CA Vinamar Gupta
Often when department or the assessee is not satisfied with the order of the ITAT, then apart from resorting to appeal before High Court u/s 260A makes use of section 254(2). U/s 254(2), ITAT is vested with power to rectify mistake apparent from record with in four years from the date of order. As per section 254(2) read with Rule 34A of ITAT rules, application for rectification is required to be filed in triplicate and to be accompanied by fee of fifty rupees. The assessee might even file second application u/s 254(2) after earlier application fails. The ITAT is also required to provide both the parties a reasonable opportunity of being heard even if it a prima facie case of review. The ITAT is required to pass a reasoned order deciding the fate of such rectification application. The vested powers of the ITAT however, are not unbridled and have to be exercised while walking the thin string of rectification vs. review, because while rectification is permissible, any perversity in order can only be dealt by High Court.
1. Recently, ITAT Amritsar in a decisions in case of Rohit Tandon ITA 345/2009 pronounced on 05-03-2015 had an occasion to deal with the issue of powers vested with ITAT regarding recall of its order, when it recalled its earlier order rendered against the assessee. The earlier order was recalled because it was found by ITAT that case laws cited on the behalf of assesseee have not been considered. Also it was found that there are certain mistakes in earlier order and arguments were not considered in right perspective, as pointed out in miscellaneous application of the assessee and argued during the hearing of the appeal. ITAT therefore found that these constitute mistakes apparent from record and hence order needs to be recalled to meet the ends of justice.
2. The departmental representative raised a contention that while arguing the case, the assessee counsel can plead only those case laws and only argue only on those points which were referred in application filed for recall of order. In other words, ITAT in second innings of appeal cannot go beyond points rectifiable in first innings. The department placed reliance on Commissioner of Income tax vs. Gokul Chand Agarwal’, 202 ITR 14 (Cal.); ‘Commissioner of Income Tax vs. Earnest Exports Ltd.’, 323 ITR 577 (Bom.); ‘Shaw Wallace And Co. Ltd. vs. Income-Tax Appellate Tribunal And Others’, 240 ITR 577 (Cal.); Commissioner of Income tax vs. Income Tax Appellate Tribunal And Others’, 293 IT 118 (Del.) ;Commissioner of Income Tax vs. Kedia Leather And Liquor Ltd.’, 293 ITR 95 (MP).
3. It was also contended on behalf of the department that non consideration in right perspective tantamounts to review of order which is the power not vested with ITAT.
4. The ITAT Amritsar shared some noticeable judgements while considering the issue of reigns on its powers to total recall of order as under:
Lachman Dass Bhatia Hingwala (P) Ltd. vs. ACIT’, 237 CTR
(Del) (FB) 117
|The Tribunal, while exercising the power of rectification u/s 254(2) of the Act, can recall its order in its entirety, if it is satisfied that prejudice has resulted to the party, which is attributable to the Tribunal’s mistake, error or omission and which error is a manifest error and it has nothing to do with the doctrine or concept of inherent power of review.|
‘Commissioner of Income Tax vs. S.K.Gupta’, reported in (2010)
327 ITR 267 (All),
If the mistakes apparent from the record go to the root of the matter, it is the discretion of the Tribunal to correct the mistakes in the facts of the order, or the operative portion of the order, or to hear the appeal denovo.
Champa Lal Chopra vs. State of Rajasthan’, reported in (2002)
257 ITR 74 (Raj.),
Where the factual mistake is so apparent that it becomes necessary to correct the same, the Tribunal would be justified in not only correcting the said mistake by way of rectification, but if the judgment has proceeded on the basis of facts, it would be justified in recalling such order.
Commissioner of Income Tax vs. Ramesh Chand Modi’, 249 ITR
Where the Tribunal fails to decide some of the questions raised before it, inadvertently or by oversight, the only appropriate method of correcting such mistake is to recall the order and make a fresh order after affording an opportunity of hearing to such party, and that in all such cases, ordinarily, the Tribunal acts ex-debito justitiae to prevent abuse of process, even in the absence of any power.
Third Member decisions of the Tribunal are also to the same effect: ‘B. Karam Chand Pyare Lal vs. ITO’ 91 ITD 398 (All.) (TM); and ‘Mohan Meakins Ltd. vs. ITO,’ 89 ITD 179 (Del) (TM)
5. Further following defects were noticed by ITAT while dealing with objection of the department that order can not be reviewed in the garb of rectification:
1. One Supreme Court Judgement stated in original order of ITAT to be relied upon by both by assessee as well as depertment in its was in fact admitted by CIT A to be held in favor of the assessee.
2. Distinction of one judgement stated to be done by assessee was neither discussed nor disposed of by the Tribunal in impugned order.
3. Another Judgment sated to be relied upon by the assessee was infact never relied.
4. Another judgment was found to be distinguishable in impugned order without assigning any reasons.
5. Arguments although stated to have been recorded in the judgment were not in fact recorded.
6. Findings of the CIT A that findings of AO are contrary to his arguments were also not dealt.
ITAT further held that the words right perspective in order u/s 254(2) is followed by as pointed out in miscellaneous application of the assessee and argued during the hearing of the appeal. Hence the order u/s 254(2) is with reference to mistakes apparent from the record as pointed out by the assessee only.
7. ITAT Amritsar there after dealt comprehensively the judgements cited by Department and distinguished them as under:
a. In Gokul Chand Aggarwal, ITAT recalled its order without pointing out that the same suffered from any mistake apparent from the record.
b. In Earnest Exports Limited, ITAT decided the case on merits and after duly considering the all judgments before it on issue of 80HHC and then again reappreciated the entire issue in its order u/s 254(2).
c. In Shaw Wallace , it was held that mistake in reasoning portion of order which did not affect correctness of final order cannot be rectified u/s 254(2).
d. In Commissioner of Income tax vs. Income Tax Appellate Tribunal And Others, it was held that mere failure to take into account the decisions cited by the assessee does not constitute mistake apparent from the record.
e. In Kedia Leather, it was held that ITAT can rectify its order but can not review it.
ITAT held that in present case there is non consideration of cited judgements coupled with apparent mistakes and neither there is any re-appreciation of the issue in recall order. Hence facts of the case are distinguishable from all the judgements cited above.
Conclusion: “Mistake” means to take or understand wrongly or inaccurately; to make an error in interpreting; it is an error; a fault; a misunderstanding; a misconception. “Apparantrly” means visible; capable of being seen; easily seen; obvious; plain. “Record “ means record of the tribunal i.e. papers and documents and orders which have been placed in paper book and with the memo of appeal, before tribunal by the parties. Hence defining the word mistake apparent from record in itself is a daunting task and its application in various practical situation is definitely not a cakewalk. The Hon’ble Bench of ITAT has however, aptly consolidated the law apropos to the subject.
(Author :CA Vinamar Gupta, 53-E, DayaNand Nagar-II, Lawrence Road, Amritsar, Mob: 9356048001, firstname.lastname@example.org)