TaxTMI 
TaxTMI 
2023 (6) TMI 1531
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....0.2022, thus, the same suffers from a mistake which being glaring, apparent, patent and obvious from record had rendered the same amenable for rectification under subsection (2) of Section 254 of the Act. 2. We find from a perusal of the miscellaneous application filed by the department in MA No. 37/RPR/2023 that the revenue applicant vide its application filed under sub-section (2) of Section 254 of the Act has sought for recalling of the order passed by the Tribunal while disposing off the appeal in ITA No. 97/RPR/2021, stating as under (relevant extract) : "2. In this case, an addition of Rs. 3,28,523/- was made by the A.O. by way of disallowance u/s 36(1)(va) on account of delayed payment of employee contribution towards EPF/ESIC. The Hon'ble ITAT while deciding the issue has vacated the said disallowance made by the AO by following its own decision on similar issue in the case of M/s Ind Synergy Limited in ITA No. 312/RPR/2016 dated 10/03/2022. 3. Subsequently, this issue has been decided by 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. Vide....
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.... Commissioner of Income TaxI, Civil Appeal No. 2833 of 2016 dated 12.10.2022, 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. The Ld. DR in order to support his contention that pursuant to the order of the Hon'ble Apex Court in the case of Checkmate Services Pvt. Ltd. (supra), the order passed by the Tribunal, taking a view to the contrary, was amenable for rectification under sub-section (2) of Section 254 of the Act, had relied on the judgment of the Hon'ble Apex Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC) and that of Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Smt. Aruna Luthra (2001) 252 ITR 76 ( P & H). 7. It was submitted by the ld. DR that 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....
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....that the orders passed by the Tribunal while disposing off the appeals were not amenable for rectification under sub-section (2) of Section 254 of the Act. We shall hereinafter deal with the respective contentions of the Ld. ARs. 9. S/shri Abhishek Mahawar and Nikhilesh Begani, the Ld. ARs for respondents at Sr.No.1 and at Sr.No.29 & 31 objected to the miscellaneous applications filed by the department. It was submitted by the Ld. ARs that the Tribunal was divested of its jurisdiction to carry out rectification of its orders u/s. 254(2) of the Act on the basis of the subsequent judgment of the Hon'ble Apex Court in the case of Checkmate Services Pvt. Ltd. Vs. Commissioner of Income Tax-I (supra). The Ld. ARs in order to fortify their contention had drawn support from the judgment of the Hon'ble Supreme Court in the case of Mepco Industries Ltd. Vs. CIT & Ors. (2009) 319 ITR 208 (SC). 10. Although at the first blush the aforesaid claim of the Ld. AR's appeared to be very attractive, but as the facts involved in the case of Mepco India Ltd. (supra) are found to be distinguishable as against those involved in the case before us, therefore, the reliance placed on the ....
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.... 12. On further appeal, the Hon'ble Apex Court after deliberating on the scope of Section 154 of the Act, observed, that as the same was taken recourse to by the CIT on the basis of a "change of opinion", therefore, he had clearly exceeded his jurisdiction. At this stage, it would be relevant to point out that the Hon'ble Apex Court, had observed that as the issue that had formed the very basis for rectification of the order u/s. 154 of the Act required examination of the nature of subsidy that was received by the assessee, therefore, the said exercise could not have been undertaken by the CIT in the garb of his jurisdiction for rectifying a mistake. Apart from that, it was observed by the Hon'ble Apex Court that as the CIT while passing order u/s. 264 of the Act dated 30.04.1997 had taken a view that the subsidy received by the assessee was not taxable as it was a "capital receipt", therefore, the view subsequently taken by him to the contrary after the judgment of the Hon'ble Apex Court in the case of Sahney Steel and Press Works Ltd. (supra) by treating the said subsidy as a "revenue receipt" was a classic illustration of "change of opinion." In sum and substance, as the CIT....
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....n'ble Apex Court to be akin were to be similarly construed. To sum up, the Ld. ARs by drawing support from the restriction placed on the powers of a court to review its order had assailed the seeking of rectification of the order of the Tribunal, which the department had sought under section 254(2) of the Act on the basis of the subsequent judgment of the Hon'ble Apex Court in the case of Checkmate Services Pvt. Ltd. Vs. Commissioner of Income Tax-I (supra). 16. We have given a thoughtful consideration to the aforesaid contention of the Ld. ARs and are unable to persuade ourselves to subscribe to the same. The Hon'ble Apex Court in the case of CIT (IT-4) Vs. Reliance Telecom Limited (2021) 133 taxmann.com 41 (SC), had held that the powers vested with the Tribunal under section 254(2) of the Act are akin to Order XLVII, Rule 1 of CPC. However, the Ld. ARs had erred in loosing sight of the context in which the said observations were recorded by the Hon'ble Apex Court. The Hon'ble Apex Court had observed that in the case before it the Tribunal which had originally passed a detailed order and held the payment made by the assessee company for purchase of software, as royalty, h....
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....assed by the Tribunal while disposing off an appeal can be rectified u/s. 254(2) of the Act for the purpose of bringing the same in conformity with a subsequent judgment of the Hon'ble Apex Court or that of the Hon'ble Jurisdictional High Court is squarely covered by the judgments of the Hon'ble Apex Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC) and S.A.L Narayana Row, CIT Vs. Model Mills Nagpur Ltd. (1967) 64 ITR 67 (SC) and thus, is no more res-integra. 17. Apropos the reliance placed by the Ld. ARs on the judgement of the Hon'ble High Court of Kerala in the case of M/s. Malabar Regional Co-operative Milk Producers Union Ltd. Vs. The Commissioner of Central Exercise, C.E Appeal No. 10 of 2019 dated 06.12.2019, we are of the considered view that as the issue had been settled and thus, is no more res-integra pursuant to the judgments of the Hon'ble Apex Court in the case of Saurashtra Kutch Stock Exchange Ltd.(supra) and Model Mills Nagpur Ltd. (supra), wherein it has been held that if a point is covered by the decision of the Hon'ble Supreme Court or that of the Hon'ble Jurisdictional High Court rendered prior to or even s....
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....les the Tribunal at any time within four years from the date of the order to amend any order passed under sub-section (1) with a view to rectify any mistake apparent from the record; and (ii) It requires the Tribunal to make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer. 23. It was submitted that so far as the first part is concerned, it is in the discretion of the Tribunal to rectify the mistake which is clear from the use of the expression `may' by the Legislature. The second part, however, enjoins the Tribunal to exercise the power if such mistake is brought to the notice of the Tribunal either by the assessee or by the Assessing Officer. The use of the word `shall' directs the Tribunal to exercise such power." Also a similar view was earlier taken by the Hon'ble Apex Court in the case of Sree Ayyanar Spinning & Weaving Mills Ltd Vs. CIT (2008) 301 ITR 434 (SC). The Hon'ble Apex Court in its aforesaid order had held as under: "Analyzing the above provisions, we are of the view that Section 254(2) is in two parts. Under the first part, the Appellate Tribunal may, at any time, within four....
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....e Hon'ble Supreme Court in the case of Checkmate Services (P) Ltd. (supra), therefore, the order passed by the Tribunal wherein the said issue had been deliberated at length could not be held to be suffering from any mistake apparent from record u/s. 254(2) of the Act. We are unable to persuade ourselves to subscribe to the aforesaid contention of the Ld. AR. As the aforesaid respective amendments to Section 36(1)(va) and Section 43B of the Act were available on the statute and before the Hon'ble Supreme Court, therefore, we find no substance in the aforesaid contention of the Ld. AR. 20. We shall now deal with the contentions of Shri Praveen Jain, Ld. AR for respondent at Sr. No. 28. It was stated by him that the addition of the delayed deposit of ESI/EPF of Rs. 2,16,046/- that was made by the A.O had resulted to double addition as the said amount was separately offered by the assessee as an addition in its return of income. It was averred by Mr. Jain that the said addition had, thereafter, been vacated by the Tribunal while disposing off the assessee's appeal in ITA No. 64/RPR/2021 dated 18.07.2022. On the basis of the aforesaid facts, it was submitted by ....
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....ntre & 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, the challenge of the Ld. AR to the validity of the jurisdiction assumed by A.O u/s. 143(1) of the Act for making addition of the delayed deposit of employees share of contributions towards ESI & EPF by the assessee-employer, cannot be dealt with by us while disposing off the present miscellaneous applications of the department. As the aforesaid contention of the Ld. AR cannot be considered in the course of the present applications, therefore, we reject the same. 23. Shri Mahendra Agrawal, Ld. AR for the respondent at Sr. No. 30 had, inter alia, stated that its claim that the addition of the delayed deposit of employee's share of contributions towards EPF and ESI could not have been made u/s. 143(1) of the Act had not been adjudicated by the Tribunal while disposing off the assessee's appeal in ITA No. 102/RPR/2021. In this regard, we may herein observe that in case the assessee was of the view that the order passed by the Tribunal suffered from any mistake, then, the recourse available with ....
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....t 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 Bench, in the case of ITO, Ward-1(1), Balasore Vs. Tapan Jana & Ors, ITA No. 27 & 28/CTK/2022 dated 16.12.2022. 25. We have given a thoughtful consideration to the aforesaid contentions of the Ld. AR. Apropos the judgment of the Hon'ble Apex Court in the case of Simplex Concrete Piles (India) Ltd. (supra) as had been relied upon by the Ld. AR, we are of the considered view that as the same was rendered in context of the jurisdiction of an A.O to reopen a concluded assessment u/s. 147 of the Act on the basis of reversal of the legal position by a subsequent judgment of the Hon'ble Apex Court, therefore, the same would not come to the respite of the assessee as regards the issue before us. Apropos the contentions advanced by the Ld. AR, wherein he has sought relief in case the applications filed by the department are allowed, viz. (i) that no addition of the delayed deposit of the employees share of contributions towards EPF & ESI could have summarily been made....
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....al, 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 & Sons Vs. CIT (2021) 129 taxmann.com. 29. We have perused the aforesaid order of the Hon'ble High Court of Kerala in the case of P.T Manuel & Sons (supra) and find that the same is distinguishable on facts. The issue before the Hon'ble High Court was as to whether the Tribunal could rectify its order passed in the case of the assessee on the basis of a subsequent view taken by them while disposing off the appeal of its sister concern. As the reliance placed by the Ld. AR on the aforesaid order is totally misconceived and not in context of the issue before us, therefore, the same by no means would assist his case. As regards the reliance placed by the Ld. AR on the judgment of the Hon'ble High Court of Calcutta in the case of Jiyajeerao Cotton Mills Ltd. Vs. ITO, (1981) 130 ITR 710 (Cal.), we find that the Hon'ble High Court had observed, that as the law laid down by the Hon'ble Supreme Court cannot be said to ....
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....houghtful 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 been summarily made u/s. 143(1) of the Act. We may herein reiterate that as the aforesaid issue does not fall within the realm of our jurisdiction while disposing off the present miscellaneous application filed by the department, therefore, we refrain from considering the same. Apropos the claim of the assessee that now when the Tribunal while disposing off the appeal had relied on its earlier order in the case of Ind Synergy Ltd. (supra), and had categorically observed that the amendments to Section 43B and Section 36(1)(va) of the Act were applicable prospectively w.e.f. 01.04.2021, therefore, the same could not have been rectified on the basis of a subsequent judgment of the Hon'ble Supreme Court, we are unable to accept the same. We may herein observe that the aforesaid issue had already been dealt with and rejected by us while dealing with similar contentions as were advanc....
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....bserved 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 time, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood. Referring to its historical decision in the case of I.C Golaknath Vs. State of Punjab & Ors, 1967 SCR (2) 762, it was further observed by the Hon'ble Supreme Court that though the Court in the said judgment had accepted the doctrine of "prospective overruling", however, the same was an exception to the general rule of the doctrine of precedent. For the sake of clarity, the relevant observations of the Hon'ble Apex Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. (supra) are culled out as under: "40. The core issue, therefore, is whether non-consideration of a decision of Jurisdictional Court (in this case a decision of the High Court of Gujarat) or of the Supreme Court can be said to be a "mi....
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....l 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 levy of additional tax on excess dividend was declared by the High Court of Bombay as illegal. The assessee company had by relying on the said decision of the Hon'ble Jurisdictional High Court filed an application with the Income Tax Officer for refund of the additional tax that was deposited by it. The Income-tax Officer declined to accede to the request of the assessee on the ground that the assessment was completed long before the judgment was pronounced by the High Court. The revision application filed by the assessee before the Commissioner of Income Tax under section 33A was also rejected. Against the order passed by the Commissioner of Income Tax the assessee company filed a writ petition with the High Court. The Hon'ble High Court allowed the assessee's petition and directed the Commissioner of ....
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....ater 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 of the Income Tax Act, 1961, be initiated on the basis of a judgment delivered by the jurisdictional or a superior court after the passing of the said order?" The Hon'ble High Court on the basis of its exhaustive deliberations on the issue under consideration, had observed that the proceedings for rectification of an order passed under the provisions of Income Tax Act can be initiated on the basis of a judgment delivered by Jurisdictional High Court or a superior court after passing of the said orders. For the sake of clarity, the observations of the Hon'ble High Court are culled out as under: "13. Apparently, the argument of Mr. Bansal appears to be attractive. If the issue of error in the order is to be examined only with reference to the date on which it was passed, it may be ....
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....he 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 authority. The action can benefit the assessee as well as the Revenue. In this situation, there appears to be no ground for placing an unduly restricted interpretation on the provision. 18. Mr. Bansal contended that a judgment of a court operates only prospectively and not retrospectively. Thus, a decided cause cannot be re-decided. Is it so? 19. A court decides a dispute between the parties. The cause can involve decision on facts. It can also involve a decision on a point of law. Both may have bearing on the ultimate result of the case. When a court interprets a provision, it decides as to what is the meaning and effect of the words used by the legislature. It is a declaration regarding the statute. In other words, the judgment declares as t....
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....ps 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 any assessment passed by them to rectify any mistake 'apparent from the record' and in the Code of Civil Procedure the words are an error apparent on the face of the record and the two provisions do not mean the same thing". As such, the contention raised by the learned counsel cannot be accepted. 25. Mr. Bansal also pointed out that in the case of Jiyajeerao Cotton Mills Ltd. v. Income Tax Officer (1981) 130 ITR 710 a Division Bench of the Calcutta High Court had categorically taken the view that the judgment of the Supreme Court does not have retrospective effect. This decision was affirmed by their Lordships of the Supreme Court as SLP (c) Nos. 87918793 of 1980 were dismissed. ....
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.... 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 accepted under Section 143(1), the provision of rectification cannot be invoked. Learned counsel placed reliance on the decision of their Lordships of the Supreme Court in Commissioner Of Income-Tax v. Hero Cycles (P) Ltd. (1997) 228 ITR 463 in support of his contention. 31. On a perusal of Section 154, we find that the provision does not provide for rectification only when a mistake in the order is detected. The mistake has to be on the record of the case. The record would include everything on the case file. The return, the evidence and the order are a part of the record. The mistake can be detected from anything on the file. Thus, even in case of an....
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....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 to or even subsequent to the order constitutes a mistake apparent from record as has been held by the Hon'ble Supreme Court in Saurashtra Kutch Stock Exchange Ltd. (supra). Similar view was expressed earlier by the Hon'ble Gujarat High Court in CIT Vs. Subodhchandra S Patel (2004) 265 ITR 445. In view of these judgments, it is vivid that even if the Hon'ble Supreme Court or the Hon'ble Jurisdictional High Court render a judgment after the passing of the order, the same has to be strictly followed. Interpretation of a statutory provision by the Hon'ble Supreme Court is always understood from the inception o....