TMI Blog2006 (2) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case are that the assessee claimed sales-tax deduction as separate deduction from the profit computed from the application of net profit rate. The ld. CIT(A) allowed the claim which was disputed by the department in its appeals and, while dealing with the issue relating to admissibility of claim of sales-tax from the profit estimated by application of net profit rate, the Tribunal in para 14 at pages 14 to 17 decided the issue by holding as under:- "As regards the nature and character of sales-tax levied by the Government of Rajasthan on the civil contractor, we find from the written note furnished by the ld. counsel for the assesses that the sales-tax is deducted by the Government authorities while making the payment to contractor, on the total contract value at the rates prescribed by the State Government from time to time. Thereafter the contractor-assessee files return in the prescribed form giving all the required details for the relevant period and the assessment is completed by levying sales-tax on the value of goods procured from mines by the contractor by employing own labour and also on the value of goods purchased from outside the territory of Rajasthan. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the Assessing Officer and the income was determined by applying a net profit rate, this issue was not examined by the Assessing Officer independently and resultantly all the expenses actually deductible as per law were treated as allowed. Obvious as it is, what ultimately allowed was the actual liability of the sales-tax and not the entire amount wrongly claimed by the assessee-firm as expenditure. It is observed that the ld. CIT(A) has directed the Assessing Officer to allow separate deduction on account of sales-tax in assessee's case for assessment year 1995-96 stating that the ITAT, Jaipur Bench had been allowing such deductions. We, however, find that the ld. CIT(A) has not specifically referred to any such decision of ITAT, Jaipur Bench, in his impugned order nor the same has been brought to our notice by the ld. counsel for the assessee during the proceedings before us. Be that as it may, this issue is purely a factual issue of the present case including the nature and character of the sales-tax and after taking into consideration the entire fact-situation of the case as well as keeping in view the reasons given by us hereinbefore we are of the considered opinion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and loss account as expenditure by the assessee. For this action, he derived support from the decisions reported in 158 ITR 78 (Cal.) 122 ITR 1034 (All.) and 178 ITR 175 (Ker.). The matter was carried before the ld. CIT(A) who upheld the action of the Assessing Officer and confirmed the addition made by him on this count. 23. We have heard both the sides and perused the relevant records. While considering the issue of allowability of sales-tax separately from the income estimated by applying the net profit rate. We have already discussed in the preceding paras of this order the relevant main features of the scheme framed by the State Government levying sales-tax on the civil contractors. The same being relevant, are reproduced hereunder: (a) Sales-tax is levied on the value of some type of purchases and as such the same forming part of purchase value is the expenditure of the assessee-contractor only to the extent of actual liability. (b) Although the said sales-tax is collected/deducted from the contract value at the prescribed rate, the surplus of such collection/deduction after adjusting the actual liability is refunded to the contractor in the subsequent period after com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer to restrict the income to the extent of income returned (sic) "Before we part with this order, we may specify for the sake of clarity that if the assessed income for any of the years involved in these appeals falls below the returned income after giving effects to this order, the Assessing Officer is directed to restrict the same to the income returned by the assessee for the year." 7. The direction issued by the Hon'ble Tribunal in para 28 is a mistake apparent from record insofar as it relates to the assessment year 1995-96 in ITA No. 177/Jodh./98 as the sales-tax amount paid was not allowed as deduction to the appellant and the relief allowed by the ld. CIT(A) was reversed by the Hon'ble Tribunal and in the light of the above facts the direction issued in para 28 so far as it relates to assessment year 1995-96 amounts to the confirmation of the addition which stand deleted by the Hon'ble Tribunal by para 24 at pages 26 and 27 of the order. The combined order reversing the decision of the ld. CIT(A) in allowing sales-tax separately and inclusion of the same even after deletion amounts to double taxation. Thus, there is an apparent mistake and contradiction in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed by the CIT(A)was reversed by the Tribunal when it issued direction that the relief allowed should not reduce the returned income. 11. The ld. AR relied upon the judgment of Rampur Distillery Chemicals Co. Ltd. In this connection it is pertinent to quote relevant portion from pages 567 and 568 of the judgment which reads as under:- "Accordingly, we hold that the High Court committed a clear error in holding that the amount in question is includible in the assessment year 1957-58. We have no hesitation to hold that the companies must be deemed to have paid, credited or distributed in the shareholders and divided income of the assessee fell to be taxed in the assessment year 1952-53 and not in the assessment year 1957-58. 12. The ld. AR also relied upon the case of Bharat General Reinsurance Co. Ltd. It is pertinent to reproduce the relevant portion from pages 307 to 308 of the judgment:- "Merely because the assessee wrongly included the income in its return for a particular year, it cannot confer jurisdiction on the department to tax income in that year even though legally such income did not pertain to that year. We are therefore of the view that the income from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. We find that this Bench of ITAT had constantly been holding that if the assessed income falls below the returned income after giving effect to the order of the ITAT, the Assessing Officer should restrict the same to the income returned by the assessee. This decision was rendered in the case of ITO v. New Mitharwal Construction Co. [2001] 72 TTJ 533 (Jodh.). We find that this Bench of the Tribunal has decided this issue on merit and there is no mistake apparent from record as contemplated in sub-section (2) of section 254 of the Act. 20. In the result, the miscellaneous application is dismissed. Per S.R. Chauhan, Judicial Member - I have gone through the order of ld. A.M. but I am not in a position to agree with the view taken by him. 2. The facts already stand mentioned in the above order. In para 18 of the above order, the ld. A.M. has made the relevant discussion by referring to Anamika Builders (P.) Ltd.'s case and Ideal Engineer's case and concluded in para 19 of the above order by referring to a decision of this Bench rendered in New Mitharwal Construction Co.'s case that "this Bench of the Tribunal has decided this issue on merits and there is no mistake apparent fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e High Court accordingly dismissed the revenue's appeal. In the said appeal of revenue, the issue was contained in question No. 2, which is as under:- "2. Whether on the facts and circumstances of the case the I.T.A.T. was justified in giving the relief on account of the sales-tax refund which was credited by the assessee-firm itself in his Profit and Loss Account and declared it as the part of its income under section 41 of the Act." 3. As seen above, it is clear that this Tribunal has decided the issue regarding inclusion of S.T. refund in total income of assessee, in favour of assessee-appellant and against the revenue after elaborate discussion on merits, and the Hon'ble High Court has upheld the same with the result that the above decision of Tribunal stands merged with the judgment of the Hon'ble High Court whereby the finally decisive position that emerges legally settled is that the amount of S.T. refunded to assessee [which had been collected by the Government authorities in excess] cannot be included in the total income of assessee-appellant. In this case, a direction of the Tribunal, if thereby any, to the contrary, or for that matter, to the effect that a part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and on the basis of the particulars/ details evidently available or. record the Assessing Officer finds the assessee to be lawfully entitled to some relief the Assessing Officer is expected and rather has a duty cast on him, under law, to allow the said relief to the assessee and to charge tax on the correct taxable income of assessee by correctly computing the assessee's taxable income on the basis of the details/particulars available on record, despite a wrong computation of income by assessee, through mistake/ignorance or otherwise. This position, as it applies to an upward/enhancing, by Assessing Officer, of the income of assessee as declared in the return, will equally apply in the downward/reducing, by Assessing Officer, of the income of assessee as declared in the return. To take an example, say if the assessee has actually earned an income of Rs. 9 lakhs but the assessee has declared an income of Rs. 10 lakhs in the return, as by mistake, the assessee has included a particular income, say interest income, of Rs. 1 lakh twice, which has brought the total income of assessee, so computed, to the figure of Rs. 10 lakhs, which the assessee has shown accordingly in the return. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 143(3) on 27-3-1992, the Assessing Officer determined the taxable income at Rs. 1.76 crores, resulting in a further refund of Rs. 44.82 lakhs. The revenue was of the view that the income assessed under section 143(3) could not be assessed at a figure lower than the returned income, nor the loss could be assessed at a figure higher than the returned loss, nor a further refund could be given. The CIT initiated revisional proceedings under section 263 and rejecting the objections of assessee, passed his revisional order on 17-3-1993 directing the Assessing Officer to modify the assessment order in such a way that the income determined would not be less than the returned income and no refund shall arise thereby. In assessee's appeal against the above, ITAT, Hyderabad allowed the appeal and set aside the CIT's order dated 17-3-1993 passed under section 263. Against the above order of the Tribunal, department's RA under sections 256(1) and 256(2) were rejected by the Tribunal and the Hon'ble High Court respectively. In Gujarat Gas Co. v. Jt. CIT [2000] 245 ITR 84 (Guj.), the fact-situation was that the CBDT had issued Instruction/Circular No. 549 directing that in scrutiny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " but the said direction has been given in view of the concession given/tolerated by assessee as the Ld. A/R of assessee expressed the assessee having no objection to the assessed income for the year under consideration, being restricted to the income returned by assessee, as has been specifically mentioned in the Tribunal's above decision in para 3 on page 534 of the reporter; and the said direction has not been given on the basis of any statutory provision, or some other legally settled position, judicially legislated though may have been. Jurisprudentially analyzing the above position, I have no hesitation in holding that a decision/judgment rendered on the basis of a concession extended by a party to the litigation by expressing no objection to a particular/specific direction being given by a judicial body, or for that matter, this Tribunal, will be a decision binding on the parties to that case alone, [and in the matter involved therein] and the same will not partake of the nature of a judicial precedent or a decision having a judicial binding nature in all similar circumstances. The binding nature of such a decision being circumscribed and restricted in the aforesaid manner, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal's appellate order, constituting a mistake apparent from record and rectifiable under section 254(2) of the Income-tax Act, 1961. An otherwise step, I am afraid, may not lead to a legally embarrassing position. I may, for benefit and convenience sake, also observe here that it is a settled position of law that even a subsequent judgment of the Hon'ble Jurisdictional High Court is a valid foundation for rectifying an apparent mistake. 7. In view of my above discussion I am of the humble opinion that the MA filed by assessee-appellant, deserves to be accepted for making rectification to the effect that in existing para 28 of, existing page 28 of the order after the end of the last line, containing the words "to the income returned by the assessee for the year", the full stop be replaced by coma and thereafter the following words should be inserted:- "subject to the condition that this direction shall not apply in respect of the S.T. refund amount of Rs. 13,30,489". 8. The above insertion will result in appropriate rectification of the apparent mistake and will also obviate the contraction between the two paras [24 and 28] of the order, and will also cast the order with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of difference of opinion between the learned Members of Tribunal, this case has been referred to me under section 255(4) of Income-tax Act, 1961. 2. In the opinion of learned Judicial Member, the following question reflects the point of difference: "Whether, on the facts and in the circumstances of the case, there is a mistake, apparent from record, in the Tribunal's appellate order dated 28-5-2001 in giving direction to the effect that if the assessed income for assessment year 1995-96 [being one of the years involved in the appeals] falls below the returned income after giving effect to the Tribunal's appellate order, the Assessing Officer to restrict the same to the income returned by the assessee for the year, which tends to curtail the relief of deletion of addition of S.T. refund amount under section 41(1) of the Income-tax Act, which stands decisively/ conclusively accorded to the assessee-petitioner?" The learned Accountant Member was of the view that difference reflected in the following question: "Whether, the ITAT can rectify its own order on a point decided on merit regarding direction to the Assessing Officer to restrict the income to the extent of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT, Jodhpur Bench, Jodhpur's Order No. 177/JDPR/98 dated 28-5-2001, the total income in the case of M/s. Bhawan Va Path Nirman (Bohra) Co., Barmer is recomputed as under: --------------------------------------------------- (Rs.) Total income assessed under section 143(3)/250 dated 30-4-1998 27,52,091 (To be added as per order given by CIT(A) at this stage) (+) 3,44,879 ------------- 30,96,970 Relief allowed by ITAT, Jodhpur Bench, Jodhpur's Order No. 177/JDPR/98 288/JDPR/98 dated 28-5-2001 (1) In the addition of sales tax refund: (-) 13,30,489 --------------- Net taxable income: 17,66,481 --------------------------------------------------- But in the ITAT Order No. 177/JDPR/98 288/JDPR/98 dated 28-5-2001, it has been mentioned in the para 28 at page No. 28 that if the assessed income for any of the year i.e., 1995-96 concerned year involved in these appeals falls below the returned income after giving of appeal effect of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be rectified. (iii) That the decisions cited on behalf of the assessee were distinguishable and not applicable to the facts of the case. Assessed income cannot fall below the returned income after appeal effect. (iv) That the Appellate Tribunal had taken the view on merit, which was a possible view and, therefore, there was no mistake apparent from record. The learned Judicial Member did not agree with the view taken by the learned Accountant Member. He held that there was a mistake apparent from record, which could be rectified under section 254(2) of the Income-tax Act. His reasonings in brief are as follows: (i) That order of the Tribunal has been upheld by the Hon'ble High Court and "same stands merged with the judgment of the Hon'ble High Court" whereby finally decisive position that emerged legally settled was that the amount of sales-tax refunded to the assessee could not be included in the total income of the assessee-appellant. Therefore, any direction to the contrary to the above legal position could not stand. (ii) There is no provision in law that assessed income cannot fall below the returned income. The assessing authorities are obliged to tax income corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eved party, that is the assessee, is specifically invoking the Tribunal's rectificational jurisdictional under section 254(2) by filing M.A. for the purpose. In this regard one need be aware, and consciously aware, that the Tribunal can, by no stretch of logic, supersede or over-rule, directly or indirectly, expressly or impliedly, the judicial pronouncement of the Hon'ble Jurisdictional High Court, to which the Tribunal is unquestionably subordinate judicially. In the situation now, when the Tribunal's direction, given in para 28 of its order, has the impact of modifying, by curtailment partly though, the position consequential to the Hon'ble High Court's appellate judgment dated 18-4-2002 referred to above, there can hardly be any justifiable denial of the above direction, contained in para 28 of the Tribunal's appellate order, constituting a mistake apparent from record and rectifiable under section 254(2) of the Income-tax Act, 1961. An otherwise step, I am afraid, may not lead to a legally embarrassing position. I may, for benefit and convenience sake, also observe here that it is a settled position of law that even a subsequent judgment of the Hon'ble Jurisdictional High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision merely confirms the decision of the Tribunal. As a result of the confirmation or affirmance of the decision of the Tribunal by the appellate authority the original decision merges in the appellate decision and it is the appellate decision alone which subsists and is operative and capable of enforcement." It is evident from above that in the light of merger of order of Tribunal with order of Hon'ble High Court, the effective and enforceable order is that of Hon'ble High Court and, therefore, only High Court has power to consider and rectify the mistake, if any found in the order. It is appellate decision which is operative and which has to be enforced. The Tribunal, therefore, lost jurisdiction to modify its order on account of the fact that its order is no more the effective order. That even if above technical view of the matter is not taken, there is no scope to rectify the order passed by the Tribunal. It is settled position that under section 254(2), the Appellate Tribunal can go into questions which are hardly debatable. Hotly contested issues on which more than one opinion is possible, are outside the purview of section 254(2) of the Income-tax Act. In the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re actually taken into consideration. Such debate is not permissible under section 254(2) of the Income-tax Act. 14. The decisions cited on behalf of the assessee and relied upon by the learned Judicial Member are distinguishable. In all those cases, assessee was found to be entitled to certain relief under a statutory provision which was not claimed in the return. Such relief had to be allowed to the assessee notwithstanding that income after relief was found to be below the returned income. Those cases stand on a different footing. The decision of Hon'ble Gujarat High Court in the case of Gujarat Gas Co. Ltd. is also distinguishable as in that case their Lordship held as ultra virus the directions of CBDT not to take assessed income at a figure lower than the one returned by the assessee, in scrutiny cases. Their Lordship held that CBDT has no such power and that such directions interfered with independent exercise of power by the Assessing Officer. It cannot be said in the present case that Tribunal while issuing directions contained in para 28 did not exercise its powers independently and that observations made in above para were based on directions of some superior authority ..... X X X X Extracts X X X X X X X X Extracts X X X X
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