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TMI Blog2013 (12) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... in law in recalling its order dated 30.06.1998 in ITA No.372 to 374 under provisions of Section 254(2) of the Income Tax Act, 1961 ?" 3- Briefly stated the facts of the present case are that the respondent-assessee is a limited company. Its assessment for the Assessment Year 1992-93 was completed under section 143(3) of the Act, by the assessing officer vide assessment order dated 28.3.1995 on a total income of Rs.24,65,76,400/- against the disclosed income of Rs.30,49,770/-. 4- Aggrieved the assessee filed an appeal before the C.I.T. (Appeal ). By order dated 15.1.1996, the C.I.T. (Appeal ) confirmed the entire addition, but on the question of disallowance of depreciation of Rs.1,92,583/- he remanded the matter to the assessing officer to consider the claim of depreciation with reference to the disposal of the assets available during the year and also its written down value of the preceding year. As per directions of CIT (Appeal) the assessing officer passed the order dated 7.11.1997 under section 143(3)/251 of the Act, giving relief of Rs.1,92,583/- and thus, the total assessed income was computed at Rs. 24,63,83,820/-. 5- Aggrieved with the order of the CIT (Appeal) dated 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 1990-91 when the assessee collected 53.68 crores through their Agent, M/s Sahara India. That year the percentage of expenditure stood at 2.79. However, with the increase in the deposits of 70.13 crores this percentage registered a steep increase coming to 6.18. It is common knowledge that after a particular point, progress in business requires concerted efforts and more often than not incurring of heavy expenditure. Even if the figures of collection for the assessment years 1990-91 and 1991-92 are considered comparatively, the increase roughly is 31%. With the corresponding increase In the expenditure, as against 2.79 of the assessment year 1990-91, this figure should be more by 1%. However, there is no mathematical principle on which such increases could be based. For example, during the assessment year 1989-90 when the collections were only 24.96 crores, the expenditure stood at 2.92% which belies the aforesaid average rule. Considering all the facts and circumstances of the case, we would restrict the assessee's claim to 4.5% (four and a half percent ) as against 3% allowed by the authorities below. (66)-Further on facts, which are slightly different for thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e found the assessee's reply dated 17.1.95, in response to his query dated 16.12.94 referred to supra as evasive, which finding was affirmed by the Ld. CIT (A). (67)-Dealing with the amount of Rs.11,44,08,593/- claimed to have been reimbursed by the company to the Agent firm, the A.O. With reference to the corresponding figures for the assessment year 1988-89, 89-90 and 90-91 observed that the percentage of the expenses the total deposits collected stood only at three. By adding the two figures of Rs.2,52,65,200/- being expenses claimed as service charges @ 2% in terms of the MOU dated 1.4.91, and the amount of Rs.11,44,08,593/-, the aggregate coming to Rs.13,96,73,793/- and taking the figure of total collection at Rs.1,26,32,59,971/- the assessing officer restricted the assessee's claim to 3% of the total collections which worked out to Rs.3,78,97,797/-. This amount deducted from the total claim of the assessee at Rs.13,96,73,793/-, an amount of Rs.10,17,75,996/- was disallowed, affirmed during the first appeal, also in dispute before us. (68)-Assailing, the Ld. Counsel for the assessee submitted that in so far as the amount of Rs. 2.52 crores ( in short ) was concerned, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we may state even at the cost of repetition that the amount of Rs.10,98,48,683/- has to be taken as the receipt of the assessee. However, as in respect of the assessment year 1991-92, the issue for the determination as to whether any expenses incurred by the Agent firm in collecting this amount were not claimed by them from the appellant company on the basis of the two of them proceeding on a wrong assumption that the amount in question although collected on behalf of the appellant could be retained by the firm, would go back to the Assessing Officer with similar directions as contained in paragraph 32 above excepting that this year, since in terms of para 6(1) of the MOU dated 1st of April,1991 at pages 20-24 there is a specific provision about the payment of 2% service charges by the appellant company to the agent firm, the Assessing Officer will not permit the assessee or address himself on this aspect of the matter, the service charges @ 2% amounting to Rs. 2.52 crores already allowed by us. The issue, therefore, stands remanded for this limited purpose. (72)-Coming to the other disallowance of Rs.10,17,75,996/-, (10.17 crores for brief), representing the partly rejected claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.2,52,65,200/-, allowed by us in para 70 above." 8- In Misc. Application under section 254(2) of the Act, the assessee applicant objected to the findings of the ITAT on the following grounds : "(a) That the Tribunal had given a clear finding in para 34 of its order that a substantial entries in the turnover can be achieved only by incurring an additional expenditure, which is dis-proportionate to the increase in deposits mobilisation but while deciding the appeal for A.Y. 1992-93, the Tribunal has lost sight of its earlier finding recorded in para 34 and the omission to apply its own finding given in the earlier part of the order while dealing with the appeal for A.Y., 1991-92 to the facts prevailing in A.Y. 1992-93 disclosed a mistake apparent from records which needs to be rectified. (b) That in support of its contention that the expenditure of Rs.11,44,08,593/- should be allowed as deduction, the assessee applicant had filed a supplementary paper book containing a copy of the assessment order of the firm for the A.Y. 1992-93 at pages 32-40 and also the statement of expenditure apportioned to the applicant which statement disclosed that the total expenditure incurred by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that there is no mistake apparent from the record. Shri B.Dogra, the Ld. Sr. D.R. also submitted that section 254(2) does not clothe the Tribunal with the power to re-write or review its judgment. According to him, the assesseee wants that the Tribunal should re-write para 34 and 37 of its order which course is not available to the Tribunal while exercising power U/s 254(2) of the I.T. Act. In support of this submission, the Ld. Sr. D.R. Heavily relied on the decision reported in 210 ITR 397. The Ld. Sr. D.R. Also pointed out that the entire facts and the evidence was before the Tribunal which have been considered and there was no mistake in fixing the rate of 4.5% for working out the expenses out of the total deposit. The Ld. D.R. Also referred to the decisions reported in ITR 229 P.651. 14. We have carefully considered the facts and circumstances relating to this matter, the material to which our attention was invited and the rival submissions. The documents referred to by the Ld. Counsel for the assessee, viz. The copy of assessment order of the firm dated 28.3.1995 for the A.Y.1992-93 and copy of assessment order of the firm dated 12.11.1997 for the assessment year 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Tribunal while deciding the appeal for 1992-93, a mistake has been committed in not looking into the material already on record and this mistake, in our view, needs to be rectified. Thus we hold that there is a mistake in the order which is apparent from record and hence we set aside the order on this limited point, i.e., the adjudication and finding of the Tribunal on ground Nos. 4 and 5 in assessee's appeal for the A.Y.1992-93 and direct that the appeal shall be re-heard on this point and issue relating to allowing of alleged expenses reimbursed to the agent amounting to Rs.11,44,08,593/- shall be adjudicated afresh, after hearing both the parties and after considering the relevant material on record. 27. Under these circumstances, the prayer of the assessee made in clause (b) stands allowed. The prayers made in paras (a) and (c)are rejected. 28. In the result, Misc. Application is partly allowed." 10- A perusal of the findings of fact recorded by the ITAT paragraph-34 and paragraphs-66 to 74 of the original order dated 30.6.1998 as extracted above clearly shows that the ITAT has considered the entire facts and circumstances and evidences on record including the paper bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. Particulars Amount (Rs.) 1. Establishment 3,45,57,775/- 2. Travelling and conveyance 74,32,621/- 3. Stationery & Printing 78,29,267/- 4. Advertisement & Publicity 34,72,820/- 5. Business development 6,11,16,112/- 11,44,08,593/- (vii) The ITAT found itself unable to disagree with the Ld. Senioir Standing counsel that the above figures only bifurcated the huge amount of Rs.11.44 crores ( in short ) in five major heads and it was far from saying that it stood to provide the details of actual expenses much less they being supported by valid documents, as stipulated by the parties with reference to the MOU referred to supra. To say so, Shri Agarwal submitted, would be travesty of facts. (viii) On a consideration of the facts and circumstances, the ITAT agreed that the details of the so-called actual expenses were not provided by the assessee at any stage and therefore an estimate is the only answer. Without providing bulk to the order, by referring to paragraph 34 of this order, the ITAT held that instead of 3% of the total deposits collected by the assessee firm as has been held by the assessing officer and affirmed by the Commissioner (Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question is allowable only when it is supported by valid documents and the amount has been reimbursed by the assessee company to the firm against the bills raised by the firm. The ITAT, while passing the impugned order; also ignored the findings recorded in paragraphs-72 and 73 of the order originally passed, that there is no dispute that at no stage any details muchless supported by documents were furnished by the firm to the assessee company or by the assessee company to the revenue authorities except giving bifurcation in five heads. The ITAT allowed the application of the assessee company under Section 254(2) of the Act, merely on the ground that certain charts and statements of expenditure were filed in the supplementary paper book and that the availability of these documents before the Tribunal at the time of hearing of the appeal has not been disputed by learned Senior D.R. Such a conclusion reached by the ITAT was framed entirely as a new opinion on facts with regard to the admissibility of expenses claimed by the assessee company. 14- In view of the facts and circumstances, noted above, we are of the view that by the impugned order, the ITAT has re-appreciated the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not attributable to the assessee, extend the period of stay, or pass an order of stay for a further period or periods as it thinks fit ; so, however, that the aggregate of the period originally allowed and the period or periods so extended or allowed shall not, in any case, exceed three hundred and sixty-five days and the Appellate Tribunal shall dispose of the appeal within the period or periods of stay so extended or allowed : Provided also that if such appeal is not so disposed of within the period allowed under the first proviso, which shall not, in any case, exceed three hundred and sixty-five days, the order of stay shall stand vacated after the expiry of such period or periods, even if the delay in disposing of the appeal is not attributable to the assessee.]" 16- Section 254(2) of the Act can be invoked by the ITAT only to rectify any mistake apparent from the record so as to amend any order passed by it under sub section (1) of Section 254 of the Act. 17- From the discussions and the findings of fact recorded in the order of the ITAT dated 30.6.1998, it is evident that the ITAT has considered all the contentions raised by the respondent-assessee. It also considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thered that the Government had power to review its own order. If the Government had no power to review its own order, it is obvious that its delegate could not have reviewed its order." 21- In the case of Dr. Smt. Kuntesh Gupta vs. Management of Hindu Kanya Mahavidyalaya, Sitapur ( U.P.) and others AIR 1987 SC 2186, Hon'ble Supreme Court in para-11 held as under : "It is now well established that a quasi judicial authority cannot review its own order, unless the power of review is expressly conferred on it by the statute under which it derives its jurisdiction." 22- In the case of A.T. Sharma v. V.A.P. Sharma, AIR 1979 SC 1047, Hon'ble Supreme Court in para-5 held as under : "The power of review may be exercised on the discovery of new and important matter or evidence which, after the exercise of due diligence was not within the knowledge of the person seeking the review or could not be produced by him at the time when the order was made; it may be exercised where some mistake or error apparent on the face of the record is found; it may also be exercised on any analogous ground. But, it may not be exercised on the ground that the decision was erroneous on merits. That would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew or could not be produced by him at the time when the order was made, it may be exercised where some mistake or error apparent on the face of the record is found, it may also be exercised on any analogous ground. But, it may not be exercised on the ground that the decision was erroneous on merits. That would be the province of a court of appeal. A power of review is not to be confused with appellate power which may enable an appellate court to correct all manner of errors committed by the subordinate court." 26- In the case of Satyanarayan Laxminarayan Hegde and others v. Mallikarjun Bhavanappa Tirumale, AIR 1960 SC 137, Hon'ble Supreme Court observed that "An error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions can hardly be said to be an error apparent on the face of the record." 27- Similar view was taken by Hon'ble Supreme Court in the case of Parison Devi and others Vs. Sumitri Devi, (1997) 8 SCC 715. 28- In the case of Commissioner of Central Excise Belapur, Mumbai v. RDC Concrete (India ) P. Ltd. 2011 (270) ELT- 625 in para 16, 17 and 22, Hon'ble Supreme Court considered the scope of rectification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d reasons, we are of the view that the CESTAT exceeded its powers and it tried to re-appreciate the evidence and it reconsidered its legal view taken earlier in pursuance of a rectification application. In our opinion, the CESTAT could not have done so while exercising its powers under section 35C(2) of the Act, and, therefore, the impugned order passed in pursuance of the rectification application is bad in law and, therefore, the said order is hereby quashed and set aside. The appeal is allowed with no order as to costs." 29- In the case of Biswanath Prasad and sons v. Commissioner of Income Tax,[ 2005] 277 ITR 265 (Alld.) a Division Bench of this Court held that there is no power of review under the Income Tax Act 1961, but it only confers power of rectification. 30- In a recent judgment this Court in ITA No.147 of 2001, decided on 12.11.2013 in Kuntesh Gupta (Smt.) (Dr.) v. Management of Hindu Kanya Mahavidyalaya Sitapur, AIR 1987 SC 2186, Patel Narshi Thakershi and others v. Pradyumansinghji Arjunsinghji , AIR 1970 SC 1273 in which the scope of the power of review of the courts were discussed and the judgment of this Court in CIT v. Mool Chand Shyam Lal, 273 ITR 160 (All) an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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