned order has altogether omitted to take note of the submissions on the question of applicability of the case of Shri Brij Bhushan Singal & Others in ITA No. 1412- 1414/Del/2018 to the present case, is factually incorrect, since the Tribunal has tak....
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....BPSL Group Companies pertaining to share capital and capital advances with certain companies, which as per the claim of the Revenue Authorities were companies controlled and managed by SCS and thus entries were duly accounted for in the books of such companies. Therefore the same if at all was relevant, would constitute the subject matter of consideration in the assessments of such companies and not to the issue of LTCG in the case of the assessee. 4.7 It was emphasized that the people involved in the alleged transactions were third parties and the present assessees were not concerned either with their statements or their retraction. Therefore if at all those statements were intended to be used in evidence, the assessees were required to be offered a prior opportunity of cross examination. 4.8 It was emphasized that in the case of Shri Brij Bhushan Singal and others, also the impugned material was made available to the assessee therein but since the assessees were not offered any opportunity of cross examination of the third parties from whose possession & control such documents were seized, such documents were held not to have any evidentiary value in the assessments framed ....
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....ey took place on 27/12/2012 no incriminating material was found from the business / residential premises of the assessee. • That the present assessment was framed under section 153A of the Act. It is well settled that the addition under section 153A of the Act can be made only on the basis of the incriminating material found during the course of search. • That in the present case the A.O. made the addition under section 68 of the Act on the basis of material found in search which took place in the case of SCS, Shri R.K. Kedia and Pintu. • That the A.O. considered the statement of third parties as incriminating material for the purpose of making the addition in assessment made under section 153A of the Act, however no opportunity to cross examine those parties was provided to the assessee. • That the Ld. CIT(A) himself admitted at page no. 176 of the impugned order that no incriminating material was found from the possession of the assessee during the course of search. 4.10 Our attention was drawn towards para 48 at page no. 112 to 126 of the order dt. 07/02/2020 and it was stated that the relevant excerpts from the order render....
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....t was pointed out that the submissions of the Ld. Counsel for the assessee were discussed in para 36 to 37 while rival submission of the Ld. Special Counsel for the Revenue alongwith his written submission including all the case laws relied upon, had been discussed in details at para no. 38 to 45, pages 94 to 108 of the impugned order and after taking a detailed note of all the material alleged as incriminating by the Department and the submissions of both the sides with respect to the legal validity and evidentiary value of the same vis a vis the assessment framed, the findings have been given at para no. 48 to 51, page 110 to 127 of the impugned order. It was also stated that after discussing the totality of the facts the ITAT at para 49, pages 112 to 126 has gone on to extensively quote from the order passed by the Coordinate Bench in the case of Shri Brij Bhushan Singal & Ors (supra) rendered on similar facts, wherein various settled principle of law had been discussed in depth by the Coordinate Bench after discussing catena of judicial pronouncement in support of each proposition. The facts of the said case were found by the ITAT to be in close proximity to the facts of the pr....
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....urse of separate search action in their cases, were not found to be relevant for adjudicating the case of the assessee in respect of unabated assessment year under section 153A of the Act and the ITAT did not feel the need to record separate findings on merits with respect to such third party documentation / statements and the same cannot be construed as an apparent error amenable to a rectification petition under section 254(2) of the Act. 4.15 As regards to this contention of the Ld. Special Counsel for the assessee that the question as to what constitutes incriminating material was not adjudicated by the ITAT. It was submitted that the ITAT has discussed the crux of the submissions of the Ld. Counsel for the assessee at para 46 to 47.2 at page no. 108 & 109 and in his written submissions the Ld. Counsel for the Assessee distinguished the case laws relied by the Ld. Special Counsel for the revenue, it had been acknowledged at para no 47.2 at page no. 109 of the impugned order and after having taken an explicit note of the facts and material on record and the submissions advanced by both the sides, the ITAT had given its considered finding and decision at para 48 to 51 at pa....
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.... • Confession of undisclosed income obtained under undue influence/coercion if not based upon credible evidence do not serve any useful purpose, the Department should focus on gathering evidences during search/survey operations and strictly avoid obtaining admission of undisclosed income under coercion/undue influence-internal paras 115 & 116 of the quoted judgment, page 119 of the impugned order. • Assessments made pursuant to search operation are required to be based on incriminating materials discovered as a result of search operation in the case of the assessee and not on recorded statements - internal para 117 of the quoted judgment at page 120 of the impugned order. • Any and every document cannot be and is not an incriminating document. No addition can be made for a particular assessment year without there being an incriminating material qua that assessment year which would justify such and addition- internal para 24 of the quoted judgment at page 121 of the impugned order. • No addition could be made u/s 153A where the Department culd not point out from the Panchanama any material found during the course of search which could....
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....sessee therein was pressed into service with significant force by the Department in the said case and after considering the totality of the fact, the submission advanced by both the sides and the various judicial pronouncement on the said issue, the ITAT Delhi Bench in the case of Shri Brij Bhushan Singal and Ors (supra) at page no. 117 of the order in the said case, held that the assessment made pursuant to search operation are required to be based on incriminating material discovered as a result of search operation in the case of assessee and further held at para 121 of the said order that no addition under section 153A of the Act could be made in the case of the assessee on the basis of statements of third party recorded under section 132(4)/133A of the Act. Therefore the contention of the Department that the said issue was not before the Coordinate Bench of the ITAT in the case of Shri Brij Bhushan Singal and Ors. was factually incorrect. 4.17 As regards to the allegation of the Department that the reliance placed by the special counsel for the Revenue that judgment rendered in various case laws were not considered by the ITAT. It was submitted that the ITAT had taken note o....
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.... The impugned order is well reasoned 4.21. Accordingly it was submitted that the Misc. Application moved by the Department is devoid of any merit and beyond the purview of rectification application under section 254(2) of the Act therefore the same may be rejected. 5. In his rejoinder the Ld. Standing Counsel for the Department gave in writing as under: BRIEF SUBMISSIONS OF REVENUE ON THE REJOINDER FILED 1. Revenue has already made its submissions with regard to the exact details of the mistakes that have inadvertently crept in the order and has also made oral submissions to the effect that these constitute mistakes of 'fact' and mistakes of 'law' and these are so vital as are likely to change the course of the decision of the Hon'ble Tribunal and hence these mistakes deserve to be rectified. 2. These written submissions only seek to submit reply to the submissions, both oral and written, of the Learned Counsel for the assessee, particularly the written counter filed against the Miscellaneous Application of the Revenue, a copy of which has since been made available to us. 3. It is submitted with utmost respect and with all hum....
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.... the Hon'ble Supreme Court states as under: "There is hardly any statutory provision under the Income Tax Act or under the Constitution itself requiring recording of reasons in the judgments but it is no more res Integra and stands unequivocally settled by different judgments of this Court holding that, the courts and tribunals are required to pass reasoned judgments/orders. In fact, Order XIV Rule 2 read with Order XX Rule 1 of the Code of Civil Procedure requires that, the Court should record findings on each issue and such findings which obviously should be reasoned would form part of the judgment, which in turn would be the basis for writing a decree of the Court." iii. In Para 12 of the said judgement, the Hon'ble Supreme Court states as under: "At the cost of repetition, we may notice, that this Court has consistently taken the view that recording of reasons is an essential feature of dispensation of justice. A litigant who approaches the Court with any grievance in accordance with law is entitled to know the reasons for grant or rejection of his prayer. Reasons are the soul of orders. Non-recording of reasons could lead to dual infirmities;....
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....cerned with assessment and collection of revenue, and the power to rectify the order of assessment conferred upon him is to ensure that injustice to the assessee or to the revenue may be avoided. It is implicit in the nature of the power and its entrustment to the authority invested with quasi-judicial functions under the Act, that to do justice it shall be exercised when a mistake apparent from the record is brought to his notice by a person concerned with or interested in the proceeding. The High Court was, in our judgment, in error in assuming that exercise of the power was discretionary, and the Income-tax Officer could, even if the conditions for its exercise were shown to exist, decline to exercise the power." [L. Hirday Narain v. Income-tax Officer [1970J 78ITR 26 (SC)] ii. "Scope of the Power of Rectification 12. As stated above, in this case we are concerned with the application under Section 254(2) of the 1961 Act. As stated above, the expression "rectification of mistake from the record" occurs in Section 154. It also finds place in Section 254(2). The purpose behind enactment of Section 254(2) is based on the fundamental principle tha....
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....mission. The power intended to be given under section 154 is to rectify an error apparent on the fact of the record. Amendment of the order is the consequence of the rectification and its purpose is to give effect to the rectification. If the rectification involves an amendment, which will affect the whole of the order, it cannot be said that simply because of the use of the word "amend", which normally may not mean the cancellation of the whole order, the Income Tax Officer should be powerless to rectify the mistake or error which is apparent on the face of the order. The word "amend" with reference to legal documents means correct an error and the expression "amend the order" would mean correct the error in the order. Under section 154 power to rectify the error is to be exercised by correcting the error in the order and the correction must, therefore, extend to the elimination of the error. What the effect of the elimination of the error will be on the original order will depend upon each case. It may be that the elimination of the error may affect only a part of the order. It may also be that the error may be such as may go to the root of the order and its elimination may resul....
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....iar v. C1T, (1958) 33 ITR 228(Mad); National Rayon Corporation Ltd. v. G. R. Bahmani, (1965) 56 ITR 114(Bom) ; ArvindN. Mafatlal v. ITO, (1957) 32 ITR 350(Bom) ; Ved Parkash Madan Lai v. CIT, (1976) 102 ITR 213(Punj)] viii. "There is no warrant in the Act authorising introduction of an error in the course of proceedings for rectification of another error. The fetters on the jurisdiction to rectify so as to confine the jurisdiction only to patent errors which did not involve any doubt or dispute will not apply to the consequential issues that flow from the application for rectification being accepted. The same result follows even in a case of suo motu rectification. The acceptance of the contrary view would be to allow one party to get away with an inequitable or unjust or even an illegal order. It would be an abdication of jurisdiction by the rectifying authority if it has to leave the matter without considering the unjust consequences flowing from its own order." [G. Balakrishnan & Bros. P. Ltd. v. State of Tamil Nadu, (1978) 41 STL 450, 454-55(Mad)] 9. The order of the Tribunal fails to consider and contradicts its own stand taken in the case o....
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....he submissions as well as the cases relied upon by the Ld. Counsel for the Assessee have been mentioned at para 36 to 37.4 page no. 78 to 94 and the counter arguments alongwith case laws relied by the Ld. Special Counsel for the Revenue are mentioned at page no. 94 to 108 in para 38 to 45, contents of the rejoinder by the Ld. Counsel for the Assessee are mentioned at para 46 to 47.2 at page no. 105 to 110 of the impugned order. Thereafter the findings have been given and the conclusion drawn by the ITAT in page no. 110 to 127 in Para 48 to 51 of the impugned order. Therefore, in this Misc. Application the Revenue wrongly alleged that the non cognizance of the live nexus existing between the incriminating material found during the search action at various places / premises and non adjudication of the question as to what constitutes the incriminating material, the said allegation is factually incorrect. Since this issue has been discussed at page no. 110 to 112 at para nos. 48 to 48.5 of the impugned order. 6.2 The another contention of the Department is that there was omission to take into consideration the reliance placed by the Revenue on the various decision and return a findi....
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....s of the decision recorded by the ITAT cannot be challenged by the Revenue in garb of rectification petition under section 254(2) of the Act which is confined to the rectification of mistake apparent from the record which must be patent, self evident, glaring, obvious, whose discovery is not dependent on argument or elaboration and does not require complicated process of investigation, arguments or proof. 6.4 On a similar issue the Hon'ble Apex Court in the case of T.S. Balaram, ITO, Company Circle IV, Bombay Vs. Volkart Brothers Ant Others (supra) held as under: "A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on pints on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record." 6.5 Similarly the Hon'ble Jurisdictional High Court in the case of CIT Vs. Vardhman Spinning (1997) reported in 226 ITR 296 (supra) held as under; "The Appellate Tribunal is a creation of a statute and it can exercise only those powers which have been conferred upon it. The only power conferred on the Tri....
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....n affirmed by the Hon'ble Supreme Court as reported at (2011) 334 ITR 1(St). 6.7 In the present case as we have already pointed out that there is no mistake apparent from the record therefore by keeping in view the ratio laid down in the aforesaid referred to cases, we are of the view that the Misc. Application moved by the Department is not maintainable. In the present case, it appears that the Department wants to get the order passed by the Tribunal reviewed which is not permissible as the ITAT has no power to review its order and the right platform / forum for redressal of this grievance on any special question of law arising from the order of the ITAT would be the Hon'ble High Court under section 260A of the Act. 6.8 On a similar issue the Hon'ble Kolkata High Court in the case of CIT vs. Bhagwati Developers (P) Ltd. (reported in (2003)261 ITR 658 held as under: " Under section 254(2), the Appellate Tribunal is clothed with the power to amend with a view to rectify any mistake apparent from the record either on its own motion or on an application by the assessee or the Assessing Officer concerned. The law by now is well- settled. Section 254(2) does n....