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TMI Blog2012 (3) TMI 450X X X X Extracts X X X X X X X X Extracts X X X X ..... .02.2011 which was completely different from the original notice dated 29.01.2010. Elaborate arguments were made even in the written submissions filed before the Tribunal. The counsel invited attention of the Bench to paragraphs 12 and 13 of the written submissions. Not deciding the grounds of appeal raised before the Tribunal is undoubtedly a mistake apparent on record and needs to be rectified. On merits the learned counsel for the assessee relied on the following orders: (i) Puranlal Agrawal (HUF) v. CIT [131 TTJ 78 (Nag)]; and (ii) S.S.I. Limited v. DCIT [85 TTJ 1049 (Chennai)] 3. The learned counsel for the assessee contended with regard to the 2nd mistake that order u/s. 263 upheld on the ground which was not mentioned in show cause notice u/s. 263 of the Act. It is evident from even the cursory look at the order of the Tribunal that the revision u/ s. 263 has been upheld on the ground that the Assessing Officer has not applied his mind/ not caused enquiry/not examined the issue while passing the order u/ s. 143(3) of the Act. This is evident from paragraphs 34 to 41 of the order of the Tribunal. However, on perusal of the show cause notices dated 29.01.2010 and 21.02.2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 67). Further, reliance is placed upon the order of the Hyderabad Bench of the Tribunal in the case of M/s. VNS Makro Technologies P. Ltd. v. DCIT in ITA No. 870/Hyd/2011 dated 05.08.2011. The counsel submitted that reliance can be placed upon the judicial pronouncements even in 254(2) proceedings as the legal position existing on the date of order is always binding on the Tribunal irrespective of the fact whether such pronouncements were brought to the notice of the Tribunal or not. In support of this proposition, he placed reliance on the decision of the Hon'ble Kerala High Court in the case of Kerala Chemicals and Proteins Ltd. v. CIT (235 ITR 467) and order of the Mumbai Bench of the Tribunal in the case of Swan Mills Ltd. v. Addl. CIT (6 SOT 420). 5. The learned counsel for the assessee submitted that the 4th mistake is with regard to consistency that has not been followed. He submitted that detailed arguments were advanced before the Tribunal as regards the consistency to be followed in the income-tax proceedings. This has been rejected by the Tribunal in para 42 of the order by observing that the principles of res judicata are not applicable. The Tribunal has further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other apparent mistakes concerning the merits of the issue which are as under: i) In paragraph No. 2 of the Tribunal's order, it has been observed that the "assessee-company is carrying on business of dealing in shares and mutual fund units". He submitted that this is certainly not the admitted fact and hence, this could not come in the preface of the order. Thus, the Hon'ble Tribunal has proceeded on incorrect assumption of the fact right from inception. ii) In paragraph No. 44 of the order, the Tribunal has made some observations regarding the shares of Hindustan Cocoa Cola Beverage Ltd. and those of the subsidiary US Company. He submitted that the Tribunal has completely ignored the assessee's submission on this issue which are contained in paragraphs 18 to 20 of the written submissions. iii) Further, in the same paragraph, the Tribunal had reproduced the dates of purchase and sale of shares of Andhra Sugars Ltd.. Here again, the Tribunal had completely ignored the detailed submissions made by the assessee vide para 21 of the written submission. Apart from the above, the whole comparison of purchase and sale of shares during the year is misnomer. If the comparison ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d summarised the elaborate arguments of the authorized representative of the assessee as well as the departmental representative and passed a reasoned and speaking order running into 40 pages. Now, it is claimed by the learned counsel that there are "some mistakes", necessitating a petition u/s 254(2). It is contended that there is a basic contradiction between the claim made and the relief sought. It is stated that the present petition is a prayer for rectification of certain "mistakes apparent from the record". The relief sought vide para 12 of the petition on page 8, however seeks that the Tribunal may be pleased to recall its order and re-hear the appeal. It is readily apparent that powers of recall are available for consideration only in terms of Rule 24 and Rule 25 of the ITAT rules applicable only for ex-parte decisions. The scope of sec 254(2), on the other hand, are confined to 'mistakes', if any, that are readily apparent from the record. 10. The ld. DR placed reliance on the observations of the Hon'ble jurisdictional Bench in the case of Sri Mathuradasji Ayodhyabai Rathi Charitable Trust ( 47 SOT 501) (Hyd) excerpted hereunder - "10. The scope and ambit of application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t para 4 as under - "...We have dealt with all issues involved in these appeals elaborately in a composite manner by taking into account all available material and submissions of the parties carefully without missing any aspect of the matter and the case laws,...It is not necessary that the Tribunal has to state in its judgement specifically or in express words that it has taken into account the cumulative effect of the circumstances or has considered the totality of the facts..." 13. Their Lordships of the AP High Court in a recent decision dt 27-07-2011 in the case of Shri P.V.S. Raju (I.T.T.A.No. 54 of 2011) held as under at para 16 on pages 15-16 of their order - "...The decision of the Tribunal has not to be scrutinised sentence by sentence merely to find out whether all facts have been set out in detail by the Tribunal or whether some incidental fact which appears on the record has not been noticed by the Tribunal in its judgment. If the Court on a fair reading of the judgment of the Tribunal, finds that it has taken into account all relevant material, and has not taken into account irrelevant material in basing its conclusions, the decision of the Tribunal is not li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of Consolidated Photo and Finvest Ltd vs ACIT, 281 ITR 394 as under - "...The argument that the proposed reopening was based only on a change of opinion has not impressed us. The assessment order did not admittedly address itself to the question which the Assessing Officer proposes to examine in the course of reassessment proceedings. The submission of Mr Vohra that even when the order of assessment did not record explicit opinion on the aspects now sought to be examined it must be presumed that those aspects were present to the mind of the Assessing Officer and had been held in favour of the assessee is too far-fetched a proposition to merit acceptance. There may indeed be a presumption that the assessment proceedings have been regularly conducted, but there can be no presumption that even when the order of assessment is silent, all possible angles and aspects of a controversy had been examined and determined by the assessing Officer..."(Emphasis supplied). 18. This decision assumes further importance for the reason that it is rendered after the Supreme Court's obiter dicta on 'change of opinion' in the case of Kelvinator Ltd 320 ITR 561. 19. It was also pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd 295 ITR 282 which held that an order cannot be erroneous when one of the two possible views was taken, the Hon'ble Bench held - ..."In this case as we have already discussed, the AO had not taken any view which was possible on the facts and in law, available on the date on which he passed the assessment order. ... Furthermore, the AO had not recorded any reason at all. The assessment order is in fact silent with regard to the issue raised by the Administrative Commissioner."... 22. The "wrong conclusion" referred to on page 6 of the order u/s 263 flows from the error in accepting the claim on record. The genesis of this error pointed out by the learned CIT, as was urged by the DR, lay in accepting the claim of the assessee without carrying out a complete enquiry, and without recording a finding of any nature. This was pointed out on the immediately preceding page 5 of the aforementioned order. This was precisely the point noted by the Bench from Pages 26-30 of their order. The error lay in an incorrect assumption of fact in noticing which there was no divergence between the Ld CIT and the Bench. The Ld Counsel in trying to set up a conflict between the phrase "wrong conclusio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in addition to the legal position that there is no res judicata in Income Tax proceedings, the assessee was ignoring the fact of consistency with reference to earlier years, prior to changes in law, when the assessee had no reservations about being seen as a trader in shares. 28. During the hearing it was argued that the Ld CIT should not have issued the 'second notice' on the issue after "accepting" the reply to the first letter. Secondly the notice u/s 263 does not raise the issue of non-application of mind by the AO. Thirdly, insofar as there is non-application of mind by the AO the CIT should have set aside the matter for de-novo adjudication by the AO rather than concluding in the matter. (a) In the reply, it was urged by the DR that besides the factual appropriateness and legal correctness of the decision of the CIT, there are technical flaws inherent in the argument of the Ld Counsel. Firstly, both letters issued by the Ld CIT in the matter are on the same subject and are in continuation of one another. There is no gainsaying the fact that proceedings were not concluded on consideration of the first reply. Secondly, on the issue of whether non-application of mind was ident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate argument; ii. Every error cannot be the subject of a petition u/s 254(2); iii. An interpretation may be right or wrong. The Bench cannot be asked to sit in judgement over an issue once again; iv. Without prejudice to the specifics of the present case, an error of judgement, even if it is egregious, cannot be the subject of a petition u/s 254(2). Other remedies are available; v. A litigant cannot be permitted a second innings in the guise of a petition u/s 254(2). In view of the above submissions, it is prayed that the petition u/s 254(2) be dismissed. 32. In the rejoinder, the learned counsel for the assessee submitted as under:- i) With reference to paragraph No.2 of the written submissions, it is submitted that though we have no specific comments to offer to the statements made therein, we put it on record that the applications under section 254(2) of the Act are filed to seek rectification of mistakes apparent on record, which is the usual practice and procedure when apparent mistakes are found in the orders passed under section 254(1) of the Act. All that the assessee has done in the present case is to press into service this provision since glaring and apparent mis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in these paragraphs, it is manifest that in those proceedings the apprehension of the assessee was about non-consideration of certain material and the findings of the Tribunal and the Hon'ble High Court were in that regard only. It is, therefore, humbly submitted that both the order of the Tribunal and the Hon'ble High Court cited by the ld. CIT (DR) in these paragraphs would not and could not advance his case. vi) With reference to paragraph 5 of the written submissions, the AR is having no comments to offer. vii) With reference to paragraph 5.1 of the written submissions, it is submitted that the argument for the assessee in the captioned miscellaneous application was that it was not the case of the ld. CIT in proceedings under section 263 of the Act that the assessing officer has failed to apply his mind, both in the show cause notice so also in the consequent order. It was in this context that it was pleaded that the Tribunal could not have upheld the order of the CIT passed under section 263 of the Act on the ground that the order passed by the assessing officer was erroneous because of non applicatio0n of mind. It is felt apt to state that the argument of the ld. CIT (D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the rectification application is arguable, the mistake has to be rectified. The mandate of law is that the mistake should be apparent and not the impact thereof. In any case, the apparent mistake has to be rectified to keep the records straight. xi) With reference to para No.6.1 of the written submissions, it is submitted that the judgment of the Hon'ble AP High Court in the case of Sri PVS Raju, relied upon by the ld. CIT (DR), is not applicable to the facts of the case for the following reasons, which have been elaborated upon at the time of hearing:- (a) In that case, the assessee had changed the treatment pursuant to the change in law which is not the case in the case of the assessee. (b) In that case consistency was not the point of argument whereas in the case of the assessee, the basic argument is of consistency. (c) The facts are completely different in respect of frequency, volume, period of holding, delivery etc., which were specifically pointed out at the time of hearing. xii) With reference to paragraph No.7 of the written submissions, it is submitted that the ld. CIT (DR) is under an incorrect impression that the assessee has been considering itself all along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that something which is not specifically stated in the show cause notice should be understood by implication. The ld. AR drew the attention of the Bench in this regard to para 10 of the above referred order. In view of the prescriptions of the provision and the precedent, it is reiterated that the argument of the ld. CIT (DR) that non-application of mind' was inbuilt in the show cause notice to devoid of any merit. xvi) With respect to the third part of this paragraph, it is submitted that when the matter was argued originally, it was nobody's case that the assessing officer had not applied his mind. Therefore, in our humble submission, there was no occasion for the assessee to argue for setting aside of the matter. It is now the case of the assessee, assuming for the sake of argument but without accepting, the finding of the Tribunal that there was non application of mind by the assessing officer that in that case the matter ought to have been gone back. xvii) With reference to paragraph No.8.2 of the written submissions, it is submitted that the attempt of the assessee is neither to reargue the matter nor to further strengthen the case but only to get the vital and glaring appa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled. In our opinion, consideration of the present arguments of the counsel for the assessee amounts to reviewing of earlier Tribunal order rather than rectification. The power so conferred on the Tribunal to rectify an error apparent on the record has a limited application. It does not enable the Tribunal to reverse, revise or review the earlier order of the Tribunal but it permits only such error which is on the face of the record to be corrected. However, it does not permit to review or rewrite the order of the Tribunal. The jurisdiction u/s. 254(2) is limited to rectifying the error which is patent, manifest and self-evident which does not require elaborate discussion of evidences or arguments to establish it. The argument of the assessee's counsel before us suggests that to discover the error in the order said to have crept in the order requires a long drawn process of reasoning and it is not a mistake at the face of the record. The Tribunal has taken one possible view and that cannot be said to be covered by an error apparent on the face of the record. What can be rectified u/s. 254(2) should be apparent and patent. The mistake has to be such for which no elaborate reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of facts. The findings of the Tribunal on these questions are not liable to be interfered with unless the Tribunal has taken into consideration any irrelevant material or has failed to take into consideration any relevant material or the conclusion arrived at by the Tribunal is perverse in the sense that no reasonable person, on the basis of the facts before the Tribunal, could have come to the conclusion to which it has come. 38. It is equally well-settled that the decision of the Tribunal has not to be scrutinised sentence by sentence merely to find out whether all facts have been set out in detail by the Tribunal or whether some incidental fact which appears on the record has not been noticed by the Tribunal in its judgment. If any one, on a fair reading of the order of the Tribunal, finds that it has taken into account all relevant material and has not taken into account any irrelevant material in basing its conclusions, the decision of the Tribunal is not liable to be interfered with, unless, of course, the conclusions arrived at by the Tribunal are perverse. 39. It is not necessary for the Tribunal to state in its order specifically or in express words that it has take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d one alternative, it cannot be said a mistake apparent unless there are manifest errors and self evident the Tribunal cannot recall its earlier order. Same view was taken by the jurisdictional High Court in the case of CIT vs. Dr. Ved Prakash & Anr. (209 ITR 448) (AP) wherein it was held as follows: "If two views are possible on a point of law, and one of the alternatives is accepted by the Tribunal, it cannot be held that the mistake is apparent from the record, unless there are manifest errors which are obvious, clear and self-evident, the Tribunal cannot recall its previous order in an attempt to rewrite the order. A change of opinion by the Tribunal consisting of the same members shall not justify rectification, nor can fresh thinking brought in by new Members of the Tribunal justify rewriting of the order under the guise of rectification. The only fact that had the second set of Members heard the appeal, they would have decided in favour of the assessee is not a reason for them to recall an order allegedly for the purpose of rectification of a mistake. Held, that, in the instant case, the Tribunal had upheld the additional income on the ground that there was no proper explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fundamental principle that a party appearing before the Tribunal should not suffer on account of a mistake committed by the Tribunal. When prejudice results from an order attributable to the Tribunal's mistake, error or omission, it is the duty of the Tribunal to set it right and it has nothing to do with the concept of the inherent power to review. The Supreme Court held that the Tribunal would be regarded as having committed a mistake in not considering the material which is already on record. Held, allowing the appeal, that the Tribunal in its earlier order specifically dealt with the orders of the Ahmedabad and Mumbai Benches of the Tribunal. The Tribunal held that the order of the Ahmedabad Bench was not relevant to the issue involved and that the order of the Mumbai Bench contained no direct discussion regarding the nature of a DEPB licence. The Tribunal had evaluated the facts and circumstances of the case when it originally dismissed the appeal of the assessee against the exercise of jurisdiction under section 263 by the Commissioner. The order did not fall within the parameters of section 254(2). The order was not valid. 45. In view of the above discussion, we do not find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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