2013 (7) TMI 352 - AT - Income Tax

Rectification of mistake - penalty levied is unreasonable and excessive. The AO has levied penalty @ 150% of the tax sought to be evaded - Held that - If the argument and ground were not disposed off is a mistake apparent from rerecord. As in thus case argument was taken in course of hearing was also not consider and adjudicated. This too is covered by the judgment of CIT Versus Ramesh Chand Modi (2000 (7) TMI 8 - RAJASTHAN High Court). Also see CIT vs. Keshav Fruit Mart (1991 (11) TMI 24 - ALLAHABAD High Court) wherein held that the question for consideration was whether there was a mistake apparent from the record in that a ground raised in the memorandum of appeal before the Tribunal was not at all considered by the Tribunal. Tribunal has not at all discussed that ground in its order and complete omission to discuss the ground set up in appeal is undoubtedly a mistake apparent from the record. Also see B. Karamchand Piarelal vs. ITO 2003 (12) TMI 262 - ITAT AMRITSAR After considering the above submissions we are satisfied, that the addition ground raised regarding excessiveness of the penalty levied u/s 271(1)(c) of the Act remained unadjudicated. This is a rectifiable mistake inadvertently committed, and this can be rectified under the provisions of Section 254(2). Other submissions are simply admitted at the re-writing of the order which is not permissible under section 254(2). Accordingly the Tribunal Order is recalled only for the limited purpose of deciding the additional legal ground raised and reject other referred mistakes - appeal partly allowed.

Summary

Issues:
Rectification of Tribunal Order for A.Y. 1995-96 regarding sale of Mill, lease money taxation method, non-adjudication of additional ground of appeal, and excessiveness of penalty levied.

Rectification of Tribunal Order for A.Y. 1995-96:
The applicant sought rectification of the Tribunal Order for A.Y. 1995-96 due to apparent mistakes in the original order. The Tribunal had not accepted the appeal of the assessee related to the sale of a Mill. The applicant argued that the Mill was closed in A.Y. 1987-88, and no depreciation was claimed after that year. The surplus from the Mill's closure was considered as long-term capital gains by the assessee. The Tribunal's order did not reflect these facts accurately, leading to the request for rectification.

Lease Money Taxation Method:
The Tribunal discussed the issue of lease money being taxed on a receipt basis in an earlier year and found no reason for a change in the accounting method. The assessee clarified that there was no change in the accounting method and that advance lease money for ginning of Narma was not income until the contract was executed. The advance lease money was disclosed as income upon contract completion, following the correct accounting standard. The Tribunal's failure to address this clarification was highlighted as a mistake in the original order.

Non-Adjudication of Additional Ground of Appeal:
An additional ground of appeal, regarding the excessiveness of the penalty levied, was raised but not adjudicated in the Tribunal's order. The applicant argued that this ground, supported by legal precedents, should have been considered and decided. The failure to address this additional ground was deemed a mistake apparent from the record, necessitating rectification.

Excessiveness of Penalty Levied:
The Tribunal Order did not adjudicate on the excessiveness of the penalty levied under section 271(1)(c) of the Act. The applicant contended that this ground remained unadjudicated and should be rectified under the provisions of Section 254(2) of the Act. The Tribunal acknowledged this rectifiable mistake and recalled the order solely to decide the additional legal ground raised, rejecting other referred mistakes.

In conclusion, the Appellate Tribunal ITAT JODHPUR allowed the miscellaneous application partly for rectifying the non-adjudication of the additional ground raised regarding the excessiveness of the penalty levied. The Tribunal recalled the order for the limited purpose of deciding this specific legal ground, in line with the provisions of the Act. The rectification was deemed necessary to ensure a fair and just resolution in accordance with the legal arguments presented by the applicant.