Case Law Details
Samriddhi Petroproducts Private Limited Vs ITO (ITAT Hyderabad)
ITAT Hyderabad held that the Tribunal has no power to recall/review its own orders in terms of scope and power of Tribunal for rectification of order u/s. 254(2) of the Income Tax Act.
Facts- The original assessment order was passed on 12/09/2016 and against that 263 order was passed by the learned Principal CIT on 28/02/2019, as none appeared on behalf of the assessee in the 263 proceedings. Feeling aggrieved, the assessee challenged the order of the learned PCIT before the Tribunal to grant fresh hearing. The learned PCIT on the basis of the direction had passed the detailed reasoned order u/s 263 which was the subject matter of the challenged before the Tribunal in ITA No.211/Hyd/2023.
Conclusion- Held that the scope and power of the Tribunal for rectification of the order u/s 254(2) of the I.T. Act, 1961 has been explained by the hon Supreme Court in the case of CIT vs. Reliance Petroproducts whereby the Hon’ble Supreme Court has held that the Tribunal has no power to recall/review its own orders.
Held that we do not find any reason to interfere in the miscellaneous application filed by the assessee as it will amount to deciding the issue on merit which in our understanding is not the scope of the application u/s 254(2) of the I.T. Act, 1961. For the above reason, the M.A filed by the assessee is dismissed.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This Miscellaneous Application filed by the assessee on 30/01/2024 which is the last date of filing the M.A. The grounds raised in the M.A are mentioned in Para 8 to 11 of the application which reads as under:
“8. It is respectfully submitted that all the above grounds are focused at the issue of validity of the original show cause letter and the order u/s 263. It is further submitted that before the Pr.CIT, Hyd-1, the assessees main contention was that the assumptions of the Pr.CIT-3, in the 263 proceedings are incorrect. Therefore, it was submitted that the Pr.CIT should drop the proceedings initiated by his predecessor. However, in the consequential order/proceedings without deciding in respect of incorrect assumptions in the original proceedings the learned Pr.CIT tried to improve the order u/s 263 and set aside the original order dt: 12.09.2016 and also consequential order u/s 143(3) r.w.s 263 of the IT Act dt: 31.12.2019. It is pertinent to mention here that against the order u/s 143(3) r.w.s 263 dt: 31.12.2019, the assessee preferred an appeal before the first Appellate Authority, on account of no representation this appeal was dismissed by the Appellate Commissioner. The assessee filed an appeal before the ITAT against this order, the Hon’ble ITAT in ITA No.580/Hyd/2022, dt: 15.12.2022, restored the matter to the file of Appellate Commissioner, which is pending for adjudication. Consequent to the order of the Pr.CIT dt: 31.03.2023, the fate of proceedings before the first Appellate Authority has become infructuous as the Pr.CIT directed the Assessing Officer to consider the issues which are subject matter of appeal before the Commissioner. The assessee humbly submit that the learned Pr.CIT is not empowered to held the proceedings before the first Appellate Authority as in fructuous.
9. In this regard it is respectfully submitted that the assessee raised the issue of validity of original order u/s 263, in its grounds of appeal, however, as the assessee has not appeared before the Pr.CIT in response to the show cause notice therefore, the matter was restored to the file of the Pr.CIT for reconsideration. In the consequential proceedings the learned Pr.CIT is required to decide the validity of the order u/s 263 in view of the assumption of the incorrect facts by the then Pr.CIT while passing the order u/s 263. However, in the subsequent proceedings the learned Pr.CIT-3, ignored the fact that the assumptions in the original proceedings are incorrect and not in accordance with the facts as per the record. Therefore. the assessee pleaded the Hon’ble Bench to cancel the order u/s 263 as the original order is passed without application of mind.
10. The Hon’ble Bench in their order dt: 31.07.2023, inadvertently has not considered the grounds raised in Form No.36 and adjudicated the issue as under:
“In our view, it is the bounded duty of the Assessing Officer to make sufficient enquiries and it is not for the Assessing Officer to pass perfunctory order without raising any question on vital issues. In the present case, the issues have not been considered by the Assessing Officer. Therefore, we do not find any reason to interfere with the order of ld.PCIT. As the order passed by the Assessing Officer was erroneous and prejudicial to the interests of Revenue. Therefore, the appeal of the assessee is dismissed. “
11. In this regard it is respectfully submitted that in the original 263 proceedings the learned Pr.CIT incorrectly assumed that there are exorbitant increase in estimation of turnover which is not correct. On the date of passing of 263 order the Department was having returns of income upto assessment year 2019-20, had the Pr.CIT verified the declared by the assessee in the subsequent actual turnover assessment years he would not have arrived to such an incorrect conclusion of exorbitant estimation of sales. Another issue is that the learned PCIT by verifying the 3CD report incorrectly assumed that the assessee accepted loans and advances in cash in violation of provisions of section 269SS and also further assumed the assessee repaid loans and advances in violation of section 269T. this assumption is totally incorrect as the 3CD reports clearly states that there is no violation of provisions of section 269SS and 2697T Therefore, the order u/s 263 is passed with an incorrect assumptions which is not permissible by the section 263 of the IT Act. An assessment order cannot be held erroneous and prejudicial to the interest of revenue on the basis of incorrect assumption.”
2. The learned AR submitted that the Tribunal while passing the order has not considered and decided the issue whether the original order passed by the Assessing Officer was filed in law or not.
3. Per contra, the learned DR, on the other hand, relied on the decision of the decision of the Hon’ble Supreme Court in the case of Commissioner of Income Tax (It)4 vs M/S. Reliance Telecom Ltd. on 3 December, 2021 in CIVIL APPEAL NO. 7110 OF 2021 and submitted that the present M.A is not maintainable.
4. We have heard both the parties, perused the material available on record. In the present case, the original assessment order was passed on 12/09/2016 and against that 263 order was passed by the learned Principal CIT on 28/02/2019, as none appeared on behalf of the assessee in the 263 proceedings. Feeling aggrieved, the assessee challenged the order of the learned PCIT before the Tribunal to grant fresh hearing. The learned PCIT on the basis of the direction had passed the detailed reasoned order u/s 263 which was the subject matter of the challenged before the Tribunal in ITA No.211/Hyd/2023.
5. We have perused the order passed by the Tribunal in ITA No.211/Hyd/2023 dated 31.07.2023 and we find all the issues, now sought to be adjudicated in M.A have already been considered by the Tribunal while passing the order. Furthermore, we find that the scope and power of the Tribunal for rectification of the order u/s 254(2) of the I.T. Act, 1961 has been explained by the hon Supreme Court in the case of CIT vs. Reliance Petroproducts (Supra) whereby the Hon’ble Supreme Court has held that the Tribunal has no power to recall/review its own orders. The relevant para in the order of the Hon’ble Supreme Court is reproduced below:
“3.1 We have considered the order dated 18.11.2016 passed by the ITAT allowing the miscellaneous application in exercise of powers under Section 254(2) of the Act and recalling its earlier order dated 06.09.2013 as well as the original order passed by the ITAT dated 06.09.2013.
3.2 Having gone through both the orders passed by the ITAT, we are of the opinion that the order passed by the ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013 is beyond the scope and ambit of the powers under Section 254(2) of the Act. While allowing the application under Section 254(2) of the Act and recalling its earlier order dated 06.09.2013, it appears that the ITAT has re-heard the entire appeal on merits as if the ITAT was deciding the appeal against the order passed by the C.I.T. In exercise of powers under Section 254(2) of the Act, the Appellate Tribunal may amend any order passed by it under sub-section (1) of Section 254 of the Act with a view to rectifying any mistake apparent from the record only. Therefore, the powers under Section 254(2) of the Act are akin to Order XLVII Rule 1 CPC. While considering the application under Section 254(2) of the Act, the Appellate Tribunal is not required to re-visit its earlier order and to go into detail on merits. The powers under Section 254(2) of the Act are only to rectify/correct any mistake apparent from the record.
4. In the present case, a detailed order was passed by the ITAT when it passed an order on 06.09.2013, by which the ITAT held in favour of the Revenue. Therefore, the said order could not have been recalled by the Appellate Tribunal in exercise of powers under Section 254(2) of the Act. If the Assessee was of the opinion that the order passed by the ITAT was erroneous, either on facts or in law, in that case, the only remedy available to the Assessee was to prefer the appeal before the High Court, which as such was already filed by the Assessee before the High Court, which the Assessee withdrew after the order passed by the ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013. Therefore, as such, the order passed by the ITAT recalling its earlier order dated 06.09.2013 which has been passed in exercise of powers under Section 254(2) of the Act is beyond the scope and ambit of the powers of the Appellate Tribunal conferred under Section 254 (2) of the Act. Therefore, the order passed by the ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013 is unsustainable, which ought to have been set aside by the High Court.
5. From the impugned judgment and order passed by the High Court, it appears that the High Court has dismissed the writ petitions by observing that (i) the Revenue itself had in detail gone into merits of the case before the ITAT and the parties filed detailed submissions based on which the ITAT passed its order recalling its earlier order; (ii) the Revenue had not contended that the ITAT had become functus officio after delivering its original order and that if it had to relook/revisit the order, it must be for limited purpose as permitted by Section 254(2) of the Act; and (iii) that the merits might have been decided erroneously but ITAT had the jurisdiction and within its powers it may pass an erroneous order and that such objections had not been raised before ITAT.
6. None of the aforesaid grounds are tenable in law. Merely because the Revenue might have in detail gone into the merits of the case before the ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors Section 254(2) of the Act. As observed hereinabove, the powers under Section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record and not beyond that. Even the observations that the merits might have been decided erroneously and the ITAT had jurisdiction and within its powers it may pass an order recalling its earlier order which is an erroneous order, cannot be accepted. As observed hereinabove, if the order passed by the ITAT was erroneous on merits, in that case, the remedy available to the Assessee was to prefer an appeal before the High Court, which in fact was filed by the Assessee before the High Court, but later on the Assessee withdrew the same in the instant case.
7. In view of the above and for the reasons stated above, the impugned common judgment and order passed by the High Court as well as the common order passed by the ITAT dated 18.11.2016 recalling its earlier order dated 06.09.2013 deserve to be quashed and set aside and are accordingly quashed and set aside. The original orders passed by the ITAT dated 06.09.2013 passed in the respective appeals preferred by the Revenue are hereby restored.”
6. In the light of the above, we do not find any reason to interfere in the miscellaneous application filed by the assessee as it will amount to deciding the issue on merit which in our understanding is not the scope of the application u/s 254(2) of the I.T. Act, 1961. For the above reason, the M.A filed by the assessee is dismissed.
Order pronounced in the Open Court on 6th September, 2024.
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