Case Law Details
ACIT (OSD) Vs G4S Facility Services (India) Ltd. (ITAT Delhi)
Income Tax Appellate Tribunal (ITAT), Delhi Bench, addressed a miscellaneous application filed by the revenue seeking to recall an order concerning delayed contributions to Provident Fund (PF) and Employee State Insurance (ESI). The order in question, dated August 30, 2022, had dismissed the revenue’s appeal, favoring the assessee based on earlier judgments from various High Courts. The revenue cited the Supreme Court decision in Checkmate Services P. Ltd. v. CIT-1 to argue that the tribunal’s order was erroneous and required rectification under Section 254(2) of the Income Tax Act.
The ITAT rejected the application, emphasizing the principle of fiscal law that each assessment year is distinct and independent. The tribunal also reiterated that Section 254(2) permits rectification only for mistakes apparent from the record, similar to the provisions of Order XLVII, Rule 1 of the Civil Procedure Code (CPC). The ITAT clarified that a subsequent judgment reversing a legal interpretation does not qualify as an “apparent mistake.” It drew attention to judicial precedents such as Reliance Jute & Industries Ltd. v. CIT (1981) and Goslino Mario (2000), which established that the law applicable to a given assessment year is determined by the prevailing legal framework for that year.
The tribunal referenced the landmark judgment in CIT v. Vegetable Products Ltd., where the Supreme Court held that if two reasonable interpretations of a tax provision exist, the one favoring the assessee must be adopted. In this case, the ITAT had originally relied on High Court decisions that supported the assessee’s claim regarding delayed PF/ESI contributions. The Supreme Court’s later judgment in Checkmate Services did not retroactively render the earlier interpretation a “mistake.”
The ITAT also distinguished this case from ACIT v. Saurashtra Kutch Stock Exchange Ltd. (2008). In that matter, the error arose from the tribunal’s failure to consider existing favorable judgments, which was not the case here. The ITAT noted that its decision aligned with the law as it stood at the time of adjudication and had accounted for all relevant precedents favoring the assessee.
In conclusion, the ITAT dismissed the revenue’s application, affirming that subsequent legal developments cannot retroactively alter decisions based on reasonable interpretations valid at the time.
Assessee was represented by : Ms. Ananya Kapoor, Adv
FULL TEXT OF THE ORDER OF ITAT DELHI
1. By virtue of this miscellaneous application, the revenue seeks to recall the order passed by this Tribunal in ITA No. 599/Del/2019 for AY 2015-16 dated 30.08.2022, by which the appeal of the revenue was dismissed on the ground of delayed contribution to employees’ contribution to PF & ESI by placing reliance on the various decisions of the Hon’ble Jurisdictional High Court and Hon’ble Punjab and Haryana High Court.
2. The application in hand has been moved to recall the said order on the basis that decision of Hon’ble Supreme Court in Civil Appeal no. 2833 of 2016 in the case of Checkmate Services P. Ltd. v. CIT-1 & others dated 12.10.2022 is not considered as that judgment has confirmed the disallowance of expenditure on account of delay in deposit of employees’ contribution related to EPF and ESI.
3. The ld. AR has relied the decision of the Mumbai Tribunal in the case of DCIT ANI Integrated Services Ltd., MA No.167/Mum/2023, order dated 29.05.2024, to contend that Mumbai Bench has taken a view on this contentious aspect holding that the scope of section 254 (2) of the Act is limited and review of an order is not possible.
4. We have given thoughtful consideration to the matter on record and on facts of the present case. It is the settled proposition of law that in fiscal litigation, each assessment year is separate and independent. It has been affirmed by the Hon’ble Delhi Court in Goslino Mario Case (2000) 242 ITR 312 that a cardinal principle of the Tax law is that the law to be applied is that which is in force in the relevant assessment year unless otherwise provided expressly or by necessary implication. In Reliance Jute and Industries Ltd. V CIT (1981) 2 SCC 585 also this proposition law is recognized.
5. We can observe that the coordinate Bench while passing the order has taken into consideration the judgments in favour of assessee. Hon’ble Supreme Court in the case of CIT vs. M/s Vegetable Products Ltd., 88 ITR 192 has held for that if two reasonable constructions of a taxing provision are possible, the construction which favours the assessee must be adopted. The coordinate Bench has, thus, given the assessee the benefit of the view of various Hon’ble High Courts favouring the Thus, where assessee is benefited due to one favorable view then, due to subsequent judgment reversing that view, cannot be said to be a mistake apparent from record, requiring exercise of powers u/s 254(2) of the Act.
6. Even otherwise, after the judgement of the Hon’ble Supreme Court in the case of CIT Reliance Telecom Ltd. (2022) 440 ITR 1 (SC), the powers u/s 254(2) being recognized as akin to power of Review under order XLVII, Rule 1 CPC, the same restricts the scope of review as it is only mistake apparent from record which can be rectified and, according to the requirement of the nature of rectification, the order may be recalled or re- heard. The Explanation attached to the order XLVII Rule 1 CPC specifically provides that merely because of reversal or modification of a judgment of a court which has been relied in a decision, that alone will not be a ground for review of the judgment. Thus for the reason that assessee was given benefit by following the law, as stood then, as laid by Hon’ble High Court, the same cannot be termed as “mistake apparent from record”.
7. The judgment relied by the Revenue of the Hon’ble Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227/173 Taxman 322 is not applicable, as that was not a case where one of the possible views in favour of the assessee was accepted by the Bench but in that case the attention of the Bench was not drawn to certain decisions in favour of the assessee which then existed and, subsequently, when the assessee came to know about the judgement an application u/s 254(2) of he Act was filed bringing it to the notice of the Tribunal.
8. In view of the above, miscellaneous application preferred by the revenue is hereby dismissed.
Order pronounced in the open court on 14/02/2025.
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