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Issues involved: Application u/s.254(2) for rectification of ITAT order regarding penalty u/s.271(1)(c) based on citation of judgment not mentioned during hearing.
Summary: The Miscellaneous Application u/s.254(2) of the Income-tax Act, 1961 was filed by the assessee seeking rectification of the ITAT order dated 20.02.2009 in ITA No.4251/Mum/2007. The assessee contended that the Tribunal upheld the penalty u/s.271(1)(c) based on a judgment not cited during the hearing, while relying on a different judgment. The Departmental Representative claimed to have relied on the judgment in question during the hearing, leading to conflicting affidavits. The Tribunal noted the conflicting affidavits and the transfer of the Members who heard the appeal, making it impossible to determine the accuracy of the claims. Regarding the substantive issue, the assessee, engaged in manufacturing toothpaste, claimed deductions u/s.80-I and 80-HHA for profit on the sale of shares. The Assessing Officer disallowed the deduction, assessing the income as capital gains, a decision upheld in further appeals. Subsequently, a penalty u/s.271(1)(c) was imposed and upheld by the CIT(A). The Tribunal found that the profit on the sale of shares was not derived from the manufacturing business, leading to the penalty being sustained based on independent reasoning, not solely on the judgment in question. In dismissing the Miscellaneous Application, the Tribunal emphasized that rectification u/s.254(2) is not a tool for reviewing earlier orders unless there is a clear mistake on record. Citing a recent judgment, the Tribunal concluded that the impugned order did not warrant rectification under section 254(2) of the Act. The Miscellaneous Application was therefore dismissed on May 21, 2010.
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