TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 516
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....ut of ITA No.41/RPR/2022), MA No.30/RPR/2023 (Arising out of ITA No.64/RPR/2021), MA No. 31/RPR/2023 (Arising out of ITA No.59/RPR/2022) The DCIT, Circle-1(1), Bhilai (C.G), The ACIT, Circle-1(1), Bhilai, The ACIT, Circle-2(1), Raipur (C.G.), The ITO, Ward-1, Raigarh (C.G.), The DCIT (CPC/ITO Ward, Jagdalpur, The DCIT, Circle-1(1), Bilaspur(C.G.), The ITO, Circle-1(1), Bilaspur, The ADIT, CPC, Bengaluru, The AD. CIT (CPC) Bangalore, The ITO, Ward- 2(1), Bilaspur (C.G.), The DCIT, CPC, Bangalore, The ACIT, Cicle1(1), Bilaspur (C.G.), The ACIT (CPC), Bengaluru, The ADIT (CPC) Bengaluru, The DCIT, Circle-1(1), Raipur (C.G.), The DCIT-2(1), Raipur (C.G.), The ACIT, Circle-4(1), Raipur (C.G.), Versus N.R Wires Private Limited, Mutyala Mohan, Shivnath Tractors Jagdalpur, Gayatri Construction, M/s. Prenita Constructions,Shri Ashok Kumar Yadav,M/s. Neelkantham Systems Private Limited, Kunj Bihari Agrawal British (I) Trading Co., M/s. Precision Erectors and Services Pvt. Ltd., J.B Construction Company, M/s. Shree Rajendra Engineering Enterpriss, Panchsheel Engineering Works, Sucheendra Babu Sukumaran, Mohan Sukumaran, Sudersan Sukumaran, Shri Ram Finance Corporation Private Limited, ....
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.... (relevant extract) : "7. However, recently, the Hon'ble Apex Court has passed an order in the case of Checkmate Services Pvt Ltd Vs. CIT-1 in Appeal No. 2833 of 2016 dated October 12th, 2022 in which they have held that the deduction shall be admissible only if the amount is paid within the due date as prescribed under those Acts and not before filing of ITR. As such, the entire scenario has now undergone a change and the litigation with respect to this issue has achieved a finality. The order of the Apex Court is the law of the land. Therefore, any order passed not in consonance with the Apex Court's order can be said to be erroneous to that extent and therefore, a cause for filing a Miscellaneous Application to correct that error can be said to have arisen. 8. However, in view of the decision of the Hon'ble Supreme Court in Civil Appeal No. 2833 of 2016 in the case of Checkmate Services (P) Ltd Vs. Commissioner of Income Tax-1 pronounced on October 12,2022, the Hon'ble Supreme Court has upheld the order of the Hon'ble Gujarat High Court. In the case of Gujarat State Road Transport Corporation, Hon'ble Gujarat High Court has held that w.r.t. the sum re....
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....uction in the hands of the assessee, therefore, the same had rendered its order that was passed while disposing off the appeal as suffering from a mistake which being apparent from record is amenable for rectification under sub-section (2) of Section 254 of the Act. 7. Admittedly, the Hon'ble Apex Court in its recent judgment in the case of Checkmate Services Pvt. Ltd. Vs. Commissioner of Income Tax- I (supra), had held that the delayed deposit of the amount of employees share of contribution towards labour welfare funds by the assessee employer was not to be allowed as a deduction under section 2(24)(x) r.w.s.36(1)(va) of the Act. It is observed by the Hon'ble Apex Court that as the assessee is not absolved from its obligation to deposit the employees share of contributions on or before the "due date" as contemplated in the respective Labour Welfare Acts, as a pre-condition for claiming the same as a deduction under Section 2(24)(x) r.w.s. 36(1)(va) of the Act, therefore, it would not be saved by the non-obstante clause of Section 43B of the Act. 8. Per contra, the Ld. Authorized Representatives ("ARs", for short) for the respective assessee's had come forth with multi-facet con....
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.... Pradesh. It was observed by the Hon'ble Apex Court that the incentives would not be available until and unless production had commenced. The Hon'ble Apex Court had observed that as the incentives which were given as refund of sales tax and subsidy on power consumed for production to which the assessee was entitled only after commencing its production, and was not in the nature of a payment made directly or indirectly for setting up the industries, therefore, the same was a "revenue receipt". The CIT after considering the judgment of the Hon'ble Apex Court in the case of Sahney Steel and Press Works Ltd. (supra) dated 19.09.1997, vide his order of rectification u/s.154 dated 30.03.1998, held that as the power tariff subsidy received by the assessee after commencement of its business was an operational subsidy, therefore, the same was not a "capital receipt". 11. Aggrieved the assessee carried the matter by way of a writ petition before the Hon'ble High Court of Madras. The Hon'ble High Court concluded that the CIT subsequent to the judgment of Hon'ble Apex Court in the case of Sahney Steel and Press Works Ltd. (supra) was right in treating the receipt of subsidy as a "revenue rece....
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....le Supreme Court in the case of Checkmate Services P. Ltd. Vs. Commissioner of Income Tax-I (supra), therefore, the reliance placed by the Ld. ARs on the aforesaid judgment would by no means assist their case. 14. We shall now deal with the reliance placed by S/Shri Abhishek Mahawar & Nikhilesh Begani, the Ld. ARs on the judgment of the Hon'ble Apex Court in the case of CIT Vs. Reliance Telecom Limited (2022) 440 ITR 1 (SC). The Ld. ARs by referring to the aforesaid judgment had drawn support from the observation of the Hon'ble Apex Court, wherein it was observed that the powers u/s. 254(2) of the Act are akin to those under Order XLVII, Rule 1 of the Code of Civil Procedure, 1908. The Ld. ARs referred to aforesaid observations of the Hon'ble Apex Court and took us through Order XLVII, Rule 1 of the Code of Civil Procedure (5 of 1908), Page 115 of APB. 15. The Ld. ARs submitted that as per "Explanation" to Order XLVII, Rule 1 of the Code of Civil Procedure (5 of 1908) a subsequent decision of a superior court cannot form a ground for the review of a judgment, therefore, the power vested with the Tribunal u/s. 254(2) of the Act, which have been held by the Hon'ble Apex Court to be....
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....ourt in the case of Income Tax Officer Vs. Ashok Textiles Ltd. (1961) 41 ITR 732 (SC). The Hon'ble Apex Court in its aforesaid order in the case of Ashok Textiles Ltd. (supra) that was rendered in context of Section 35 of 1922 Act (pari materia to Section 154), had observed that the restrictive operation of power of review under Order XLVII, Rule 1 of Code of Civil Procedure, 1908 is not applicable in case of Section 35 of 1922 Act. We, thus, are of the considered view, that as held by the Hon'ble Apex Court in the case of Reliance Telecom Limited (supra) though the Tribunal u/s. 254(2) can rectify/correct any mistake apparent from record but cannot review its order, i.e. revisit its earlier order and go into details on merits, therefore, the contention of the Ld. ARs who have tried to read the restriction placed on review of an order by a court as provided in the "Explanation" to order XLVII, Rule 1 into the scope of power of the Tribunal to rectify any such mistake apparent from record cannot be accepted. On the contrary, we find that the issue leading to filing of the present miscellaneous applications by the department, i.e. as to whether an order passed by the Tribunal while d....
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....Hon'ble Apex Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC). The Hon'ble Apex Court had observed that the power vested with the Tribunal to rectify a mistake in its order passed while disposing off an appeal deals with two situations, viz. (i) rectifying any mistake apparent from record on a suo-motto basis within a time period of four years from the date of the order; and (ii) rectifying the mistake that was brought to the notice of the Tribunal either by the assessee or by the A.O. For the sake of clarity, the relevant observations of the Hon'ble Apex Court in the case of Saurashtra Kutch Exchange Ltd. (supra) are culled out as under: ".......orders passed by the Appellate Tribunal on appeal shall be final". Sub-section (2) enacts that the Tribunal may at any time within four years from the date of the order rectify any mistake apparent from the record suo motu. The Tribunal shall rectify such mistake if it is brought to notice of the Tribunal by the assessee or the Assessing Officer. 22. Sub-section (2) thus covers two distinct situations; (i) It enables the Tribunal at any time within four years from the date of the order to ame....
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....e assessee or by the department, then the Tribunal is obligated to exercise the powers vested with it under subsection (2) of Section 254 of the Act without being subjected to the restriction of the time limit of six months (earlier four years), which is applicable only in a case where it seeks to rectify any mistake apparent from record on a suo-motto basis. We, thus, finding no substance in the aforesaid contention of Shri G.S. Agrawal, reject the same. We shall now deal with the claim of Mr. Agrawal that as the legislature in all its wisdom in order to avoid any undue hardships to the assessee's had vide the Finance Act, 2021 made available on the statute "Explanation 2" to Section 36(1)(va) and "Explanation 5" to Section 43B of the Act only with prospective effect from 01.04.2021, wherein it was clarified that the provisions of Section 43B would not be applicable to a sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of Section 2 applies, which aspect had not been looked into and adjudicated upon by the Hon'ble Supreme Court in the case of Checkmate Services (P) Ltd. (supra), therefore, the order passed by the Tribun....
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....0A of the Act operates in an independent field, which in no manner jeopardizes its right for seeking rectification of a mistake in the order passed by the Tribunal under sub-section (2) of Section 254 of the Act, therefore, the said contention being devoid and bereft of any merit cannot be accepted. 22. Ms. Puja Bajaj, Ld. AR for the respondent at Sr. No.27 & 33 had stated that as the issue, i.e as to whether or not the delayed deposit of the employee's share of contribution towards labour welfare funds, i.e. PF & ESI by the assessee-employer was to be held as the latters income, was a debatable issue at the time of processing of the return of income, therefore, the same was beyond the purview of Section 143(1) of the Act. The Ld. AR in order to buttress her aforesaid claim had relied on the orders of ITAT, Mumbai Bench "D" in the case of Della Adventure and Resorts Pvt. Ltd. Vs. National Faceless Appeal Centre (NFAC) (2022) 66 CCH 28 (Mumbai) and that of the ITAT, Delhi Bench, "G" in the case of Garg Heart Centre & Nursing Home Private Limited & Ors. Vs. Assistant Commissioner of Income Tax & Ors. (2022) 65 CCH 521 (Delhi) (copies placed on record). As observed by us hereinabove,....
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....upra). Additionally, the Ld. AR in order to buttress his claim that the department could not have on the basis of a subsequent judgment of the Hon'ble Apex Court in the case of Checkmate Services (P) Ltd. (supra) rectified its order under section 254(2) of the Act had pressed into service the judgment of Hon'ble Apex Court in the case of DCIT Vs. Simplex Concrete Piles (India) Ltd. (2013) 358 ITR 129 (SC). Apart from that, the Ld. AR submitted that the DCIT, CPC, Bengaluru could not have made an addition of the delayed deposit of the employees share of contribution towards ESI/EPF by taking recourse to a prima facie adjustment u/s.143(1) of the Act. The Ld. AR in support of his contention had relied on the order of the ITAT, Mumbai in the case of M/s. P.R. Packing Service Vs. ACIT, ITA No.2376/Mum/2022 dated 07.12.2022. Alternatively, the Ld. AR had submitted that in case the application filed by the department is accepted and the matter is recalled, then the respondent may be allowed to claim the payment of ESI and EPF under consideration as a business expenditure u/s. 37(1) of the Act. The Ld. AR in support of his aforesaid contention had relied on the order of ITAT, Cuttack Benc....
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....y, it was submitted by the Ld. AR that the present application was filed by the department to circumvent its failure to carry the matter in appeal before the Hon'ble High Court. 27. We have given a thoughtful consideration and are unable to persuade ourselves to subscribe to the aforesaid contention of Mr. Jain. As the filing of an appeal before the Hon'ble High Court on the one hand, and seeking rectification of a mistake u/s. 254(2) of the Act, both operate in their respective independent fields and are in no way overlapping, therefore, we are unable to concur with the Ld. AR that as the department has not assailed the order of the Tribunal by filing an appeal u/s. 260A of the Act before the Hon'ble High Court, therefore, the application filed by it under sub-section (2) of Section 254 would not be maintainable. We, thus, finding no substance in the aforesaid contention of the Ld. AR, reject the same. 28. Shri Nitin Goyal, Ld. AR for respondents at Sr Nos. 25, 26 & 34 had further objected to the application filed by the department under sub-section (2) of Section 254 of the Act by drawing support from the judgment of the Hon'ble High Court of Kerala in the case of P.T. Manuel &....
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....herein it was held that the amendment to Section 43B and Section 36(1)(va) that was made available on the statute vide the Finance Act, 2021 was applicable with prospective effect from 01.04.2021, therefore, the rectification proceedings could not have been resorted on the basis of a subsequent "change of opinion"; (iii) that though the non-consideration of a judgment of a superior court as was available at the time of passing of the order would render the order of the Tribunal as suffering from a mistake apparent from record but the same would not apply in case of a judgment rendered subsequently; and (iv) that as held by the Hon'ble Supreme Court in the case of Reliance Telecom Ltd. (supra) even in a case where the Tribunal had decided the appeal erroneously on merits, the same would not justify vesting of jurisdiction for recalling of the said order. 31. We have given a thoughtful consideration to the aforesaid submissions filed by the assessee before us. As observed by us hereinabove, it is the claim of the assessee that the deduction of the delayed deposit of employees share of contribution towards ESI & EPF was a debatable issue and an addition of the same could not have bee....
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....our considered view, the aforesaid issue can safely be resolved by referring to the judgment of the Hon'ble Supreme Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC). The Hon'ble Apex Court by referring to the order of the Hon'ble High Court of Gujarat in the case of Suhrid Geigy Ltd. Vs. CIT (1999) 237 ITR 834 (Guj), had observed, that if a point is covered by the decision of the Hon'ble Jurisdictional High Court rendered prior to or even subsequent to the order proposed to be rectified, then it could be said to be a mistake apparent from record u/s. 254(2) of the Act and could be corrected by the Tribunal. The Hon'ble Apex Court drawing support from Blackstonian theory, had observed that it is not the function of the court to pronounce a "new rule" but to maintain and expound the old one. The Hon'ble Apex Court had observed that if a subsequent decision altered the earlier one, then the later decision does not lay down any new law but only discovers the correct principle of law which had to be applied retrospectively. It was further observed by the Hon'ble Apex Court that even where an earlier decision of the court operated for quite some ....
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....k states; "The theory of case law is that a judge does not make law; he merely declares it; and the overruling of a previous decision is a declaration that the supposed rule never was law. Hence any intermediate transactions made on the strength of the supposed rule are governed by the law established in the overruling decision. The overruling is retrospective, except as regards matters that are res judicatae or accounts that have been settled in the meantime". (emphasis supplied) 44. It is no doubt true that after a historic decision in Golak Nath v. Union of India, (1967) 2 SCR 762, this Court has accepted the doctrine of `prospective overruling'. It is based on the philosophy: "The past cannot always be erased by a new judicial declaration". It may, however, be stated that this is an exception to the general rule of the doctrine of precedent. 45. Rectification of an order stems from the fundamental principle that justice is above all. It is exercised to remove the error and to disturb the finality." Also, we find support from the judgment of the Hon'ble Supreme Court in the case of S.A.L. Narayana Row, CIT v. Model Mills Nagpur Ltd. [1967] 64 ITR 67 (SC), wherein the ....
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....in the case of M. K. Kuppuraj Vs. ITO [1995] 211 ITR 853 (Mad.), was of the view that an assessment made contrary to a judgment subsequently rendered by jurisdictional High Court constitutes an error on the face of the record amenable to rectification proceedings under section 154 of the Income tax Act, 1961. The Hon'ble High Court of Delhi in the case of Lakshmi Sugar Mills Co Ltd. Vs. CIT (2012) 22 taxmann.com 300 (Delhi) referring to the judgment of the Hon'ble Apex Court in the case of Saurashtra Kutch Stock Exchange Ltd. (supra), had observed that as judges do not make law and only discover or find the law, therefore, a judicial decision acts retrospectively. It was observed by the High Court that where a decision of the Hon'ble Supreme Court overrules earlier decision, the views expressed in the later decision would have to be regarded as having always been the law. Also, we find that the issue in hand had exhaustively been looked into by the Hon'ble High Court of Punjab & Haryana in the case of CIT Vs. Smt. Aruna Luthra (2001) 252 ITR 76 (P & H). Issue before the Hon'ble High Court reads as under: "Can proceedings for rectification of an order passed under the provisions o....
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....ilege of mortals. It would be a folly not to correct it. Section 154 appears to have been enacted to enable the Authority to rectify the mistake. The legislative intent is not to allow it to continue. This purpose has to be promoted. The legislature's will has to be carried out. By placing a narrow construction, the object of the legislation shall be defeated. Such a consequence should not be countenanced. 16. Still further, it deserves mention that the Parliament has prescribed a period of four years for correction of the mistake. While assessment under Section 143 or 144 has to be normally made within a period of one or two years, the mistake can be rectified at any time during the period of four years. The obvious intention of the Legislature is that if the mistake has come to the notice of the authority within the prescribed time, it should not be allowed to continue. It should be rectified. Regardless of the fact that the limitation for passing an order of assessment or filing an appeal has elapsed. 17. Still further, the provision has inbuilt safeguards. It provides for the issue of notice. It ensures the grant of an opportunity. It limits the jurisdiction of the auth....
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....icial institutions". It is only equitable and fair that similar cases lead to identical results. 23. Mr. Sanjay Bansal contended that the judicial principle of retroactive operative of judge-made law has now been negated by the Parliament by introducing the 'Explanation' in Order 47 Rule 1. A subsequent decision is no longer a good ground for review. Thus, the counsel contended that the same principle should be followed while construing the provisions of the Income Tax Act. 24. This contention cannot be accepted. Firstly, because a similar provision has not been made in S. 154. The plain language is materially different. Still further, we have the authoritative pronouncement of their Lordships of the Supreme Court in Income Tax Officer, Alwaye v. Asok Textiles Ltd., Alwaye AIR 1961 SC 699. It was held that the High Court had "fallen into an error in equating the language and the scope of Section 35 of the Act (Income Tax Act, 1922) with that of Order 47 Rule 1 CPC. The language of the two is different because according to Section 35 of the Act which provides for rectification of mistakes the power is given to the various income tax authorities within four years from the date of....
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....a binding decision of the jurisdictional High Court or the Supreme Court. There was no such judgment when the application under S. 154 had been filed. The pronouncement had come at a later stage when the prescribed period of four years had already expired. Thus, the decisions have been given in a different context. Thus, these are distinguishable from the facts of the case in hand. 29. The basic principle is the certainty of law. Even though considerations of justice, equity and fair-play sometimes compel courts to deviate from a view expressed in an earlier case, yet the common law principle of stare decisis has been followed with the avowed object of ensuring that the litigant must be able to act on the view expressed by a court. Law can't move with the wind. It is not a weather cock. The citizen is entitled to act on the basis of the law declared by the court. Once he acts, he should not be told that this summer is very hot. Thus, the law has changed even though the legislature has not intervened. The gnawing uncertainty has certainly to be avoided. 30. It was then contended that in a case where the Income Tax Officer intimates the assessee that the return has been accep....
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....nal High Court. Our aforesaid view is further fortified by Article 141 of the Constitution of India, which reads as under: "A law declared by the Hon'ble Supreme Court is binding on the Courts within the territory of India". 35. Apart from that, we find that a "Third Member" of the ITAT, Mumbai, Bench "E" in the case of Kailashnath Malhotra Vs. JCIT, Special Range 56, Mumbai (2010) 129 TTJ 393 (Mum.), had after drawing support from the judgment of the Hon'ble Supreme Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC), observed that if the order passed by the Tribunal is not found to be in conformity with the judgment of the Hon'ble Supreme Court or that of the Hon'ble Jurisdictional High Court, which may be rendered prior to or subsequent to the impugned order then the same would constitute a mistake apparent from record amenable for rectification u/s. 254(2) of the Act. For the sake of clarity, the relevant observations of the Tribunal are culled out as under: "... I have absolutely no doubt in my mind that the non- consideration of a judgment of the Hon'ble Supreme Court or that of the Hon'ble jurisdictional High Court delivered prior ....
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....ts, it would be in the larger interests of society that the present judgment operates hereafter. As a result, it is hereby directed that the law declared in the present judgment shall operate prospectively. The appeals are hereby dismissed, without order on costs. On the basis of our aforesaid deliberations, it can safely be concluded that as and where the Hon'ble Apex Court had intended that its judgment be given a prospective applicability, a specific rider to the said effect as in the case of M/s New Noble Educational Society Vs. The Chief Commissioner of Income Tax (supra) had been provided. However, we are afraid that no such rider is found in the judgment of the Hon'ble Apex Court in the case of Checkmate Services Pvt. Ltd. Vs. Commissioner of Income Tax-I (supra), which means that the same would have a retrospective application. We, thus, considering the facts involved in the case before us r.w the aforesaid settled position of law, are of the considered view, that as stated by the department in its miscellaneous application and, rightly so, as the view taken by the Tribunal in the captioned appeals is not found to be in conformity with the judgment of the Hon'ble Apex Cour....