2013 (8) TMI 1009 - HC - Income Tax

Mistake apparent from record is Rectifiable or not? u/s. 254(2) - Assessee had deposited the amounts under ESI and EPF contributions prior to the filing of the return under s. 139(1) of the Act. Tribunal held that assessee firm is in default for depositing the aforesaid amounts beyond the stipulated time period. Proviso to s. 43B was retrospective and no disallowance could be made if the payment had been made before the due date prescribed u/s 139(1) of the Act - interpreted vide judgment delivered by Hon'ble High Court in 2006- COMMISSIONER OF INCOME-TAX VERSUS AVERY CYCLE INDUSTRIES P. LIMITED (NO. 1). 2006 (9) TMI 153 - PUNJAB AND HARYANA HIGH COURT and in March 2007 delivered by the Hon'ble Supreme Court in CIT VERSUS VINAY CEMENT LTD. 2007 (3) TMI 346 - SC ORDER . The said decisions were prior in point of time to the decisions of the Tribunal on 5th Nov. 2007 and 23rd Nov., 2007 - HELD THAT - Non-consideration of the decision of the jurisdictional High Court or of the Supreme Court would constitute mistake apparent from the record and such mistake can be rectified u/s 254(2) by the tribunal. The Tribunal was in error in declining to rectify the mistake which was apparent on the face of the record. Decision in the case of- ASSISTANT COMMISSIONER, INCOME TAX, RAJKOT VERSUS SAURASHTRA KUTCH STOCK EXCHANGE LTD 2008 (9) TMI 11 - SUPREME COURT , relied upon. Decision in favour of Assessee.

Summary

Issues:
Identification of identical issues in two appeals for disposal.

Analysis:
The judgment pertains to two appeals, IT Appeal Nos. 115 and 116 of 2009, with identical issues. The primary issue revolves around the interpretation of the Income Tax Act, 1961, specifically regarding the applicability of the decision of the jurisdictional High Court or the Supreme Court in the case of Asstt. CIT v. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227. The central question for determination was whether the Tribunal erred in dismissing a miscellaneous application filed by the assessee, contending that the decision of the Hon'ble Supreme Court was not brought to the notice of the Tribunal during the appellate proceedings, thus constituting a 'mistake apparent from record' rectifiable under section 254(2) of the Act.

The factual background of the case involves a partnership firm engaged in manufacturing and exporting rubber goods. The firm filed its return for the assessment year 2003-04, declaring net income. The Assessing Officer (AO) initiated limited scrutiny under section 143(3)(ii) of the Act due to delayed deposits of employees' contributions towards ESI and EPF. The AO issued a show-cause notice for adding these amounts to the firm's income, resulting in an addition of a specific amount. The CIT(A) allowed the appeal and deleted the addition, but the Tribunal reversed this decision, leading to the appeal before the High Court.

The appellant argued that previous judgments, including CIT v. Avery Cycle Industries (P.) Ltd. (2007) 292 ITR 198 and CIT v. Vinay Cement Ltd. (2007) 213 CTR (SC) 268, supported their position that contributions made before the due date prescribed under section 139(1) could not be disallowed under section 43B of the Act. Relying on the decision in Asstt. CIT v. Saurashtra Kutch Exchange Ltd. (2008) 305 ITR 227, the appellant contended that non-consideration of jurisdictional court decisions constitutes a 'mistake apparent from record' rectifiable under section 254(2) of the Act.

The High Court, after considering the arguments, found merit in the appellant's contentions. Referring to the decision in Saurashtra Kutch Stock Exchange Ltd.'s case, the High Court held that the Tribunal erred in not rectifying the mistake apparent on the face of the record. The Court emphasized that previous judgments interpreting section 43B were delivered before the Tribunal's decisions, rendering the Tribunal's decision erroneous. Consequently, the substantial question of law was answered in favor of the assessee, resulting in the appeals being allowed.

In conclusion, the High Court's judgment clarified the applicability of previous court decisions in tax matters and underscored the importance of considering relevant legal precedents during appellate proceedings to rectify mistakes apparent from the record.