2014 (1) TMI 293 - AT - Income Tax

Recall of order - Held that - The scope of section 254(2) is very limited under which an order can be amended or rectified by the Tribunal where there is a mistake apparent on the record of the order - From the perusal of the impugned order there appears no mistake apparent on the record - The ground that the assessee could not produce the relevant documents relied upon by the assessee before the lower authorities is not a ground which can be considered to be a mistake apparent on the record - It was the discretion of the Tribunal either to accept or reject the adjournment application and when it is the case of the assessee itself that the same was rejected and even the ld. representative of the assessee was duly heard on merits under such circumstances it cannot be said that there was any mistake committed by the Tribunal which is apparent in the order - If the representative of the assessee had not filed the documents relied upon by it before the date of hearing itself then he himself is responsible for the lapse or lack of due diligence - It cannot be said to be a case of any mistake apparent on the record. The shareholder would have independent right to contest such additions if so made by the AO but so far the assessee company is concerned it has no locus-standi to contest the same - The assessee has sought the recalling of the order by way of seeking the review of the order passed on merits but not for any rectification of mistake apparent on record which otherwise is beyond the scope of provisions of section 254(2) of the Income Tax Act - Decided against assessee.

Issues involved:
1. Recalling of the order dated 24.07.13 passed in ITA No.7626/M/11 under section 254(2) of the Income Tax Act.
2. Consideration of whether the transaction between two companies was a loan or a business transaction under section 2(22)(e) of the Income Tax Act.
3. Rejection of adjournment request by the Tribunal and subsequent dismissal of the appeal.
4. Failure to produce necessary documents to substantiate the business transaction claim.
5. Applicability of section 254(2) for amending orders with apparent mistakes.
6. Deletion of additions made by the AO and the issue of additions in the hands of a shareholder.

Detailed Analysis:

1. The applicant sought to recall the order dated 24.07.13 under section 254(2) of the Income Tax Act, claiming a mistake apparent from the record. The applicant contended that the adjournment request was rejected, leading to the dismissal of the appeal without the opportunity to present evidence supporting the business transaction claim.

2. The main issue revolved around whether the transaction between two companies constituted a loan or a business transaction under section 2(22)(e) of the Income Tax Act. The applicant argued that the lower authorities had rejected their contention that the transaction was a business deal, while an alternate argument was accepted by the CIT(A) regarding additions made by the AO.

3. The Tribunal rejected the adjournment request, stating that the authorized representative was present and heard, thus the case was not unheard. The Tribunal emphasized that the failure to file necessary documents before the hearing was not a valid ground for recalling the order under section 254(2).

4. The Tribunal highlighted that the applicant's responsibility to provide necessary documents before the hearing and the lack of a provision allowing recalling orders for not producing documents on time. The Tribunal concluded that there was no mistake apparent on the record to warrant recalling the order.

5. Additionally, the Tribunal noted that the applicant had not reproduced a ground of appeal challenging the potential additions in the hands of a shareholder, indicating a contradiction in the applicant's stance. This omission was seen as concealing material facts, further weakening the applicant's case for recalling the order.

6. The Tribunal also considered the Revenue's appeal to the High Court against the deletion made by the CIT(A) and confirmed by the Tribunal. The Tribunal emphasized that seeking a review of the order on merits, not rectification of a mistake, was beyond the scope of section 254(2) of the Income Tax Act, leading to the dismissal of the applicant's request.

This detailed analysis covers the issues involved in the legal judgment comprehensively, addressing each aspect of the case and the Tribunal's reasoning for dismissing the application to recall the order.

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