Tribunal would have the necessary power to rectify/amend its order if a mistake/error is brought to the notice of the Tribunal
Federal Mogul Goetze (India) Ltd. through A.R. vs. Assistant Commissioner of Income Tax Circle-9(1), New Delhi; W.P.(C) 11330/2021; High Court of Delhi;22.10.2021
The present Writ Petition was directed against the order passed by the Income Tax Appellate Tribunal (in short „the Tribunal‟), whereby the Miscellaneous Application was dismissed. The said M.A. was filed by the assessee/petitioner seeking adjudication qua additional grounds which formed part of its appeal i.e., ITA No.1909/Del/2016. The said grounds were as follows:
- The Ld. AO, on facts and in law, has erred in disallowing the advances written off amounting to INR 52,53,000 under the provisions of Section 36(2) of the Act. In doing so, the Ld. AO has failed to appreciate that such advances were given during the normal course of business and their subsequent non-recovery and consequent write-off in the books of accounts by the Appellant constituted a valid business expenditure to be allowed to the Appellant.
- The Ld. AO has erred, on the facts and circumstances of the case and in law, in not allowing additional MAT credit (amounting to INR 1,36,75,898) as claimed by the Appellant during the course of assessment proceedings. In doing so, the Ld. AO has failed to appreciate that the aforesaid claim was a revision of an existing claim already claimed in the return of income, on account of an inadvertent error and not a fresh claim on account of omission on the part of the Appellant. Further, the Hon’ble DRP has grossly omitted in addressing the objection raised by the appellant on the aforesaid action of the Ld. AO while issuing directions to the Ld. AO.”
Observations and Findings:
- Relying on the judgments in Lachman Dass Bhatia Hingwala (P.) Ltd. v. Assistant Commissioner of Income Tax, 2010 SCC OnLine Del 4617 by Delhi High Court and in Assistant Commissioner of Income-Tax v. Saurashtra Kutch Stock Exchange Ltd.,  262 ITR 146 by Gujarat High Court, following observations were made:
a) The Tribunal has power to rectify a mistake apparent from the record on its own motion or on an application by a party under section 254(2) of the Act;
b) An order on appeal would consist of an order made under section 254(1) of the Act or it could be an order made under sub-section (1) as amended by an order under sub-section (2) of section 254 of the Act;
c) The power of rectification is to be exercised to remove an error or correct a mistake and not for disturbing finality, the fundamental principle being, that power of rectification is for justice and fair play;
d) That power of rectification can be exercised even if a mistake is committed by the Tribunal or even if a mistake has occurred at the instance of party to the appeal;
e) A mistake apparent from record should be selfevident, should not be a debatable issue, but this test might break down, because judicial opinions differ, and what is a mistake apparent from the record cannot be defined precisely and must be left to be determined judicially on the facts of each case;
f) Non-consideration of a judgment of the jurisdictional High Court would always constitute a mistake apparent from the record, regardless of the judgment being rendered prior to or subsequent to the order proposed to be rectified;
g) After the mistake is corrected, consequential order must follow, and the Tribunal has power to pass all necessary consequential orders.
h) 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.
i) Justice is a virtue which transcends all barriers. Neither the rules of procedure nor technicalities of law can stand in its way. The order of the court should not be prejudicial to anyone.
j) If the court finds that the order was passed under a mistake and it would not have exercised the jurisdiction but for the erroneous assumption which in fact did not exist and its perpetration shall result in miscarriage of justice then it cannot on any principle be precluded from rectifying the error.
k) The latter is available where the mistake is of the court. In Administrative Law, the scope is still wider. Technicalities apart if the court is satisfied of the injustice then it is its constitutional and legal obligation to set it right by recalling its order.
- No decision could be rendered on the issues raised before the Income Tax Appellate Tribunal (in short “the Tribunal”) by way of additional ground nos. 6 and 7, in view of the fact that the appeal had been withdrawn by the petitioner.
- It was accept by the counsel for the Respondent also cannot but accept the position that, the Tribunal has the power to amend its order to rectify mistakes, which are apparent on the face of the record, in exercise of its power under sub-section (2) of Section 254 of the Income Tax Act, 1961 (in short “the Act”).
- The power available to the Tribunal under subsection (2) of Section 254 of the Act is not limited to a mistake committed by the Tribunal. The amendment to the order of the Tribunal can also be made, if it is triggered on account of a mistake of the counsel for the parties.
- Once a mistake/error is brought to the notice of the Tribunal, which is apparent on face of record, either by the assessee or the assessing officer, the Tribunal would have the necessary power to rectify/amend its order. This power will also extend to a situation, such as the one obtaining in the present case, where the petitioner’s counsel withdrew the appeal, for the reason that, the issue concerning transfer pricing adjustment in respect of the assessment year (AY) in issue i.e., AY 2011-12, stood resolved.
In view of the aforesaid, the impugned order passed by the Tribunal in miscellaneous application deserves to be set aside. And the Tribunal was directed to take up the petitioner’s appeal, insofar as the issues pertaining to grounds 6 and 7 are concerned, and adjudicate upon the same, after hearing the concerned parties
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