Case Law Details
Kamal Nayan Singh Vs DCIT (Jharkhand High Court)
Once it is found that the rectification application u/s 254(2) of the I. T. Act, 1961 has been submitted within a period of four years from the date of actual receipt of the judgment and order passed by the tribunal, which is sought to be reviewed, petitioner is entitled to relief.
In the case of Sree Ayyanar Spinning & Weaving Mills Ltd. v. Commissioner of Income-tax reported in (2008) 17 SCC 203 the Hon’ble Supreme Court has an occasion to interpret section 254(2) of the I.T. Act, 1961, wherein the fact in short was that miscellaneous application u/s 254 (2) of the Act was filed well within four years for rectification of the order and it was the Tribunal which took its own time to dispose of the said application and the High Court held that application could not have been entertained by the tribunal beyond four years and the Hon’ble Supreme Court set aside the said judgment of High Court.
HC held that the order of the tribunal requires interference in view of the fact that the learned tribunal has committed gross error in complying the law prevalent on the date of hearing and not the law prevalent at the date of filing of the miscellaneous application. At the cost of repetition, the judgment relied upon by the learned tribunal has already been distinguished in the preceding paragraphs. Hence, both the substantial questions of law are decided in favour of the assessee.
FULL TEXT OF THE JUDGMENT/ORDER OF JHARKHAND HIGH COURT
The instant appeal is directed against the order dated 08.9.2017 passed by the learned Income Tax Appellate Tribunal (In short I.T.A.T.), in M.A. No. 03/RAN/2014, arising out of IT. (S.S.A. No. 58/PAT/2007), for the assessment years: Block period 1996-97 to 2002-03 (up to 07.3.2002); whereby the learned I.T.A.T. dismissed the Miscellaneous Petition filed by the petitioner under Section 254 (2) of the Income Tax Act, 1961.
2. The brief facts, which are necessary for disposal of the instant appeal, is that an assessment order u/s 158 BC/158 BB of the I.T. Act, 1961, dated 3 1.3.2004 was passed by the D.C.I.T., Central Circle-2, Ranchi for the Block Assessment Years i.e., 1996-97 to 2002-03 (up to 07.3.2002). Being aggrieved, the appellant challenged the aforesaid assessment order in appeal, wherein the learned C.I.T. (Appeals), vide its order dated 07.3.2007, passed in Appeal No. 79/RN/B.P./S & S/04-05, deleted the entire addition. Being aggrieved by the appellate order, the revenue challenged the same before the learned I.T.A.T. and the learned tribunal, vide its order dated 23.12.2009, passed in I.T.(S.S.)A. No. 58/PAT/2007, reversed the order passed by the C.I.T. (Appeals).
It further transpires that the said order was communicated to the petitioner, vide letter dated 02.08.2010 (Annexure 3), by the Assistant Registrar, I.T.A.T. Patna. Thereafter, the petitioner filed a miscellaneous application before the tribunal praying therein for reconsideration of the matter on certain grounds (Annexure 4). The said miscellaneous application has been dismissed by the impugned order on the ground of limitation; hence the appellant filed the instant appeal.
3. After hearing both the parties, this court, vide its order dated 28.04.2022, admitted the instant appeal on following questions of law.
I. Whether under the facts and circumstances and in law, the tribunal is justified in dismissing the M.A. filed by the appellant on the ground of limitation without considering the law existing on the date of filing of the said M.A. i.e. Section 254 (2)?
II. Whether the findings recorded by the I.T.A.T., Ranchi Bench, Ranchi is perverse and is liable to be set aside.
4. Mr. Biren Poddar, learned senior counsel for the appellant submits that the order passed by the learned tribunal is perverse in nature as it has dismissed the miscellaneous application of the appellant on the ground of limitation without considering the law existing on the date of filing of the said miscellaneous application since the petitioner rightly filed the miscellaneous application within time as per law i.e., within a period of four years from the date of communication. However, the learned I.T.A.T. decided the M.A. on the basis of amended law which was prevalent on the date of hearing. He contended that it is an admitted fact that as per the existing law the petitioner filed the miscellaneous application within time. Thus, the instant appeal be allowed and the matter may be remitted to the learned I.T.A.T. to reconsider the miscellaneous application on merit.
5. Mr. R.N. Sahay, learned Senior Standing Counsel for the Revenue opposed the aforesaid prayer. However, in paragraph 9 of his written submission he has categorically admitted that the tribunal vide its order dated 23.12.2009 reversed the order passed by the C.I.T. (Appeals) dated 07.03.2007 and the said order was communicated to the appellant vide letter dated 02.8.2010. Nevertheless, as per the mandates of law, which was existing at the time of hearing, the appellant was supposed to file any Miscellaneous Application under Section 254 (2) within a period of six months from the date of the order. As such, there is no perversity in the order..
6. Having heard learned counsel for the parties and after going through the impugned order as well as the written submissions filed by both the parties, it is an admitted fact that the I.T.A.T. allowed the appeal of the Revenue by reversing the order of C.I.T. (Appeals) vide its order dated 23.12.2009. However, the same was communicated to the petitioner vide letter dated 02.8.2010 and the miscellaneous application was filed by the petitioner on 03.06.2014. This goes to show that the miscellaneous application under section 254 (2) of the I.T. Act was filed within a period of four years from the date of communication of the order by the Assistant Registrar vide its letter dated 02.8.2010.
7. Prior to 01.06.2016, Section 254(2) of the Income Tax Act, 1961 reads as under:
“254(2) 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 amendment if the mistake is brought to its notice by the assesse or the Assessing Officer.”
The above section 254(2) of the Act was amended w.e.f. 01.06.2016 by Finance Act, 2016 and after its amendment the said section reads as under:-
“254(2) The Appellate Tribunal may, at any time *[within 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 passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assesse or the Assessing Officer:”
* Substituted for “four years from the date of the order” by the Finance Act, 2016, w.e.f. 1-6-2016
8. Thus, the effect of such amendment is that prior to amendment of Section 254(2), the assessee could bring to the notice of the appellate tribunal within 4 years from the date of the order for rectifying any mistake apparent from the record but after the amendment of the said section w.e.f. 01.06.2016, the same could be brought to the notice of the appellate tribunal within 6 months from the end of the month in which the order was passed.
9. In the instant case, the order passed by the learned ITAT on 23.12.2009 (Annexure-3/1) was sent by the Assistant Registrar, ITAT, Patna, vide his letter dated 02.08.2010, through registered post to the counsel of the appellant at Ranchi. The assertion to this effect has been made by the appellant in its miscellaneous application (Annexure-4) at paragraph 7 thereof. The Miscellaneous Application u/s 254(2) was filed on 03.06.2014 (Annexure-4) before the ITAT against the aforesaid order dated 23.12.2009 (Annexure-3/1), which was well within four years from 02.08.2010, when the said order dated 23.12.2009 was sent/communicated to the appellant. The said period of four years was provided under the then existing section 254 (2) of the Act and as such, such miscellaneous application was not be barred by law of limitation. The impugned order also confirms that the miscellaneous application was filed by the appellant against the order dated 23.12.2009 and the appellant had filed miscellaneous application on 03.06.2014.
10. This clearly goes to show that the appellant had filed the miscellaneous application much prior to amendment made in section 254 (2) of the Act w.e.f. 01.06.2016, but the Tribunal, in the impugned order, for the purpose of dismissing the said miscellaneous application filed by the appellant has wrongly relied upon an order passed by Mumbai Bench of Tribunal in the case of DCIT Vs. Hita Land Private Ltd. & Ors, order dated 25.04.2017 (ITAT Mumbai) in Miscellaneous Application No. 103/Mum/2017. The fact of the said case of Hita Land Private Ltd. has been mentioned in the impugned order at running page 66, the perusal of which shows as under:
(a) Tribunal passed the original order on 03.2013.
(b) Revenue filed Miscellaneous Application on 02.2017.
(c) The said MA was filed after amendment of section 254 (2) w.e.f. 01.06.2016.
Whereas, in the instant case the appellant had filed miscellaneous application on 03.06.2014 i.e., much before said amendment dated 01.06.2016, therefore, in the impugned order the learned tribunal has wrongly mentioned that facts of the instant case and facts of the case of Hita Land Private Ltd. are similar.
11. Moreover, the said order passed in Hita Land Private Ltd. by the Mumbai Bench of I.T.A.T. is in the teeth of a judgment of the Gujarat High Court in the case of Peterplast Synthetics (P.) Ltd. versus Assistant Commissioner of Income Tax reported in (2014)44 taxman.com 302, para12 and 13; wherein the High Court has held that once it is found that the rectification application u/s 254(2) of the I. T. Act, 1961 has been submitted within a period of four years from the date of actual receipt of the judgment and order passed by the tribunal, which is sought to be reviewed, petitioner is entitled to relief.
Further, in the case of Sree Ayyanar Spinning & Weaving Mills Ltd. v. Commissioner of Income-tax reported in (2008) 17 SCC 203 the Hon’ble Supreme Court has an occasion to interpret section 254(2) of the I.T. Act, 1961, wherein the fact in short was that miscellaneous application u/s 254 (2) of the Act was filed well within four years for rectification of the order and it was the Tribunal which took its own time to dispose of the said application and the High Court held that application could not have been entertained by the tribunal beyond four years and the Hon’ble Supreme Court set aside the said judgment of High Court. The relevant paragraphs 11, 12, 13 and 14 are quoted herein below.
11. By the impugned judgment the High Court came to the conclusion that under Section 254(2) the Tribunal could not have allowed rectification beyond four years. That, the Tribunal had no power to rectify the mistake after four years which time is set out in Section 254(2) itself for passing an order of rectification either suo motu or an application filed either by the assessee or by the assessing officer. The High Court did not go into the merits of the case. The High Court allowed the appeal and set aside the order of the Tribunal only on the ground of limitation. Hence, this civil appeal by special leave
12. In the light of the above controversy we set out hereinbelow provisions of Section 254(2) of the 1961 Act which read as follows:
“254. (2) 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 amendment if the mistake is brought to its notice by the assessee or the assessing officer:”
Analysing 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 subsection (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.
13. In the present 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.
14. In this connection, our attention is also invited to the judgment of the Rajasthan High Court in Harshvardhan Chemicals and Minerals Ltd. v. Union of India [(2002) 256 ITR 767 (Raj)] wherein an identical controversy arose for determination and the view taken by that Court was as follows : (ITR p. 767 C-F)
“Once the assessee has moved the application within four years from the date of appeal, the Tribunal cannot reject that application on the ground that four years have lapsed, which includes the period of pendency of the application before the Tribunal. If the assessee has moved the application within four years from the date of the order, the Tribunal is bound to decide the application on the merits and not on the ground of limitation. Section 254(2) of the Income Tax Act, 1961, lays down that the Appellate Tribunal may at any time within four years from the date of the order rectify the mistake apparent from the record but that does not mean that if the application is moved within the period allowed i.e. four years, and remains pending before the Tribunal, after the expiry of four years the Tribunal can reject the application on the ground of limitation.”
We are in agreement with the view expressed by the Rajasthan High Court in Harshvardhan Chemicals and Minerals Ltd. [(2002) 256 ITR 767 (Raj)]”
12. Having regard to the facts of the case and the discussions made hereinabove, we hold that the order of the tribunal requires interference in view of the fact that the learned tribunal has committed gross error in complying the law prevalent on the date of hearing and not the law prevalent at the date of filing of the miscellaneous application. At the cost of repetition, the judgment relied upon by the learned tribunal has already been distinguished in the preceding paragraphs. Hence, both the substantial questions of law are decided in favour of the assessee.
13. Consequently, the impugned order dated 08.9.2017, passed by the learned Income Tax Appellate Tribunal in M.A. No. 03/RAN/2014 is quashed and set aside.
The matter is remitted back to the learned tribunal with a direction to entertain the miscellaneous application filed by the appellant assessee and decide the same on its own merit in accordance with law after hearing both the parties. It goes without saying that we have not gone into the merits of the case.
14. As a result, the instant appeal stands allowed.
