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2025 (5) TMI 13 - AT - Income TaxRectification of mistake u/s 254 - Unexplained cash credit u/s 68 - AO had rejected the appellant s claim of receipt of cash - Revenue by way of the present Miscellaneous Application contended that the Tribunal s order 2022 (8) TMI 1336 - ITAT PUNE is not acceptable as certain factual aspects of the case remained to be brought to the notice of the Tribunal and hence not considered which according to the Revenue is mistake apparent on record - HELD THAT - In exercise of powers u/s 254(2) Tribunal may amend any order passed by it only to rectify any mistake apparent from the record. The Tribunal cannot revisit its earlier order and go into details on merit which is beyond the scope and ambit of the power conferred u/s 254(2) of the Act. On perusal of the contents of the Miscellaneous Application filed by the Revenue as well as the findings of the Tribunal 2022 (8) TMI 1336 - ITAT PUNE we find it difficult to agree with the contentions of the Revenue. Tribunal in its order had adjudicated the legal issue raised by way of an additional ground challenging the assessment itself after considering the specific facts brought to its notice at the time of hearing as well as the material available on records of the Tribunal. The Tribunal allowed the appeal(s) of the assessee holding the assessment as non-est in the eyes of law by giving reasoning in detail after considering all the facts and circumstances of the case and the settled legal position in respect thereto. We agree with the contention of the AR that what the Revenue is actually seeking by way of this Miscellaneous Application is the review of the Tribunal s order in the garb of rectification which is not permissible under the law. In its recent judgment in Reliance Telecom Ltd. 2021 (12) TMI 211 - SUPREME COURT their Lordships while considering application u/s 254(2) Tribunal is not required to revisit its original order and go in details on merits and completely recall its order as powers u/s 254(2) are only to rectify/correct any mistake apparent from record. We hold that there is no mistake apparent on record in the Tribunal s order calling for rectification of the same.
Issues Presented and Considered
The core legal questions considered by the Tribunal in this matter are:
Issue-wise Detailed Analysis 1. Validity of the Assessment Order under Limited Scrutiny Framework Legal Framework and Precedents: The CBDT Circular No. 20 of 2015 and Circular No. 5/2016 prescribe procedures for limited scrutiny assessments, requiring the Assessing Officer (AO) to convert the limited scrutiny into a complete scrutiny before making additions beyond the scope of the limited scrutiny notice. The Supreme Court and various High Courts have held that assessments exceeding the scope of limited scrutiny without following prescribed procedures are invalid (e.g., CIT vs. Padmavati, Madras High Court). Court's Interpretation and Reasoning: The Tribunal accepted the assessee's additional ground that the AO failed to convert the limited scrutiny into a complete scrutiny before making additions under section 68 for unexplained cash credits. It relied on the Special Bench decision in All Cargo Global Logistics Ltd and the Supreme Court ruling in NTPC Ltd vs. CIT, which allow courts to entertain pure questions of law where all facts are on record. The Tribunal noted that the limited scrutiny notice issued to the assessee mentioned "interest income mismatch" as the sole issue, but the AO added unexplained cash credit on a different ground without converting the scrutiny to complete. The Tribunal found no material to show that the AO complied with the procedural requirements for conversion. Therefore, the assessment order was held to be non-est in law and quashed. Key Evidence and Findings: The assessee's paper book containing the limited scrutiny notice, the AO's assessment order, and the absence of any record showing conversion from limited to complete scrutiny were pivotal. The Tribunal also observed that the reason for selection in the Computer Assisted Scrutiny Selection (CASS) system was related to cash deposits, supporting the assessee's contention that the AO exceeded the limited scrutiny scope. Application of Law to Facts: The Tribunal applied the legal principle that an assessment under limited scrutiny cannot be expanded without following due process, and since the AO failed to do so, the assessment was invalid. Treatment of Competing Arguments: The Revenue argued that the issue of "interest income mismatch" was a system-generated error and that the AO's addition was within the scope of limited scrutiny as per CASS reasons. The Tribunal found this contention misleading and held that the AO's order was beyond the limited scrutiny scope without conversion. Conclusion: The Tribunal allowed the appeal, quashing the assessment order as invalid for non-compliance with procedural requirements governing limited scrutiny assessments. 2. Scope and Permissibility of Miscellaneous Application under Section 254(2) Legal Framework and Precedents: Section 254(2) of the Act empowers the Tribunal to amend any order passed by it to rectify any mistake apparent from the record. However, judicial precedents including Ras Bihari Bansal vs. CIT (Delhi High Court) and the Supreme Court in CIT (IT-4) Mumbai v. Reliance Telecom Ltd. have clarified that review or re-argument of issues under the guise of rectification is impermissible. Mistakes apparent from record are limited to clear, obvious errors and do not include errors of judgment or oversight of facts. Court's Interpretation and Reasoning: The Tribunal examined the Revenue's Miscellaneous Application which sought recall of the order on grounds that certain factual aspects were not considered, such as the assessee's failure to contest the limited scrutiny issue earlier and the system-generated nature of the scrutiny notice. The Tribunal held that these contentions do not amount to a mistake apparent on record but rather an attempt to re-argue the merits and facts of the case, which is beyond the scope of section 254(2). The Tribunal emphasized that it had considered all relevant facts and legal principles before passing the order and that no apparent error was discernible. Key Evidence and Findings: The Tribunal relied on the contents of the Miscellaneous Application, the original order dated 24.08.2022, and relevant judicial precedents to determine the scope of rectification powers. Application of Law to Facts: The Tribunal applied the settled legal position that rectification cannot be used as a tool for review and that the Revenue's contentions amounted to a request for review rather than correction of an apparent error. Treatment of Competing Arguments: The Revenue argued that the Tribunal's order was based on misleading facts and incomplete consideration. The assessee's representative contended that the Miscellaneous Application was a disguised review and not maintainable. The Tribunal sided with the assessee's submission. Conclusion: The Tribunal dismissed the Miscellaneous Application, holding that no mistake apparent on record existed and that the Revenue's application was an impermissible attempt at review. Significant Holdings "In exercise of powers under section 254(2) of the Act, the Tribunal may amend any order passed by it only to rectify any mistake apparent from the record. The Tribunal cannot revisit its earlier order and go into details on merit, which is beyond the scope and ambit of the power conferred under section 254(2) of the Act." "It is a settled law that review in the garb of rectification is not permissible under section 254(2) of the Act. The Hon'ble Delhi High Court in the case of Ras Bihari Bansal vs. CIT held that an oversight of a fact cannot constitute an apparent mistake rectifiable under this section. Similarly, failure of the tribunal to consider an argument advanced by either party for arriving at a conclusion, is not an error apparent on record, although it may be an error of judgment." "The Tribunal allowed the appeal(s) of the assessee holding the assessment as non-est in the eyes of law by giving reasoning in detail after considering all the facts and circumstances of the case and the settled legal position in respect thereto." "The fact presented before the Hon'ble B Bench of the tribunal has been found misleading as it is amply clear that the addition was made on the issue mentioned in the CASS reason and there is no deviation from the CBDT instruction by the AO in framing the assessment." Final determinations:
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