TMI Blog2015 (12) TMI 768X X X X Extracts X X X X X X X X Extracts X X X X ..... inion, the Tribunal was right when it held that the issue is not arising out of the order of the FAA. While deciding the MA we cannot decide such an issue. As far as the argument of opening balance of cash credit is concerned, we would like to mention that the issue raised by the assessee was not argued by the assessee before the lower authorities as it had not taken the said ground. Considering the available material on record the Tribunal had decided the issue. Even if there is an error of judgment on part of the bench, same does not fall under the category of mistake apparent on the record, as held by the Hon’ble Bombay High Court in the case of Ramesh Electricals (1992 (11) TMI 32 - BOMBAY High Court ). The assessee had not brought to our notice any case by which the said judgment has been reversed. We also find that it is not that kind of a mistake that has been dealt with by the Hon’ble jurisdictional High Court in the case of Supreme Industries Ltd. (2014 (12) TMI 184 - BOMBAY HIGH COURT). It is not a case of typographical or arithmetical mistake. It is not the case that the judgment delivered by the Hon’ble Bombay High Court or the Hon’ble Apex Court has been not followe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MA/199/Mum/2015, AY. 1994-95: Vide its Miscellaneous Applications, all dated 28th August, 2015 , the assessee has contended that the order of the Tribunal, dated 15. 06. 2012, contained certain mistakes apparent from the record, that same have to be rectified, as per the provisions of the section 254(2) of the Act, that the assessee had filed a writ petition before the Hon ble Bombay High Court, that the Hon ble Court vide its order, dated 8. 2. 2013, directed the assessee to avail alternate appellate remedy u/s. 260A of the Act, that it had filed an appeal before the Hon ble court, that while hearing the appeal the Hon ble Court had passed an order on 19. 8. 2015 expressing an opinion that it would be appropriate for the assessee to prefer a miscellaneous application before the Tribunal. 2. The assessee has further contended that paragraphs 15 to 18 of the order of the Tribunal dealt with validity of assessment, that the Tribunal had dismissed the ground on the basis that the issue had attained finality due to concession by the Counsel in the first round of proceedings, that two important judgments i. e. Sachin S. Hundekari [(2011)(1)ALLMR, 804)] and Central Council for R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not considered. She further argued that letter addressed to the AO, dated 14. 5. 2008, with regard to order u/s. 127 of the Act was not considered, that the arguments with regard to challenging the order was u/s. 127 were also not dealt with by the Tribunal. Brief history of the case: 4. Assessee firm is engaged in the business of manufacturing electric wires. It filed the return of income on 31. 10. 1994, declaring total income of ₹ 17, 361/-. A revised return was filed on 25. 11. 1994, declaring loss of ₹ 1, 87, 253/-. The original assessment was completed on 09. 12. 1996 u/s. 143(3) of the Act computing the total loss at ₹ 1. 87 lacs. The AO reopened the assessment invoking the provisions of section 147. In response to the notice issued u/s. 148 of the Act, the assessee stated that return filed earlier might be treated as fresh return. The AO mentioned that while finalising the assessment of the year 1997-98 that the assessee did not file loan confirmation in respect of unsecured loans for that AY. , that the amount in question was added to the total income of the assessee as unexplained cash credits u/s. 68 of the Act, that the assessee had taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling return of income and closing of accounts, that even then basic information was not made available to the AO, that assessee had taken a number of adjournments during appellate proceedings, that it did not file any evidence proving the genuineness of the cash credits that sufficient opportunities were given to the assessee. 6. The assessee filed an application, before the Tribunal, for stay of demand(SA. No. 273/M/ 2005, dated23. 8. 2005). Sh. Arvind Shonde, AR, appeared on behalf the assessee. While deciding the stay application, the Tribunal observed as under : 3. The ld. Counsel for the assessee invited our attention to the balance sheet as on 31. 3. 1993, at page 28 of the paper book, wherein an amount of ₹ 56, 35, 570/- is mentioned as unsecured loans, therefore, he submitted, in any case this cannot be treated as in the hands of the assessee for the year under consideration. The Tribunal did not grant stay, but the matter was taken up for hearing under the category of Early Hearing Case . 7. In the regular appeal, while challenging the order of the FAA of 11. 6. 2002, before the Tribunal, the assessee raised nine grounds. Out of the nine grounds, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee has also raised one more issue relating to disallowance of interest paid on the borrowed funds. Since this issue relates to the earlier issues, it should also be re-adjudicated by the Assessing Officer . Accordingly, the matter is restored to the file of the Assessing Officer for re-adjudication of the impugned issue of additions made under section 68 of the I. T. Act on account of unexplained borrowed funds. While completing the assessment u/s. 143(3) r. w. s. 254 of the Act, in pursuance of the above order of the Tribunal, the AO held that the assessee had failed to produce the loan confirmation letters with regard to ₹ 65. 33 lacs. So, he made the addition of the said amount to the income of the assessee. 8. Against the said order of the AO, the assessee filed following grounds of appeal before the FAA: 1. The learned Income Tax Officer erred in assessing the total income of the appellant at ₹ 76, 53, 778/- as against returned income of ₹ 17, 361/-. 2. The learned Income Tax Officer erred in treating unsecured loans amounting to ₹ 65, 33, 021/- as income of the appellant u/s. 68. 3. The learned Income Tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the assessee was given a period of almost one year to produce the documentary evidences and to prove the genuineness of loans, that time was allowed after admitting additional evidences, that in pursuance of the direction of the Tribunal the AO had given number of opportunities to the assessee to produce the confirmation along with the copies of bank statement and copies of income tax return, that the assessee had submitted 98 confirmation out of 145 parties without any supporting document before the AO, that the assessee had not filed confirmation letter in respect of 47 parties at all, that the confirmation filed before the AO were only affidavits of the broker along with the name of the parties without address, PAN and bank statement, that out of 98 so called confirmation letters the AO had issued notice u/s. 133(6) of the Act, that out of them only eight parties had filed confirmation with the documentary evidences, that summons to 98 parties were not served as claimed by the assessee , that the AO had issued notice where the addresses were provided by the assessee, that it did not mean that notices were served in all the cases. He further held that the assessee had fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO for the two AY. s. The assessee filed appeal raising two contentions. The first contention was that reopening the assessment was not valid and the second contention was that the interest payment by the agricultural estate had been validly claimed as a deduction against the interest receipts of the agricultural estate. However, these contentions were negatived by the FAA and the assessee appealed before the Tribunal. The Tirbunal upheld the orders of reassessments and with regard to the other contention restored the matter to the FAA. The FAA set aside the assessment for being done afresh according to law, in accordance with the observations of the Tribunal sorder. On the assessee s appeal against the orders, the Tribunal rejected the conten - tion of the assessee by pointing out that the earlier order dated 31. 07. 1978 had become final as the assessee did not take up the matter to the High Court and the question could not be considered afresh. On a reference, the Hon ble court framed the following question: Whether, on the facts and in the circumstances of the case, the assessee was entitled to raise the question of the validity of the jurisdiction assumed by the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt had held that if the correctness of the remand order was not challenged through appropriate proceedings, it would not be open to review it when the matter would come again before that authority in appeal or revision against the order passed by the authorities below in accordance with the remand order. Following the above decisions, finally, the Hon ble Court held as under: Even a wrong order has a finality and unless that finality is disturbed by a process known to law or by a process authorised by law, the rights of the assessee and the Revenue will continue to be governed by the order. Where the Appellate Tribunal remands a case the finality of views expressed by it while doing so depends on the nature of the order of remand. If the remand is in the nature of calling for a finding and the Tribunal keeps seisin of the case it may be permissible for the Tribunal to reconsider its views. On the other hand, if the Tribunal disposes of the appeal while passing the order of remand and another appeal comes before the Tribunal against the order passed after the remand, it has no power to reconsider the finding or opinion. Questions which have become final and concluded by the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopen the assessment before the Tribunal. There are four questions and the first question of law referred to us would suffice and that would cover all the aspects raised in all the four questions. Accordingly, we are of the opinion that all the four questions should be reframed and only the first question of law which is comprehensive and takes in all the aspects of the case is taken as the question referred to us in all the tax cases and we answer the question of law as reframed by us in all the tax cases in the affirmative and against the assessee. The Hon ble jurisdictional High Court, in the case of Jivatlal Purtapshi(65ITR261)has also dealt with the similar issue. Facts of the case were that while an appeal by the assessee challenging an addition of ₹ 4, 72, 500/-was pending before the FAA, the assessee and the department arrived at a settlement, inter alia, that the said addition should be deleted from the assessment. The FAA, after recording the concession, deleted the amount and allowed the appeal. In spite of the concession, the department filed an appeal to the Tribunal challenging the correctness of the deletion. A preliminary objection raised on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application, the matter had not been pursued under section 256(2) with the result that the earlier order of the Tribunal became final. On the Tribunal rejecting an application for reference, the executor applied to the High Court for an order directing the Tribunal to state a case the Hon ble Court held as under: It is a settled principle of law that there should be a finality of legal proceedings. When the assessment was made in the first instance, the assessee raised in the appeal filed by it the contentions that the assessment was void and illegal, that the Tribunal was not competent to give a direction validly under section 153(3) and that the proper course to be adopted by the Tribunal was to annul the assessment and not to set aside the same and direct the Income-tax Officer to make a fresh assessment. These contentions were duly considered by the Tribunal and were rejected. They have become final in terms of section 254(4) of the Act, there having been no reference from the order of the Tribunal. To permit the assessee to raise these contentions once again will offend the rule of finality of judicial proceedings. . . . . In M. Syed Alavi v. State of Kerala [1981] 48 STC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejected by the FAA. The Tribunal held that there was no sale of assets by reason of transfer pursuant to orders made under section 394(2) of the Companies Act. On a reference, the Revenue contended that the order of the FAA directing the AO to recompute the profit in terms of section 41(2) which was a final order was not challenged by the assessee, that the subsequent proceeding was only in obedience to that order, that the order of the AAC was thus res judicata in so far as the assessee was concerned in respect of the profit u/s. 41(2)and that the Tribunal had no jurisdiction to consider the ambit and application of section 41(2) in the appeal filed against the final order of the FAA. Deciding the issue the Hon ble Court held as under : . . the Tribunal had no jurisdiction to interfere with the final order of the Appellate Assistant Commissioner in regard to the applicability of section 41(2). Finally, we would like to refer to the matter of Orissa Cement Ltd. (211 ITR 420), delivered by the Hon ble Delhi High Court. In that matter the assessee had paid advance tax. The assessment having been completed at a figure where the tax paid came to be more than the tax asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad accepted the order dated July 9, 1986, was correct. No question of law arose from its order. 12. From the above discussion, it is clear that the Hon ble Courts are of the view that a party (AO/Assessee), conceding an issue in original proceedings, is barred to re-agitate the same issue when the matter is reheard by the same forum. In other words, what is voluntarily accepted cannot give rise to a grievance which can be taken further in appeal. If this practice is not adhered there would not be any end to litigation. Principles of taxation jurisprudence stipulate that even a wrong order has a finality and unless that finality is disturbed by a process of law or by a process authorised by law, the rights of the affected parties will continue to be governed by the order. Reasons for the said principle are not difficult to compre hend. Litigation cannot be allowed to continue perpetually-especially when the AO/Assessee takes a conscious decision for not agitating an issue raised by it. In short, the litigants, in the appeals before the Tribunal/Hon ble High Court/Apex Court, are not allowed to re-agitate same issue after conceding before the lower authorities. Approaching a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of reassessment. The ground is beyond our comprehension. In the Grounds of appeal it had not challenged the reopening. In those circumstances how the FAA was supposed to dispose the issue? In other words, if the FAA does not adjudicate an issue that is not before him how his order can be held to be erroneous. In our opinion, to come out of the trap in which the assessee had put itself, it has not only raised a finality-attained-issue again before the Tribunal, but also made a petition to raise additional grounds. If we consider the sequence of the events it becomes clear that the issue of re-opening of assessment u/s. 147 had become final, when the assessee decided not to press the ground no. 1 and 2 and the Tribunal had decided the appeal on 29/09/2005. 12. 2. We would also like to discuss one more important aspect with regard to the re-opeing. Before the FAA, in the second round of litigation the assessee was represented by qualified person-a Chartered Accountant. Not only this, one of the partners was also present during the hearing before the FAA. The assessee has, in the MA filed by it, argued that concession given by Sh. Shonde was not binding on it. But, it has not said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question relating to the disallowance . . The entire issue was examined on the merits including the judgments relied upon by the assessee. After examining the matter in detail, it allowed the appeal filed by the Revenue. Reliance and reference to reasons stated in the decision could not be regarded as a mistake apparent from the record. In that case, the Tribunal, in its order, had referred to the controversy in question relating to disallowance made on account of short-term capital loss and long-term capital loss and after examining the matter in detail and had allowed the appeal filed by the Revenue. The assessee filed an application under section 254(2)of the Act and same was dismissed by the Tribunal. The Hon ble Karnataka High Court had also an occasion to deal with the same subject in the matter of Mcdowell and Company Ltd. (310ITR 215). In that case Tribunal had decided the appeal of the assessee after considering the rival submissions. Later on, an application was moved by it, u/s. 254 of the Act for rectifying the mistake. The Tribunal allowed the MA filed by the assessee and granted it relief. Reversing the order of the Tribunal, the Hon ble court laid down follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if there is merely a mistake in the order sought to be rectified. The mistake to be rectified must be one apparent from the record. A decision on a debatable point of law or disputed question of fact is not a mistake apparent from the record. The plain meaning of the word apparent is that it must be something which appears to be so ex facie and is incapable of argument or debate. Some of the cases of the Hon ble jurisdictional High Court dealing with the issue also throw light on the scope of section 254(2) of the Act. First of them is Ramesh Electricals (203 ITR 497). Facts of the case were that the assessee carrieed on a business in electrical goods and appliances, that the assessee debited a sum of ₹ 54, 000 as commission paid to one Messrs. Neeta Electric Corporation, Bombay, that the AO found that all the five partners of the firm of Neeta Electric had close links with the assessee, that the assessee claimed that commission paid by it was allowable under section 37 of the Act, that the AO disallowed the deduction after examining evidence and holding that the commission was not paid for business purposes, that the FAA upheld the order of the AO, that in the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Honda Siel Power Products (295 ITR466)that the under-lying purpose of section 254(2) is based on the fundamental principle that a party appearing before the Tribunal should not suffer on account of a mistake committed by the Tribunal, that 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, that 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. In the case of Supreme Industries Ltd. (359ITR758)the High Court found that mistake has occurred in the order of the Tribunal dated 14. 05. 2010, in mentioning Income Tax Appeals Nos. 904, 867and 868/Mum/2005(being appeal numbers allotted to the Revenue s appeals)instead of Income Tax Appeals Nos. 906, 907and 908/ Mum/ 2005. The Tribunal rejected the application for rectification on the ground that such an application was not maintainable. On writ petitions the Hon ble Court set aside the order of the Tribunal and directed it to pass appropriate order correcting the mistakes. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and thereby exercising the power of appeal by the Tribunal on its own orders. The Hon ble Court discussed the issue as under: 6. The factual background, in brief, for filing of miscellaneous petitions by the appellants herein has been mentioned in the preceding paragraphs. The orders of assessment, in so far as they relate to the cost of construction of a godown have been reopened in exercise of power under section 148 of the Act. The appellants suffered orders of reassessment in the hands of the assessing authority and, accordingly, carried the matter to the Appellate Commissioner. It is no doubt true that the ground of the absence of factual basis for reopening the assessment was urged. All the same, that ground did not weigh with the Appellate Commissioner. The reason appears to be that the reopening was on the basis of the valuation of the godown by the Superintending Engineer. Accordingly, notices were issued to the appellants duly pointing out the same. 7. Section 148 of the Act has been interpreted by the courts in such a way as to keep the power of the assessing authority intact, as long as there existed some basis. If the basis as such exists, the exercise ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a manner which it felt appropriate. It is not necessary that every aspect must be addressed in greater detail. This is particularly so with the appellate fora. If on any aspect, the appellate forum is silent, it can be deemed to have concurred with the view expressed by the forum from which the order under appeal has arisen. Therefore, the petitions filed under section 254(2) were rightly rejected by the Tribunal. 14. From the above discussion, we can safely state that the words mistake apparent from record, as appearing in the section 254(2)have a special meaning and definite connotation. A patent, manifest and self-evident error which does not require elaborate discussion of evidence or arguments to establish it, can be said to be an error apparent on the face of the record and only such a mistake can be corrected while applying provisions of section 254(2) of the Act. It is also a settled legal proposition that the scope of the said section is very limited and circumscribed. For exercising jurisdiction under the section, if the applicant has to advance long arguments, it will not fall under the category of apparent mistake. Besides, provisions of section 254(2)do not con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. Lack of jurisdiction is very strong base to prove that scale of convenience is tilted in favour of the assessee. In the proceedings before the Tribunal the assessee filed additional evidence and requested that same should be taken on record. At that point of time also, the assessee chose not to argue the validity of reassessment. Rather it did not press the ground. As stated earlier, it was a conscious decision of the assessee not of the then AR. A senior AR, like Sh. Arvind Shonde, would not make any concession without understanding the implication of such concession. We have not come across any letter or affidavit of Sh. Shonde stating that he was ignorant of facts or that there was misrepresentation of law on his part during the hearing of stay-petition or the regular hearing. No letter written by the assessee and addressed to Sh. Shonde has been produced before us where in the assessee has questioned his decision of not arguing the grounds that were raised but not argued. The assessee, who had earlier instructed the-then- AR, not to press ground of reopening is, after 10 years, stating that not pressing the grounds about re-opening was a concession by a counsel in m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong concession made by a counsel before the court cannot bind the parties when statutory provisions clearly provide otherwise ; (g) A party may be allowed to resile and an appellate court may permit in rare and appropriate cases to resile from a concession made on a wrong appreciation of the law and had led to gross injustice though one may not call in question the very fact of making the concession as recorded in the judgment. While deciding the matter the Hon ble Court had taken note of the cases of Ramdas Shrinivas Nayak(AIR1982SC1249), Roop Kumar v. Mohan Thedani(AIR2003SC2418), Ram Bali(10SCC598), S. C. Parashar(AIR2006SC3566), Shammi Bhan (supra), MohanlalLikumal Punjabi(3SCC628), Ayurveda and Siddha v. Dr. K. Santhakumari(supra), Tripura Goods Transp ort Association(AIR1998SC465), delivered by the Honn ble Supreme Court. We would like to test facts of the case before us on the touch stone of the principles laid down by the above judgment. Not pressing of ground in the appellate proceedings cannot be termed a concession made against the statutory provisions. It is not uncommon that while arguing the cases before the Tribunal, the assessees prefer not to press ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details from the AO, but it does not in any manner prove that the issue of change of jurisdiction u/s. 127 were agitated before the FAA. We find that the FAA had decided the appeal on 27. 3. 2008 whereas the letter to the AO is dated 14. 5. 2008. Naturally, the FAA had no occasion to deal with the issue. We find that while dealing with the issue the Tribunal has dealt all the arguments raised by the assessee and had arrived at a conclusion. In our opinion, while deciding the rectification application we cannot sit over the judgment of the earlier bench, because we do not have power of review. We have reproduced the grounds taken by the assessee before the FAA in the second round of litigation and there was no ground about change of jurisdiction. In our opinion, the Tribunal was right when it held that the issue is not arising out of the order of the FAA. While deciding the MA we cannot decide such an issue. As far as the argument of opening balance of cash credit is concerned, we would like to mention that the issue raised by the assessee was not argued by the assessee before the lower authorities as it had not taken the said ground. Considering the available material on rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd time was given to the assessee to produce details about the creditors, but it failed to produce the same. In these circumstances the FAA upheld the addition made by the AO. Considering the above facts the Tribunal had in its order dated 15. 06. 2012 had taken a decision. In our opinion, the said decision cannot be rectified under the provisions of section 264(2) of the Act, as no mistake apparent from the record was brought to our notice. Considering the above discussion, we reject the MA, filed by the assessee, for the AY. 1994-95. MA/200-201/Mum/2015-AY. 1995-96 1996-97: Both the rectification applications are identically worded and the only difference is that the last line on page no. 3 of the application for the AY. 1995-96 appears as first line of the page no. 4 of the application filed for AY. 1996-97. In these application the assessee has advanced same similar arguments that are part of the application filed for AY. 1994-95. We have dealt with all the issues raised by the assessee while adjudicating the MA for earlier year. The only difference is with regard to the letter written by it on 14. 05. 2008 wherein it had requested for the copy of the reasons reco ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
