ITAT order allowing EPF & ESIC employee’s contribution prior to Checkmate Services Judgment suffers from ‘apparent mistake from record’ 

DCIT Vs N.R Wires Private Limited & 38 Others (ITAT Raipur)

ITAT order allowing EPF & ESIC employee’s contribution prior to Checkmate Services Judgment suffers from ‘apparent mistake from record’

ITAT allowed the Miscellaneous Applications filed by the Department holding that the Appellate Orders passed by the ITAT, Raipur Bench on section 36(1)(va) EPF & ESIC employee’s contribution disallowance allowing the appeals of the respective assessees prior to Checkmate Services Judgment suffers from ‘apparent mistake from record’ amenable to rectification jurisdiction u/s.254(2) based upon the subsequent judgment of the Hon’ble Supreme Court in Checkmate Services case relying upon ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC), S.A.L. Narayana Row, CIT v. Model Mills Nagpur Ltd. [1967] 64 ITR 67 (SC) & plethora of other judgments. In an elaborate Order, the Hon’ble ITAT distinguishes assessee’s reliance on Mepco Industries Ltd. Vs. CIT & Ors. (2009) 319 ITR 208 (SC), CIT Vs. Reliance Telecom Limited (2022) 440 ITR 1 (SC) & M/s. Malabar Regional Co-operative Milk Producers Union Ltd. Vs. The Commissioner of Central Exercise, C.E Appeal No.10 of 2019 dated 06.12.2019 (on identical issue in the context of section 35C(2) of Central Excise Act) & plethora of other judgments. Distinguishes assessee’s reliance on Order LXVII Rule 1 of CPC and also holds that the ratio decidendi propounded by Supreme Court operates retrospectively.

FULL TEXT OF THE ORDER OF ITAT RAIPUR

The captioned miscellaneous applications filed by the department are arising out of the respective orders of the Tribunal, wherein the additions made by the A.O of the delayed deposit of employee’s share of contributions towards labour welfare funds, viz. Employee’s Provident fund (EPF) and Employee’s State Insurance (ESI) by the respective assessee’s was vacated by the Tribunal. It is stated by the department that as the aforesaid orders of the Tribunal are not found to be in conformity with the recent judgement of the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. Vs. Commissioner of Income Tax-I, Civil Appeal No.2833 of 2016 dated 12.10.2022, thus, the same suffers from a mistake which being glaring, apparent, patent and obvious from record had rendered the same amenable for rectification under sub-section (2) of Section 254 of the Act.

2. As a common issue is involved in the aforesaid applications, therefore, we shall dispose off the same by way of a consolidated order. We shall for the sake of convenience take up the MA No.01/RPR/2023 (arising out of ITA No.67/RPR/2019) as the lead matter, and the order therein passed shall apply mutatis-mutandis for the purpose of disposing off the remaining applications.

3. On a perusal of the miscellaneous application filed by the department in MA No.01/RPR/2023, we find that the revenue applicant under sub-section (2) of Section 254 of the Act has sought for recalling of the order passed by the Tribunal while disposing off the appeal in ITA No.67/RPR/2019, stating as under (relevant extract) :

“7. However, recently, the Hon’ble Apex Court has passed an order in the case of Checkmate Services Pvt Ltd Vs. CIT-1 in Appeal No. 2833 of 2016 dated October 12th, 2022 in which they have held that the deduction shall be admissible only if the amount is paid within the due date as prescribed under those Acts and not before filing of ITR. As such, the entire scenario has now undergone a change and the litigation with respect to this issue has achieved a finality. The order of the Apex Court is the law of the land. Therefore, any order passed not in consonance with the Apex Court’s order can be said to be erroneous to that extent and therefore, a cause for filing a Miscellaneous Application to correct that error can be said to have arisen.

8.However, in view of the decision of the Hon’ble Supreme Court in Civil Appeal No. 2833 of 2016 in the case of Checkmate Services (P) Ltd Vs. Commissioner of Income Tax-1 pronounced on October 12,2022, the Hon’ble Supreme Court has upheld the order of the Hon’ble Gujarat High Court. In the case of Gujarat State Road Transport Corporation, Hon’ble Gujarat High Court has held that w.r.t. the sum received by the assessee from any of his employees to which provision of sub-clause (x) of clause (24) of section (2) applies, the assessee shall be entitled to deduction in computing the income referred to in section 28 w.r.t. such sum credited by the assessee to the employee’s account in the relevant fund or funds on or before the due date mentioned in explanation to section 36(1)(va) of the Income Tax Act, 1961.

9.Considering the above facts, Miscellaneous Application u/s. 254(2) of the Income Tax Act, 1961 before the Hon’ble ITAT, Raipur is required to be filed as the Hon’ble FAT was not justified in directing the AO to vacate the disallowance of Rs.49,188/- made u/s 36(1)(va) of the Income Tax Act, 1961 on account of delayed deposit of the employees share of contribution.”

4. We have heard the ld. Authorized Representatives of both the parties, perused the material available on record a/w. the respective written submissions filed by them, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.

5. Issue leading to filing of the present miscellaneous application by the department lies in a narrow compass, i.e. as to whether or not the order passed by the Tribunal while disposing off the appeal not being in conformity with the subsequent judgment of the Hon’ble Supreme Court in the case of Checkmate Services P. Ltd. Vs. Commissioner of Income Tax-I, Civil Appeal No.2833 of 2016 dated 12.10.2022, had thus rendered the same as suffering from a mistake, which being manifest on the face of the record makes it amenable for rectification under sub-section (2) of Section 254 of the Act?

6. It is the claim of the Ld. Departmental Representative (“DR”, for short) that as the view taken by the Tribunal that the assessee as per Section 43B of the Act was entitled for deduction of its delayed deposit of employees share of contributions towards Employees Provident Fund (EPF) and Employees State Insurance (ESI) is not in conformity with the subsequent judgment of the Hon’ble Supreme Court in the case of Checkmate Services P. Ltd. Vs. Commissioner of Income Tax-I, Civil Appeal No.2833 of 2016 dated 12.10.2022, wherein the Hon’ble Apex Court had held that as per the provisions of Section 2(24)(x) r.w.s.36 (1)(va) of the Act such delayed deposits were not to be allowed as deduction in the hands of the assessee, therefore, the same had rendered its order that was passed while disposing off the appeal as suffering from a mistake which being apparent from record is amenable for rectification under sub-section (2) of Section 254 of the Act.

7. Admittedly, the Hon’ble Apex Court in its recent judgment in the case of Checkmate Services Pvt. Ltd. Vs. Commissioner of Income Tax-I (supra), had held that the delayed deposit of the amount of employees share of contribution towards labour welfare funds by the assessee-employer was not to be allowed as a deduction under section 2(24)(x) r.w.s.36(1)(va) of the Act. It is observed by the Hon’ble Apex Court that as the assessee is not absolved from its obligation to deposit the employees share of contributions on or before the “due date” as contemplated in the respective Labour Welfare Acts, as a pre-condition for claiming the same as a deduction under Section 2(24)(x) r.w.s. 36(1)(va) of the Act, therefore, it would not be saved by the non-obstante clause of Section 43B of the Act.

8. Per contra, the Ld. Authorized Representatives (“ARs”, for short) for the respective assessee’s had come forth with multi-facet contentions to drive home their claim that the orders passed by the Tribunal while disposing off the appeals were not amenable for rectification under sub-section (2) of Section 254 of the Act. We shall hereinafter deal with the respective contentions of the Ld. ARs.

9. S/shri Abhishek Mahawar and Nikhilesh Begani, the Ld. ARs for respondents at Sr.No.1 and at Sr.No.29 & 31 objected to the miscellaneous applications filed by the department. It was submitted by the Ld. ARs that the Tribunal was divested of its jurisdiction to carry out rectification of its orders u/s. 254(2) of the Act on the basis of the subsequent judgment of the Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd. Vs. Commissioner of Income Tax-I (supra). The Ld. ARs in order to fortify their contention had drawn support from the judgment of the Hon’ble Supreme Court in the case of Mepco Industries Ltd. Vs. CIT & Ors. (2009) 319 ITR 208 (SC).

10. Although at the first blush the aforesaid claim of the Ld. AR’s appeared to be very attractive, but as the facts involved in the case of Mepco India Ltd. (supra) are found to be distinguishable as against those involved in the case before us, therefore, the reliance placed on the same would not assist their case. In the case before the Hon’ble Apex Court, the assessee appellant which was engaged in the business of manufacturing of potassium chlorates had received power subsidy for two years. The power subsidy received was initially offered by the assessee as a “revenue receipt” in its return of income. However, the assessee thereafter in its application filed u/s. 264 of the Act by relying upon the judgment of the Hon’ble Apex Court in the case of CIT Vs. P.J. Chemicals Ld., (1994) 210 ITR 830 (SC), had claimed that the amount of subsidy received was a “capital receipt” and hence, not liable to be taxed. The aforesaid revision petition filed by the assessee applicant u/s.264 of the Act was allowed by the CIT vide his order dated 30.04.1997. Subsequent to the aforesaid order, the Hon’ble Apex Court in the case of Sahney Steel and Press Works Ltd. (1997) 228 ITR 258 (SC) had held that the incentive subsidy in the case before them was a “revenue receipt” and hence, was liable to be taxed u/s.28 of the Act. The decision of the Hon’ble Apex Court was based on a detailed examination of the subsidy scheme formulated by the Government of Andhra Pradesh. It was observed by the Hon’ble Apex Court that the incentives would not be available until and unless production had commenced. The Hon’ble Apex Court had observed that as the incentives which were given as refund of sales tax and subsidy on power consumed for production to which the assessee was entitled only after commencing its production, and was not in the nature of a payment made directly or indirectly for setting up the industries, therefore, the same was a “revenue receipt”. The CIT after considering the judgment of the Hon’ble Apex Court in the case of Sahney Steel and Press Works Ltd. (supra) dated 19.09.1997, vide his order of rectification u/s.154 dated 30.03.1998, held that as the power tariff subsidy received by the assessee after commencement of its business was an operational subsidy, therefore, the same was not a “capital receipt”.

11. Aggrieved the assessee carried the matter by way of a writ petition before the Hon’ble High Court of Madras. The Hon’ble High Court concluded that the CIT subsequent to the judgment of Hon’ble Apex Court in the case of Sahney Steel and Press Works Ltd. (supra) was right in treating the receipt of subsidy as a “revenue receipt”.

12. On further appeal, the Hon’ble Apex Court after deliberating on the scope of Section 154 of the Act, observed, that as the same was taken recourse to by the CIT on the basis of a “change of opinion”, therefore, he had clearly exceeded his jurisdiction. At this stage, it would be relevant to point out that the Hon’ble Apex Court, had observed that as the issue that had formed the very basis for rectification of the order u/s.154 of the Act required examination of the nature of subsidy that was received by the assessee, therefore, the said exercise could not have been undertaken by the CIT in the garb of his jurisdiction for rectifying a mistake. Apart from that, it was observed by the Hon’ble Apex Court that as the CIT while passing order u/s.264 of the Act dated 30.04.1997 had taken a view that the subsidy received by the assessee was not taxable as it was a “capital receipt”, therefore, the view subsequently taken by him to the contrary after the judgment of the Hon’ble Apex Court in the case of Sahney Steel and Press Works Ltd. (supra) by treating the said subsidy as a “revenue receipt” was a classic illustration of “change of opinion.” In sum and substance, as the CIT while taking recourse to Section 154 of the Act had recharacterized the subsidy received by the assessee as a “revenue receipt”, which was earlier held by him vide his order passed u/s.264 of the Act dated 30.04.1997 as a “capital receipt”, it was, thus, on the basis of the said fact that the Hon’ble Apex Court had held that jurisdiction for rectifying a mistake could not have been assumed on the basis of a “change of opinion”.

13. We are unable to persuade ourselves to subscribe to the claim of the Ld. AR’s that the Hon’ble Apex Court in the case of Mepco Industries Ltd. Vs. CIT(supra), had held that an order passed by the Tribunal which is not found to be in conformity with the ratio decidendi of a subsequent judgment of the Hon’ble Apex Court cannot be rectified under sub section (2) of Section 254 of the Act. Considering the distinguishable facts that were involved in the case of Mepco Industries Ltd. Vs. CIT (supra), we are of the considered view that as in the case of the present assessee before us the department is only seeking rectification of the order passed by the Tribunal, i.e. for the limited purpose of bringing the same in conformity with the judgment of the Hon’ble Supreme Court in the case of Checkmate Services P. Ltd. Vs. Commissioner of Income Tax-I (supra), therefore, the reliance placed by the Ld. ARs on the aforesaid judgment would by no means assist their case.

14. We shall now deal with the reliance placed by S/Shri Abhishek Mahawar & Nikhilesh Begani, the Ld. ARs on the judgment of the Hon’ble Apex Court in the case of CIT Vs. Reliance Telecom Limited (2022) 440 ITR 1 (SC). The Ld. ARs by referring to the aforesaid judgment had drawn support from the observation of the Hon’ble Apex Court, wherein it was observed that the powers u/s.254(2) of the Act are akin to those under Order XLVII, Rule 1 of the Code of Civil Procedure, 1908. The Ld. ARs referred to aforesaid observations of the Hon’ble Apex Court and took us through Order XLVII, Rule 1 of the Code of Civil Procedure (5 of 1908), Page 115 of APB.

15. The Ld. ARs submitted that as per “Explanation” to Order XLVII, Rule 1 of the Code of Civil Procedure (5 of 1908) a subsequent decision of a superior court cannot form a ground for the review of a judgment, therefore, the power vested with the Tribunal u/s.254(2) of the Act, which have been held by the Hon’ble Apex Court to be akin were to be similarly construed. To sum up, the Ld. ARs by drawing support from the restriction placed on the powers of a court to review its order had assailed the seeking of rectification of the order of the Tribunal, which the department had sought under section 254(2) of the Act on the basis of the subsequent judgment of the Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd. Vs. Commissioner of Income Tax-I (supra).

16. We have given a thoughtful consideration to the aforesaid contention of the Ld. ARs and are unable to persuade ourselves to subscribe to the same. The Hon’ble Apex Court in the case of CIT (IT-4) Vs. Reliance Telecom Limited (2021) 133 taxmann.com 41 (SC), had held that the powers vested with the Tribunal under section 254(2) of the Act are akin to Order XLVII, Rule 1 of CPC. However, the Ld. ARs had erred in loosing sight of the context in which the said observations were recorded by the Hon’ble Apex Court. The Hon’ble Apex Court had observed that in the case before it the Tribunal which had originally passed a detailed order and held the payment made by the assessee company for purchase of software, as royalty, had thereafter, in exercise of powers u/s.254(2) completely recalled its earlier order dated 06.09.2013 and re-heard the entire appeal on merits as if it was deciding the appeal against the order passed by the CIT. It was observed by the Hon’ble Apex Court that the Tribunal in exercise of powers under section 254(2) could only rectify/correct any mistake apparent from record. In our considered view, the reference by the Hon’ble Apex Court to Order XLVII, Rule 1 of CPC, 1908 was for the purpose of making it clear that the Tribunal in exercise of powers vested u/s. 254(2) cannot revisit its earlier order and go into the details on merits. The Ld. ARs interpretation, if accepted, would mean that the Tribunal in exercise of Section 254(2) can review an order. The Hon’ble Apex Court in its order had clearly observed that the Tribunal in exercise of powers u/s. 254(2) cannot review its order, i.e. revisit its earlier order and go into details on merits. Be that as it may, it was clearly observed by the Hon’ble Court that the Tribunal in exercise of powers u/s.254(2) can only rectify/correct any mistake apparent from record. Our aforesaid view is supported by the judgment of a three judge bench of the Hon’ble Apex Court in the case of Income Tax Officer Vs. Ashok Textiles Ltd. (1961) 41 ITR 732 (SC). The Hon’ble Apex Court in its aforesaid order in the case of Ashok Textiles Ltd. (supra) that was rendered in context of Section 35 of 1922 Act (pani matenia to Section 154), had observed that the restrictive operation of power of review under Order XLVII, Rule 1 of Code of Civil Procedure, 1908 is not applicable in case of Section 35 of 1922 Act. We, thus, are of the considered view, that as held by the Hon’ble Apex Court in the case of Reliance Telecom Limited (supra) though the Tribunal u/s.254(2) can rectify/correct any mistake apparent from record but cannot review its order, i.e. revisit its earlier order and go into details on merits, therefore, the contention of the Ld. ARs who have tried to read the restriction placed on review of an order by a court as provided in the “Explanation” to order XLVII, Rule 1 into the scope of power of the Tribunal to rectify any such mistake apparent from record cannot be accepted. On the contrary, we find that the issue leading to filing of the present miscellaneous applications by the department, i.e. as to whether an order passed by the Tribunal while disposing off an appeal can be rectified u/s. 254(2) of the Act for the purpose of bringing the same in conformity with a subsequent judgment of the Hon’ble Apex Court or that of the Hon’ble Jurisdictional High Court is squarely covered by the judgments of the Hon’ble Apex Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC) and S.A.L Narayana Row, CIT Vs. Model Mills Nagpur Ltd. (1967) 64 ITR 67 (SC) and thus, is no more res-integra.

17. Apropos the reliance placed by the Ld. ARs on the judgement of the Hon’ble High Court of Kerala in the case of M/s. Malabar Regional Co-operative Milk Producers Union Ltd. Vs. The Commissioner of Central Exercise, C.E Appeal No.10 of 2019 dated 06.12.2019, we are of the considered view that as the issue had been settled and thus, is no more res-integra pursuant to the judgments of the Hon’ble Apex Court in the case of Saurashtra Kutch Stock Exchange Ltd.(supra) and Model Mills Nagpur Ltd. (supra), wherein it has been held that if a point is covered by the decision of the Hon’ble Supreme Court or that of the Hon’ble Jurisdictional High Court rendered prior to or even subsequent to the order proposed to be rectified, then it could be said to be a mistake apparent from record u/s.254(2) of the Act and could be corrected by the Tribunal. We, thus, respectfully following the aforesaid judgments of the Hon’ble Apex Court find favour with the claim of the Ld. DR that the orders passed by the Tribunal in the present appeals, i.e. to the extent it had vacated the additions of delayed deposit of employees share of contribution towards ESI and EPF is not in conformity with the judgment of the Hon’ble Supreme Court in the case of Checkmate Services (P) Ltd. Vs. CIT-1 (supra), had thus rendered the said orders as suffering from a mistake which being apparent from record makes it amenable for rectification under sub­section (2) of Section 254 of the Act.

18. Apropos the contention advanced by Shri G.S. Agrawal, Ld. AR for respondents at Sr. Nos.6 & 7, that the Tribunal after lapse of a period of six months from the end of the month in which the order proposed to be rectified was passed was functus officio for rectifying the said order, we are unable to persuade ourselves to subscribe to the same. We, say so, for the reason that the scope of sub-section (2) of Section 254 had been looked into by the Hon’ble Apex Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC). The Hon’ble Apex Court had observed that the power vested with the Tribunal to rectify a mistake in its order passed while disposing off an appeal deals with two situations, viz. (i) rectifying any mistake apparent from record on a suo-motto basis within a time period of four years from the date of the order; and (ii) rectifying the mistake that was brought to the notice of the Tribunal either by the assessee or by the A.O. For the sake of clarity, the relevant observations of the Hon’ble Apex Court in the case of Saurashtra Kutch Exchange Ltd. (supra) are culled out as under:

“. orders passed by the Appellate Tribunal on appeal shall be final”. Sub-section (2) enacts that the Tribunal may at any time within four years from the date of the order rectify any mistake apparent from the record suo motu. The Tribunal shall rectify such mistake if it is brought to notice of the Tribunal by the assessee or the Assessing Officer.

22. Sub-section (2) thus covers two distinct situations;

(i) It enables the Tribunal at any time within four years from the date of the order to amend any order passed under sub-section (1) with a view to rectify any mistake apparent from the record; and

(ii)It requires the Tribunal to make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer.

23. It was submitted that so far as the first part is concerned, it is in the discretion of the Tribunal to rectify the mistake which is clear from the use of the expression `may’ by the Legislature. The second part, however, enjoins the Tribunal to exercise the power if such mistake is brought to the notice of the Tribunal either by the assessee or by the Assessing Officer. The use of the word `shall’ directs the Tribunal to exercise such power.”

Also a similar view was earlier taken by the Hon’ble Apex Court in the case of Sree Ayyanar Spinning & Weaving Mills Ltd Vs. CIT (2008) 301 ITR 434 (SC). The Hon’ble Apex Court in its aforesaid order had held as under:

“Analyzing the above provisions, we are of the view that Section 254(2) is in two parts. Under the first part, the Appellate Tribunal may, at any time, within four years from the date of the order, rectify any mistake apparent from the record and amend any order passed by it under sub-section (1). Under the second part of Section 254(2) reference is to the amendment of the order passed by the Tribunal under sub-section (1) when the mistake is brought to its notice by the assessee or the Assessing Officer. Therefore, in short, the first part of Section 254(2) refers to suo motu exercise of the power of rectification by the Tribunal whereas the second part refers to rectification and amendment on an application being made by the Assessing Officer or the assessee pointing out the mistake apparent from the record. In this case we are concerned with the second part of Section 254(2). As stated above, application for rectification was made within four years. Application was well within four years. It is the Tribunal which took its own time to dispose of the application. Therefore, in the circumstances, the High Court had erred in holding that the application could not have been entertained by the Tribunal beyond four years.”

19. On a perusal of the aforesaid observations of the Hon’ble Apex Court, it is established beyond doubt that in case a mistake in the order passed by the Tribunal while disposing off the appeal is brought to its notice either by the assessee or by the department, then the Tribunal is obligated to exercise the powers vested with it under sub­section (2) of Section 254 of the Act without being subjected to the restriction of the time limit of six months (earlier four years), which is applicable only in a case where it seeks to rectify any mistake apparent from record on a suo-motto basis. We, thus, finding no substance in the aforesaid contention of Shri G.S. Agrawal, reject the same. We shall now deal with the claim of Mr. Agrawal that as the legislature in all its wisdom in order to avoid any undue hardships to the assessee’s had vide the Finance Act, 2021 made available on the statute “Explanation 2” to Section 36(1)(va) and “Explanation 5” to Section 43B of the Act only with prospective effect from 01.04.2021, wherein it was clarified that the provisions of Section 43B would not be applicable to a sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of Section 2 applies, which aspect had not been looked into and adjudicated upon by the Hon’ble Supreme Court in the case of Checkmate Services (P) Ltd. (supra), therefore, the order passed by the Tribunal wherein the said issue had been deliberated at length could not be held to be suffering from any mistake apparent from record u/s.254(2) of the Act. We are unable to persuade ourselves to subscribe to the aforesaid contention of the Ld. AR. As the aforesaid respective amendments to Section 36(1)(va) and Section 43B of the Act were available on the statute and before the Hon’ble Supreme Court, therefore, we find no substance in the aforesaid contention of the Ld. AR.

20. We shall now deal with the contentions of Shri Praveen Jain, Ld. AR for respondent at Sr. No.28. It was stated by him that the addition of the delayed deposit of ESI/EPF of Rs.2,16,046/- that was made by the A.O had resulted to double addition as the said amount was separately offered by the assessee as an addition in its return of income. It was averred by Mr. Jain that the said addition had, thereafter, been vacated by the Tribunal while disposing off the assessee’s appeal in ITA No.64/RPR/2021 dated 18.07.2022. On the basis of the aforesaid facts, it was submitted by Mr. Jain that the miscellaneous application filed by the department may not be admitted. We are unable to accept the aforesaid contention of the Ld. AR. We, say so, for the reason that as the solitary issue which we are seized of and confined to in the present application is the maintainability of the claim of the department, which under sub­section (2) of Section 254 of the Act had sought for rectification of our order passed while disposing off the appeal, on the ground that the view therein taken is not found to be in conformity with the subsequent judgment of the Hon’ble Apex Court in the case of Checkmate Services (P) Ltd. (supra). Accordingly, the aforesaid contention of the Ld. AR being totally out of context and beyond the scope of our jurisdiction while disposing off the present applications, is rejected.

21. Shri Y.K Mishra, Ld. AR for the respondents at Sr. Nos. No.8, 9- 11,13 & 16-17 had, inter alia, stated that in case the department was  aggrieved with the order of the Tribunal, then, the remedy available with it was to file an appeal before the Hon’ble High Court and not to seek rectification of the order u/s. 254(2) of the Act. We are unable to persuade ourselves to subscribe to the contention of the Ld. AR. As the remedy available with the department to file an appeal before the Hon’ble High Court u/s. 260A of the Act operates in an independent field, which in no manner jeopardizes its right for seeking rectification of a mistake in the order passed by the Tribunal under sub-section (2) of Section 254 of the Act, therefore, the said contention being devoid and bereft of any merit cannot be accepted.

22. Ms. Puja Bajaj, Ld. AR for the respondent at Sr. No.27 & 33 had stated that as the issue, i.e as to whether or not the delayed deposit of the employee’s share of contribution towards labour welfare funds, i.e. PF & ESI by the assessee-employer was to be held as the latters income, was a debatable issue at the time of processing of the return of income, therefore, the same was beyond the purview of Section 143(1) of the Act. The Ld. AR in order to buttress her aforesaid claim had relied on the orders of ITAT, Mumbai Bench “D” in the case of Della Adventure and Resorts Pvt. Ltd. Vs. National Faceless Appeal Centre (NFAC) (2022) 66 CCH 28 (Mumbai) and that of the ITAT, Delhi Bench, “G” in the case of Garg Heart Centre & Nursing Home Private Limited & Ors. Vs. Assistant Commissioner of Income Tax & Ors. (2022) 65 CCH 521 (Delhi) (copies placed on record). As observed by us hereinabove, the challenge of the Ld. AR to the validity of the jurisdiction assumed by A.O u/s.143(1) of the Act for making addition of the delayed deposit of employees share of contributions towards ESI & EPF by the assessee-employer, cannot be dealt with by us while disposing off the present miscellaneous applications of the department. As the aforesaid contention of the Ld. AR cannot be considered in the course of the present applications, therefore, we reject the same.

23. Shri Mahendra Agrawal, Ld. AR for the respondent at Sr. No.30 had, inter alia, stated that its claim that the addition of the delayed deposit of employee’s share of contributions towards EPF and ESI could not have been made u/s.143(1) of the Act had not been adjudicated by the Tribunal while disposing off the assessee’s appeal in ITA No.102/RPR/2021. In this regard, we may herein observe that in case the assessee was of the view that the order passed by the Tribunal suffered from any mistake, then, the recourse available with him was to prefer a miscellaneous application seeking rectification of the said mistake. Be that as it may, the aforesaid contention of the assessee would not be relevant at the stage of adjudicating the maintainability of the present miscellaneous application filed by the revenue. Apropos the claim of Shri Agrawal, Ld. AR that the “Explanation-5” of Section 43B and “Explanation 2” of Clause (va) of Section 36(1) of the Act, which provides that the delayed deposit of employee’s share of contribution towards labour welfare funds would not be saved by the provisions of Section 43B of the Act had been made available on the statute vide the Finance Act, 2021 w.e.f. 01.04.2021, therefore, the same would have no bearing on the case of the assessee for A.Y.2018-19, we are unable to concur with the same. As the “Explanation 5” of Section 43B and “Explanation 2” of Section 36(1)(va) of the Act were both available on the statute at the time of judgment of the Hon’ble Apex Court, therefore, the aforesaid contention of the Ld. AR, wherein he had tried to distinguish the facts involved in case of the assessee as against those before the Hon’ble Apex Court being devoid and bereft of any merit is liable to be rejected.

24. Shri Sunil Kumar Agrawal, the Ld. AR for respondents at Sr. No. 3, 35, 37 & 38 had endorsed the submissions advanced by S/Shri Nikhilesh Begani and Abhishek Mahawar (supra). Additionally, the Ld. AR in order to buttress his claim that the department could not have on the basis of a subsequent judgment of the Hon’ble Apex Court in the case of Checkmate Services (P) Ltd. (supra) rectified its order under section 254(2) of the Act had pressed into service the judgment of Hon’ble Apex Court in the case of DCIT Vs. Simplex Concrete Piles (India) Ltd. (2013) 358 ITR 129 (SC). Apart from that, the Ld. AR submitted that the DCIT, CPC, Bengaluru could not have made an addition of the delayed deposit of the employees share of contribution towards ESI/EPF by taking recourse to a prima facie adjustment u/s.143(1) of the Act. The Ld. AR in support of his contention had relied on the order of the ITAT, Mumbai in the case of M/s. P.R. Packing Service Vs. ACIT, ITA No.2376/Mum/2022 dated 07.12.2022. Alternatively, the Ld. AR had submitted that in case the application filed by the department is accepted and the matter is recalled, then the respondent may be allowed to claim the payment of ESI and EPF under consideration as a business expenditure u/s.37(1) of the Act. The Ld. AR in support of his aforesaid contention had relied on the order of ITAT, Cuttack Bench, in the case of ITO, Ward-1(1), Balasore Vs. Tapan Jana & Ors, ITA No.27 & 28/CTK/2022 dated 16.12.2022.

25. We have given a thoughtful consideration to the aforesaid contentions of the Ld. AR. Apropos the judgment of the Hon’ble Apex Court in the case of Simplex Concrete Piles (India) Ltd. (supra) as had been relied upon by the Ld. AR, we are of the considered view that as the same was rendered in context of the jurisdiction of an A.O to reopen a concluded assessment u/s. 147 of the Act on the basis of reversal of the legal position by a subsequent judgment of the Hon’ble Apex Court, therefore, the same would not come to the respite of the assessee as regards the issue before us. Apropos the contentions advanced by the Ld. AR, wherein he has sought relief in case the applications filed by the department are allowed, viz. (i) that no addition of the delayed deposit of the employees share of contributions towards EPF & ESI could have summarily been made u/s.143(1)(a) ; and (ii) that the employee’s share of contribution towards ESI/EPF would even otherwise be allowable as a deduction u/s.37(1) of the Act, the same cannot be accepted by us. We, say so, for the reason that the limited issue before us is as to whether or not the miscellaneous applications filed by the department u/s. 254(2) of the Act are maintainable or not. The reliefs/rectification of mistakes as had been sought by the assessee respondent falls beyond the realm of adjudication of the present applications. Our aforesaid conviction is all the more fortified by the fact that as held by the Hon’ble Apex Court in the case of Saurashtra Kutch Stock Exchange Ltd. (supra) and Sree Ayyanar Spinning & Weaving Mills Ltd. (supra), the Tribunal on a suo-motto basis can rectify a mistake apparent from record within a period of six months from the end of the month in which the order was passed. Be that as it may, in case the assessee had within the stipulated time period contemplated in sub-section (2) of Section 254 of the Act filed any application pointing out any mistake in the order passed by the Tribunal while disposing off the appeal, then, the said claim will be considered while disposing off the said applications.

26. Shri Nilesh Jain, the Ld. AR for the assessee respondent at Sr. No.2 had relied on the contentions placed by S/sshri Abhishek Mahawar, Nikhilesh Begani and G.S. Agrawal. Alternatively, it was submitted by the Ld. AR that the present application was filed by the department to circumvent its failure to carry the matter in appeal before the Hon’ble High Court.

27. We have given a thoughtful consideration and are unable to persuade ourselves to subscribe to the aforesaid contention of Mr. Jain. As the filing of an appeal before the Hon’ble High Court on the one hand, and seeking rectification of a mistake u/s.254(2) of the Act, both operate in their respective independent fields and are in no way overlapping, therefore, we are unable to concur with the Ld. AR that as the department has not assailed the order of the Tribunal by filing an appeal u/s.260A of the Act before the Hon’ble High Court, therefore, the application filed by it under sub-section (2) of Section 254 would not be maintainable. We, thus, finding no substance in the aforesaid contention of the Ld. AR, reject the same.

28. Shri Nitin Goyal, Ld. AR for respondents at Sr Nos. 25, 26 & 34 had further objected to the application filed by the department under sub-section (2) of Section 254 of the Act by drawing support from the judgment of the Hon’ble High Court of Kerala in the case of P.T. Manuel & Sons Vs. CIT (2021) 129 taxmann.com.

29. We have perused the aforesaid order of the Hon’ble High Court of Kerala in the case of P.T Manuel & Sons (supra) and find that the same is distinguishable on facts. The issue before the Hon’ble High Court was as to whether the Tribunal could rectify its order passed in the case of the assessee on the basis of a subsequent view taken by them while disposing off the appeal of its sister concern. As the reliance placed by the Ld. AR on the aforesaid order is totally misconceived and not in context of the issue before us, therefore, the same by no means would assist his case. As regards the reliance placed by the Ld. AR on the judgment of the Hon’ble High Court of Calcutta in the case of Jiyajeerao Cotton Mills Ltd. Vs. ITO, (1981) 130 ITR 710 (Cal.), we find that the Hon’ble High Court had observed, that as the law laid down by the Hon’ble Supreme Court cannot be said to have retrospective operation in the sense that although a debate, doubt or conflict of a judicial opinion is resolved and settled by the Supreme Court but it does not obliterate the existence of such debate, doubt or conflict prior to such decision. As the Hon’ble Apex Court in the case of Saurashtra Kutch Stock Exchange Ltd. (supra) and Model Mills Nagpur Ltd. (supra), had held that if a point is covered by a decision of the Hon’ble Jurisdictional High Court or Hon’ble Supreme Court rendered prior to or even subsequent to the order proposed to be rectified, then, it could be said to be a mistake apparent from record u/s. 254(2) of the Act and could be corrected by the Tribunal. We, thus, respectfully following the aforesaid judgments of the Hon’ble Apex Court are unable to concur with the contentions placed by the Ld. AR.

30. Apropos the assessee placed at Sr. No.32 (MA No.34/ RPR/2023), we find that written submissions have been filed before us. The assessee has objected to the miscellaneous application filed by the department on the ground that, viz. (i) that as the entitlement of the assessee for deduction of the delayed deposit of employees share of contribution towards ESI & EPF was a debatable issue, hence, the same could not have been disallowed u/s.143(1) of the Act; (ii) that as the Tribunal while disposing off the appeal of the assessee had relied upon its earlier order in the case of Ind Synergy Ltd., ITA No.312/RPR/2016 dated 10.03.2022, wherein it was held that the amendment to Section 43B and Section 36(1)(va) that was made available on the statute vide the Finance Act, 2021 was applicable with prospective effect from 01.04.2021, therefore, the rectification proceedings could not have been resorted on the basis of a subsequent “change of opinion”; (iii) that though the non-consideration of a judgment of a superior court as was available at the time of passing of the order would render the order of the Tribunal as suffering from a mistake apparent from record but the same would not apply in case of a judgment rendered subsequently; and (iv) that as held by the Hon’ble Supreme Court in the case of Reliance Telecom Ltd. (supra) even in a case where the Tribunal had decided the appeal erroneously on merits, the same would not justify vesting of jurisdiction for recalling of the said order.

31. We have given a thoughtful consideration to the aforesaid submissions filed by the assessee before us. As observed by us hereinabove, it is the claim of the assessee that the deduction of the delayed deposit of employees share of contribution towards ESI & EPF was a debatable issue and an addition of the same could not have been summarily made u/s.143(1) of the Act. We may herein reiterate that as the aforesaid issue does not fall within the realm of our jurisdiction while disposing off the present miscellaneous application filed by the department, therefore, we refrain from considering the same. Apropos the claim of the assessee that now when the Tribunal while disposing off the appeal had relied on its earlier order in the case of Ind Synergy Ltd. (supra), and had categorically observed that the amendments to Section 43B and Section 36(1)(va) of the Act were applicable prospectively w.e.f. 01.04.2021, therefore, the same could not have been rectified on the basis of a subsequent judgment of the Hon’ble Supreme Court, we are unable to accept the same. We may herein observe that the aforesaid issue had already been dealt with and rejected by us while dealing with similar contentions as were advanced by the Ld. ARs for the aforementioned assesses. Also, the judgment of the Hon’ble Supreme Court in the case of Reliance Telecom Ltd. (supra) as had been relied upon by the assessee had been considered by us while dealing with the contentions of the aforementioned Ld. ARs. We, thus, not finding any substance in the written submissions filed by the assessee before us, reject the same.

32. We have given a thoughtful consideration to the issue before us, and are unable to persuade ourselves to subscribe to the contentions advanced by the Ld. ARs for the respective assessees. Admittedly, it is a matter of fact borne from record that the view taken by the Tribunal, wherein it had vacated the additions made by the AO’s w.r.t delayed deposit of employee’s share of contribution towards labour welfare funds, viz. EPF & ESI by the respective assessee-employers, i.e. beyond the stipulated time period contemplated in the said respective Acts is not in conformity with the view taken by the Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd. Vs. Commissioner of Income Tax-I (supra). The genesis of the present controversy is as to whether or not the aforesaid subsequent judgment of the Hon’ble Apex Court would render our orders passed while disposing off the present appeals, wherein a view to the contrary had been taken, as suffering from a mistake which being apparent, patent, obvious and glaring from record would render the same amenable for rectification u/s. 254(2) of the Act?

33. In our considered view, the aforesaid issue can safely be resolved by referring to the judgment of the Hon’ble Supreme Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC). The Hon’ble Apex Court by referring to the order of the Hon’ble High Court of Gujarat in the case of Suhrid Geigy Ltd. Vs. CIT (1999) 237 ITR 834 (Guj), had observed, that if a point is covered by the decision of the Hon’ble Jurisdictional High Court rendered prior to or even subsequent to the order proposed to be rectified, then it could be said to be a mistake apparent from record u/s. 254(2) of the Act and could be corrected by the Tribunal. The Hon’ble Apex Court drawing support from Blackstonian theory, had observed that it is not the function of the court to pronounce a “new rule” but to maintain and expound the old one. The Hon’ble Apex Court had observed that if a subsequent decision altered the earlier one, then the later decision does not lay down any new law but only discovers the correct principle of law which had to be applied retrospectively. It was further observed by the Hon’ble Apex Court that even where an earlier decision of the court operated for quite some time, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood. Referring to its historical decision in the case of I.C Golaknath Vs. State of Punjab & ors, 1967 SCR (2) 762, it was further observed by the Hon’ble Supreme Court that though the Court in the said judgment had accepted the doctrine of “prospective overruling”, however, the same was an exception to the general rule of the doctrine of precedent. For the sake of clarity, the relevant observations of the Hon’ble Apex Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. (supra) are culled out as under:

“40. The core issue, therefore, is whether non-consideration of a decision of Jurisdictional Court (in this case a decision of the High Court of Gujarat) or of the Supreme Court can be said to be a “mistake apparent from the record”? In our opinion, both – the Tribunal and the High Court – were right in holding that such a mistake can be said to be a “mistake apparent from the record” which could be rectified under Section 254(2).

41. A similar question came up for consideration before the High Court of Gujarat in Suhrid Geigy Limited v. Commissioner of Surtax, Gujarat, (1999) 237 ITR 834 (Guj). It was held by the Division Bench of the High Court that if the point is covered by a decision of the Jurisdictional Court rendered prior or even subsequent to the order of rectification, it could be said to be “mistake apparent from the record” under Section 254 (2) of the Act and could be corrected by the Tribunal.

42. In our judgment, it is also well- settled that a judicial decision acts retrospectively. According to Blackstonian theory, it is not the function of the Court to pronounce a `new rule’ but to maintain and expound the `old one’. In other words, Judges do not make law, they only discover or find the correct law. The law has always been the same. If a subsequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite some time, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood.

43. Salmond in his well-known work states;

“The theory of case law is that a judge does not make law; he merely declares it; and the overruling of a previous decision is a declaration that the supposed rule never was law. Hence any intermediate transactions made on the strength of the supposed rule are governed by the law established in the overruling decision. The overruling is retrospective, except as regards matters that are res judicatae or accounts that have been settled in the meantime”. (emphasis supplied)

44. It is no doubt true that after a historic decision in Golak Nath v. Union of India, (1967) 2 SCR 762, this Court has accepted the doctrine of `prospective overruling’. It is based on the philosophy: “The past cannot always be erased by a new judicial declaration”. It may, however, be stated that this is an exception to the general rule of the doctrine of precedent.

45. Rectification of an order stems from the fundamental principle that justice is above all. It is exercised to remove the error and to disturb the finality.”

Also, we find support from the judgment of the Hon’ble Supreme Court in the case of S.A.L. Narayana Row, CIT v. Model Mills Nagpur Ltd. [1967] 64 ITR 67 (SC), wherein the levy of additional tax on excess dividend was declared by the High Court of Bombay as illegal. The assessee company had by relying on the said decision of the Hon’ble Jurisdictional High Court filed an application with the Income Tax Officer for refund of the additional tax that was deposited by it. The Income-tax Officer declined to accede to the request of the assessee on the ground that the assessment was completed long before the judgment was pronounced by the High Court. The revision application filed by the assessee before the Commissioner of Income Tax under section 33A was also rejected. Against the order passed by the Commissioner of Income Tax the assessee company filed a writ petition with the High Court. The Hon’ble High Court allowed the assessee’s petition and directed the Commissioner of Income Tax to revise the order and refund the taxes which were illegally collected. On appeal by the revenue against the order of the High Court which had decided the issue in favour of the assessee, the Supreme Court upheld the decision of the High Court in which the Income-tax Officer was directed to revise the order and rectify the mistake. In Kil Kotagiri Tea and Coffee Estates Co. Ltd. v. ITAT [1988] 174 ITR 579 (Ker.), the Hon’ble High Court of Kerala held that an order of assessment passed upon an interpretation or application of law which is ultimately found to be wrong in light of judicial pronouncements rendered subsequently discloses a mistake apparent from the record. The Hon’ble High Court of Karnataka in the case of Mysore Cements Ltd. v. Deputy Commissioner of Commercial [1994] 93 STC 464, had observed, that it was needless to point out that when a point is covered by a decision of the Supreme Court or concerned Court, either rendered prior to or subsequent to the order proposed to be rectified, then the point ceases to be a debatable point and it also ceases to be a point requiring elaborate arguments or detailed investigation/enquiry. The Hon’ble High Court of Andhra Pradesh in the case of B.V.K. Seshavataram Vs. CIT [1994] 210 ITR 633 (AP) followed the ratio of the decision of the Supreme Court in the case of S.A.L. Narayana Row [1967] 64 ITR 67(SC), and came to the conclusion that a subsequent decision can form a valid basis for rectifying an order of assessment under section 154 of the Income-tax Act, 1961. The Hon’ble High Court of Madras in the case of M. K. Kuppuraj Vs. ITO [1995] 211 ITR 853 (Mad.), was of the view that an assessment made contrary to a judgment subsequently rendered by jurisdictional High Court constitutes an error on the face of the record amenable to rectification proceedings under section 154 of the Income tax Act, 1961. The Hon’ble High Court of Delhi in the case of Lakshmi Sugar Mills Co Ltd. Vs. CIT (2012) 22 taxmann.com 300 (Delhi) referring to the judgment of the Hon’ble Apex Court in the case of Saurashtra Kutch Stock Exchange Ltd. (supra), had observed that as judges do not make law and only discover or find the law, therefore, a judicial decision acts retrospectively. It was observed by the High Court that where a decision of the Hon’ble Supreme Court overrules earlier decision, the views expressed in the later decision would have to be regarded as having always been the law. Also, we find that the issue in hand had exhaustively been looked into by the Hon’ble High Court of Punjab & Haryana in the case of CIT Vs. Smt. Aruna Luthra (2001) 252 ITR 76 (P & H). Issue before the Hon’ble High Court reads as under:

“Can proceedings for rectification of an order passed under the provisions of the Income Tax Act, 1961, be initiated on the basis of a judgment delivered by the jurisdictional or a superior court after the passing of the said order?”

The Hon’ble High Court on the basis of its exhaustive deliberations on the issue under consideration, had observed that the proceedings for rectification of an order passed under the provisions of Income Tax Act can be initiated on the basis of a judgment delivered by Jurisdictional High Court or a superior court after passing of the said orders. For the sake of clarity, the observations of the Hon’ble High Court are culled out as under:

“13. Apparently, the argument of Mr. Bansal appears to be attractive. If the issue of error in the order is to be examined only with reference to the date on which it was passed, it may be possible to legitimately contend that it was legal on the date on which it was passed. The subsequent decision has only rendered it erroneous or illegal. However, there was no error much less than an apparent error on the date of its passing. Thus, provision of Section 154 is not applicable. However, such a view shall be possible only if the provision were to provide that the error has to be seen in the order with reference to the date on which it was passed. Such words are not there in the statute. Resultantly, such a restriction cannot be introduced by the court.

Thus, the contention raised by the counsel for the assessee cannot be accepted.

14. There is another aspect of the matter. In a given case, on interpretation of a provision, an authority can take a view in favour of one of the parties. Subsequent to the order, the jurisdictional High Court or their Lordships of the Supreme Court interpret the same provision and take a contrary view. The apparent effect of the judgment interpreting the provision is that the view taken by the authority is rendered erroneous. It is not in conformity with the provision of the statute. Thus, there is a mistake. Should it still be perpetuated? If the contention raised on behalf of the assessee were accepted, the result would be that even though the order of the authority is contrary to the law declared by the highest court in the State or the country, still the mistake couldn’t be rectified for the reason that the decision is subsequent to the date of the order.

15. Only the dead make no mistake. Exemption from error is not the privilege of mortals. It would be a folly not to correct it. Section 154 appears to have been enacted to enable the Authority to rectify the mistake. The legislative intent is not to allow it to continue. This purpose has to be promoted. The legislature’s will has to be carried out. By placing a narrow construction, the object of the legislation shall be defeated. Such a consequence should not be countenanced.

16. Still further, it deserves mention that the Parliament has prescribed a period of four years for correction of the mistake. While assessment under Section 143 or 144 has to be normally made within a period of one or two years, the mistake can be rectified at any time during the period of four years. The obvious intention of the Legislature is that if the mistake has come to the notice of the authority within the prescribed time, it should not be allowed to continue. It should be rectified. Regardless of the fact that the limitation for passing an order of assessment or filing an appeal has elapsed.

17. Still further, the provision has inbuilt safeguards. It provides for the issue of notice. It ensures the grant of an opportunity. It limits the jurisdiction of the authority. The action can benefit the assessee as well as the Revenue. In this situation, there appears to be no ground for placing an unduly restricted interpretation on the provision.

18. Mr. Bansal contended that a judgment of a court operates only prospectively and not retrospectively. Thus, a decided cause cannot be re-decided. Is it so?

19. A court decides a dispute between the parties. The cause can involve decision on facts. It can also involve a decision on a point of law. Both may have bearing on the ultimate result of the case. When a court interprets a provision, it decides as to what is the meaning and effect of the words used by the legislature. It is a declaration regarding the statute. In other words, the judgment declares as to what the legislature had said at the time of the promulgation of the law. The declaration is — This was the law. This is the law. This is how the provision shall be construed.

20. Julius Stone in ‘Social Dimensions of Law and Justice’ () Ist Indian Reprint 1999 (Chapter (XIV) while dealing with the subject of ‘Judge and Administrator in Legal Ordering’, observes as under:—

“If, then, a main impulse underlying the stare decisis doctrine is that justice should respect reasonable reliance of affected parties based on the law as it seemed when they acted, this impulse still has force when reliance is frustrated by an overruling. Despite this, it has long been assumed that a newly emergent rule is to be applied not only to future facts, and to the necessarily past facts of the very case in which it emerges, but to all cases thereafter litigated, even if these involved conduct, which occurred before the establishment of the new rule. This has proceeded ostensibly on the conceptual basis, clearly formulated since Blackstone, that the new holding does not create but merely declares, law. So that any prior putative law under which the parties acted is to be regarded as simply not law”.

(Emphasis supplied.)

21. The above observations clearly support the principle that the court merely declares law. An earlier decision as declared by the court is “simply no law”.

22. Notwithstanding the above observations, the issue of judge-made law being prospective or retroactive is not free from difficulty. However, the system as followed in Indian courts ensures a “suitable legal order”. It promotes “dignity and good repute of judicial institutions”. It is only equitable and fair that similar cases lead to identical results.

23. Mr. Sanjay Bansal contended that the judicial principle of retroactive operative of judge-made law has now been negated by the Parliament by introducing the ‘Explanation’ in Order 47 Rule 1. A subsequent decision is no longer a good ground for review. Thus, the counsel contended that the same principle should be followed while construing the provisions of the Income Tax Act.

24. This contention cannot be accepted. Firstly, because a similar provision has not been made in S. 154. The plain language is materially different. Still further, we have the authoritative pronouncement of their Lordships of the Supreme Court in Income Tax Officer, Alwaye v. Asok Textiles Ltd., Alwaye AIR 1961 SC 699. It was held that the High Court had “fallen into an error in equating the language and the scope of Section 35 of the Act (Income Tax Act, 1922) with that of Order 47 Rule 1 CPC. The language of the two is different because according to Section 35 of the Act which provides for rectification of mistakes the power is given to the various income-tax authorities within four years from the date of any assessment passed by them to rectify any mistake ‘apparent from the record’ and in the Code of Civil Procedure the words are an error apparent on the face of the record and the two provisions do not mean the same thing”. As such, the contention raised by the learned counsel cannot be accepted.

25. Mr. Bansal also pointed out that in the case of Jiyajeerao Cotton Mills Ltd. v. Income Tax Officer (1981) 130 ITR 710 a Division Bench of the Calcutta High Court had categorically taken the view that the judgment of the Supreme Court does not have retrospective effect. This decision was affirmed by their Lordships of the Supreme Court as SLP (c) Nos. 8791-8793 of 1980 were dismissed. Mr. Bansal also referred to the decision of the Andhra Pradesh High Court in Pingle Madhusudan Reddy v. Controller of Estate Duty, to contend that the judgment of the court does not operate retrospectively.

26. It is undoubtedly true that the view taken by the Andhra and Calcutta High Courts supports the argument of the petitioner. Even the Madras High Court has taken a veiw in favour of the assessee in State of Tamil Nadu v. K.S.M.G Meenambal and Co., () (1984) 56 STC 82 However, the view of the Kerala and Karnataka High Courts is to the contrary, In Kotagiri Tea and Coffee Estates Co. Ltd. v. Income Tax Appellate Tribunal () (1988) 174 ITR 579, the Kerala High Court relying upon the principle enunciated in ‘Salmond’s Jurisprudence’ had held in favour of the Revenue. Similar view was expressed by the Karnataka High Court in Mysore Cemets Ltd. v. Deputy Commissioner of Commercial Taxes () (1994) 116 CTR (Karnataka) 284.

27. Learned counsel referred to the decision of a Bench of this Court in CIT v. Haryana State Co-operative Supply and Marketing Federation () (1990) 182 ITR 53. In this case, it was inter alia observed that “once the matter has been decided by the High Court, it is not possible for the Department to carry out rectification on the solitary ground that in a later decision, the Supreme Court has impliedly overruled the decision”. In Hero Cycles Ltd. v. The State of Punjab, () (1995) 99 STC 611 and Ram Dass Rice and General Mills v. The State of Punjab, () (1996) 100 STC 211 the opinion was in favour of the Revenue.

28. On an examination of the judgments cited by the counsel for the Assessee, it appears that the rectification was not sought on the basis of a binding decision of the jurisdictional High Court or the Supreme Court. There was no such judgment when the application under S. 154 had been filed. The pronouncement had come at a later stage when the prescribed period of four years had already expired. Thus, the decisions have been given in a different context. Thus, these are distinguishable from the facts of the case in hand.

29. The basic principle is the certainty of law. Even though considerations of justice, equity and fair-play sometimes compel courts to deviate from a view expressed in an earlier case, yet the common law principle of stare decisis has been followed with the avowed object of ensuring that the litigant must be able to act on the view expressed by a court. Law can’t move with the wind. It is not a weather cock. The citizen is entitled to act on the basis of the law declared by the court. Once he acts, he should not be told that this summer is very hot. Thus, the law has changed even though the legislature has not intervened. The gnawing uncertainty has certainly to be avoided.

30. It was then contended that in a case where the Income Tax Officer intimates the assessee that the return has been accepted under Section 143(1), the provision of rectification cannot be invoked. Learned counsel placed reliance on the decision of their Lordships of the Supreme Court in Commissioner Of Income-Tax v. Hero Cycles (P) Ltd. (1997) 228 ITR 463 in support of his contention.

31. On a perusal of Section 154, we find that the provision does not provide for rectification only when a mistake in the order is detected. The mistake has to be on the record of the case. The record would include everything on the case file. The return, the evidence and the order are a part of the record. The mistake can be detected from anything on the file. Thus, even in case of an assessment under Section 143(1), it has not to be assumed that there can be no error apparent from the record. As for the decision in the case of Hero Cycles, the rule laid down by their Lordships is that the mistake can be of fact and law. However, the rectification can be made only when “a glaring mistake of fact or law committed by the officer passing the order becomes apparent from the record. Rectification is not possible if the question is debatable”. We cannot read this decision to mean that only the order has to be seen and not the record. Thus, the contention raised by the counsel cannot be accepted.

32. It was also contended that the decision of an authority decides the rights of the parties. It vests a right in them. The vested right can’t be taken away except when specifically permitted by a retrospective law.

33. There is no quarrel with the proposition. However, what deserves notice is that the right, if any, is subject to the provisions of law. Section 154 clearly provides for the intervention of the Authority within the specified time. Subject to the condition that the mistake is apparent. The issue is not debatable. Thus, any right under an order is subject to the provision of the statute. That being so, there is no vested right which can be said to have been taken away.”

34. On the basis of our aforesaid deliberations read along with the settled position of law as had been laid down by the Hon’ble Courts, we are of the considered view that as a subsequent decision of the Hon’ble Supreme Court do not enact the law but declare the law as it always was, therefore, an order can be rectified on the basis of a subsequent judgment of the Hon’ble Supreme Court or that of the Hon’ble Jurisdictional High Court. Our aforesaid view is further fortified by Article 141 of the Constitution of India, which reads as under:

“A law declared by the Hon’ble Supreme Court is binding on the Courts within the territory of India”.

35. Apart from that, we find that a “Third Member” of the ITAT, Mumbai, Bench “E” in the case of Kailashnath Malhotra Vs. JCIT, Special Range 56, Mumbai (2010) 129 TTJ 393 (Mum.), had after drawing support from the judgment of the Hon’ble Supreme Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC), observed that if the order passed by the Tribunal is not found to be in conformity with the judgment of the Hon’ble Supreme Court or that of the Hon’ble Jurisdictional High Court, which may be rendered prior to or subsequent to the impugned order then the same would constitute a mistake apparent from record amenable for rectification u/s. 254(2) of the Act. For the sake of clarity, the relevant observations of the Tribunal are culled out as under:

“… I have absolutely no doubt in my mind that the non- consideration of a judgment of the Hon’ble Supreme Court or that of the Hon’ble jurisdictional High Court delivered prior to or even subsequent to the order constitutes a mistake apparent from record as has been held by the Hon’ble Supreme Court in Saurashtra Kutch Stock Exchange Ltd. (supra). Similar view was expressed earlier by the Hon’ble Gujarat High Court in CIT Vs. Subodhchandra S Patel (2004) 265 ITR 445. In view of these judgments, it is vivid that even if the Hon’ble Supreme Court or the Hon’ble Jurisdictional High Court render a judgment after the passing of the order, the same has to be strictly followed. Interpretation of a statutory provision by the Hon’ble Supreme Court is always understood from the inception of the provision and it is never considered as a prospective ruling unless so specified.”

On a perusal of the aforesaid order, it transpires that the Tribunal had observed that even if the Hon’ble Apex Court renders a judgment after passing of the order sought to be rectified, the same is to be strictly followed, as the judgment of the Hon’ble Apex Court is always understood from the inception of the provision and it is never considered as a prospective ruling unless so specified. Our aforesaid conviction is further fortified by the judgment of the Hon’ble Supreme Court in the case of M/s New Noble Educational Society Vs. The Chief Commissioner of Income Tax, (2023) 290 Taxman 206 (SC). The Hon’ble Apex Court in its aforesaid judgment had while departing from its previous rulings regarding the meaning of the term “solely” used in Section 10(23C)(vi) of the Act, had held that in order to avoid disruption, and to give time to institutions likely to be affected to make appropriate changes and adjustments, it would be in the larger interests of society that the law declared in the said judgment operates prospectively. For the sake of clarity, the relevant observations of the Hon’ble Supreme Court are culled out as under:

“78. In the light of the foregoing discussion, the assessees’ appeals fail. It is however clarified that their claim for approval or registration would have to be considered in the light of subsequent events, if any, disclosed in fresh applications made in that regard. This court is further of the opinion that since the present judgment has departed from the previous rulings regarding the meaning of the term ‘solely’, in order to avoid disruption, and to give time to institutions likely to be affected to make appropriate changes and adjustments, it would be in the larger interests of society that the present judgment operates hereafter. As a result, it is hereby directed that the law declared in the present judgment shall operate prospectively. The appeals are hereby dismissed, without order on costs.

On the basis of our aforesaid deliberations, it can safely be concluded that as and where the Hon’ble Apex Court had intended that its judgment be given a prospective applicability, a specific rider to the said effect as in the case of M/s New Noble Educational Society Vs. The Chief Commissioner of Income Tax (supra) had been provided. However, we are afraid that no such rider is found in the judgment of the Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd. Vs. Commissioner of Income Tax-I (supra), which means that the same would have a retrospective application. We, thus, considering the facts involved in the case before us r.w the aforesaid settled position of law, are of the considered view, that as stated by the department in its miscellaneous application and, rightly so, as the view taken by the Tribunal in the captioned appeals is not found to be in conformity with the judgment of the Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd. Vs. Commissioner of Income Tax-I (supra), therefore, the same had rendered the orders passed while disposing off the respective appeals as suffering from a mistake, which being apparent from record had therein made those amenable for rectification under sub-section (2) to Section 254 of the Act.

36. We, thus, in terms of our aforesaid observations allow the respective miscellaneous applications filed by the department u/s. 254(2) of the Act, and recall the respective orders that were passed by the Tribunal while disposing off the aforementioned appeals.

37. Resultantly, the miscellaneous application filed by the department in MA No.01/RPR/2023 is allowed in terms of our aforesaid observations.

MA Nos. 02 to 19, 22 to 36 & 38 to 42/RPR/2023

38. As observed by us hereinabove, as the issue on the basis of which the department had filed miscellaneous applications in the remaining cases remains the same as were there before us in MA No.01/RPR/2023, therefore, the order therein passed shall apply mutatis-mutandis for the purpose of disposing off the said applications. Accordingly, all the Miscellaneous Applications filed by the department are allowed on the same terms as are recorded by us hereinabove while disposing off the MA No.01/RPR/2023. Thus, the Miscellaneous Applications filed by the department in MA Nos. 02 to 19, 22 to 36 & 38 to 42/RPR/2023 are allowed in terms of our aforesaid observations.

39. In the combined result, all the miscellaneous applications filed by the department are allowed in terms of our aforesaid observations. The registry is directed to fix the respective appeals for hearing for the limited purpose of giving effect to the judgment of the Hon’ble Apex Court in the case of Checkmate Services P. Ltd. Vs. Commissioner of Income Tax-I (supra) on 07.06.2023 after putting both the parties to notice.

Order pronounced under rule 34(4) of the Income-tax Appellate Tribunal Rules, 1963, by placing the details on the notice board.