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RECTIFICATION BY ITAT U/S.254(2) – no limitation when assessee or AO apply for rectification- appoint of view found in undisputed judgment of ITAT, Special Bench

Income Tax - By: - CA DEV KUMAR KOTHARI - Dated:- 5-9-2017 - Provision- section 254 of Income -tax Act 1961 regarding order and rectification of order by Tribunal. Judgment considered: Bhilai Engg. Corpn. Ltd. Versus Deputy Commissioner Of Income Tax. 2001 (11) TMI 264 - ITAT NAGPUR which seems to have attained finality. Raja Malwinder Singh Versus Union Of India And Another.Dated: - 04 July 2005 2005 (7) TMI 78 - PUNJAB AND HARYANA High Court -In this case judgment in case of Bhilai Enginnering .....

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limitation for suo moto rectification by ITAT, as stated in first part of sub-section has been reduced to six month from the end of month in which order was passed whereas earlier limitation was four years from the date of the order . In this article an attempt is made to find out whether the limitation is only in respect of rectification by ITAT at its own and limitation is not applicable in case an application is made by any party to the appeal that is Revenue (AO) and Assessee and in such a s .....

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th a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the 2[Assessing] Officer: Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub-section unless the Appellate Tribunal has given notice to the assessee of its intention .....

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ill be failing in discharge of its duties to the public (taxpayer being a party to appeal) as well as the Revenue (AO). In sub-section (2), in first part about rectification at its own by Tribunal also word may has been used, this can be considered as discretionary power of Tribunal to pass an order to rectify any mistake apparent from records in the order passed under sub-section (1). Therefore, it can be said that though the word may has been used but it need to be read as shall. When there is .....

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en if parties to appeal are absent. The practice to dismiss appeal due to absence of appellant and / or respondent is wrong and contrary to law. Even ITAT Rules prescribe that an appeal has to be decided on merit. In second part word shall has been used in relation to rectification on application by any party to appeal that is assessee or revenue. Therefore, when a rectification petition has been filed by assessee or the AO, the Tribunal has to pass an order on such petition also. Limitation: It .....

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or the AO, there seems no limitation. There is no limitation for filing of a rectification petition as well. Otherwise, there should be clearly provided limitation for filing of a rectification petition also as we find for filing of appeal before CIT(A), ITAT, high Court and the Supreme Court. The purpose for not prescribing limitation is to make rendering of justice and redressing injustice caused due to a mistake. Now it is well settled that any authority and Tribunal is bound to follow judgme .....

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sed on law declared by Courts is an important way to reduce litigation. It is therefore, fully purposefully that a limitation for filing of a petition for rectification and passing of order has not been specifically mentioned in the section. The subsection (2) is analysed below with highlights: (2) The Appellate Tribunal may, at any time within 12[six months from the end of the month in which the order was passed] with a view to rectifying any mistake apparent from the record, amend any order pa .....

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me Tax. 2001 (11) TMI 264 - ITAT NAGPUR (supra.) Special Bench of ITAT (Three members Bench) paragraph 3 and 13 are reproduced below: 3. Both the parties were heard on this point. Section 254(2) of the Income-tax Act, 1961 (hereinafter called the Act ) prescribes as under:- The Appellate Tribunal may, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such ame .....

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is the paramount factor. It is to be seen that how best justice could be done. If the error is palpable Tribunal, in the interest of justice can proceed with the matter and set the things right. 13. Hon'ble Supreme Court in the case of Poothundu Plantations (P.) Ltd. v. Agrl ITO 1996 (7) TMI 3 - SUPREME COURT has held that if the Supreme Court has construed the meaning of a section, then any decision to the contrary given by any other authority must be held to be erroneous and such error mus .....

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