2014 (1) TMI 904 - AT - Income Tax

Recall of order Rectification of mistake apparent on record u/s 254 of the Act Held that - The issue has already been decided in the case of Teja Construction 2014 (1) TMI 832 - ITAT HYDERABAD and the Assessing Officer is directed to estimate the income of the assessee, i.e., directing the Assessing Officer to estimate the income of the assessee @ 9% on own contract works, 8% on contracts taken by assessee on subcontracts and @ 5% on contracts given by the assessee to 3rd party on subcontracts and directing the Assessing Officer to allow remuneration, interest on pital and depreciation out of estimated income - In CIT vs. Pearl Woollen Mills 2009 (11) TMI 48 - PUNJAB AND HARYANA HIGH COURT it has been held that Statutory authority cannot exercise power of review unless such power is expressly conferred - There is no express power of review conferred on the Tribunal - the scope of review does not extent to re- hearing of the case on merit - The scope and ambit of application of section 254(2) is very limited Decided against Assessee.

Summary

Issues:
- Recalling and deciding an order by ITAT Hyderabad
- Estimation of income percentages for different types of contracts
- Application of section 254(2) for rectification of mistakes in the order

Analysis:

1. Recalling and Deciding Order:
The case involved an appeal before the Appellate Tribunal ITAT Hyderabad where the issue was regarding the estimation of income percentages for different types of contracts. The Tribunal recalled and decided the entire order in response to the appeal by the assessee. The Tribunal upheld the order of the CIT(A) regarding the rate of profits to be adopted on the gross receipts and further allowance of remuneration, interest on capital, and depreciation. The Tribunal dismissed the Revenue's appeal on these issues based on the decision in the Assessee's own case for the earlier year.

2. Estimation of Income Percentages:
The Tribunal directed the Assessing Officer to estimate the income of the assessee at 9% on own contract works, 8% on contracts taken by the assessee on subcontracts, and 5% on contracts given by the assessee to 3rd party on subcontracts. This decision was based on the Tribunal's earlier estimation in the Assessee's own case for the previous year. The Tribunal emphasized that the estimate of income may vary from case to case and that the estimate of income as a percentage of Gross receipts is prior to the allowance of depreciation, interest on capital, and remuneration.

3. Application of Section 254(2):
The Tribunal addressed the application of section 254(2) for rectification of mistakes in the order. It was highlighted that the powers of the Tribunal under this section are limited to rectifying mistakes apparent from the record. The Tribunal clarified that the power to rectify a mistake is not equivalent to a power to review or recall the order sought to be rectified. The Tribunal emphasized that under this section, an oversight of a fact cannot constitute an apparent mistake rectifiable, and failure to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on record.

In conclusion, the Tribunal dismissed the Miscellaneous Application filed by the assessee, stating that the Tribunal cannot review its earlier order as sought by the assessee's counsel. The application of section 254(2) was elaborated upon to clarify the limited scope and purpose of rectification of mistakes in the Tribunal's order. The judgment provided detailed reasoning and legal principles governing the Tribunal's powers in such matters.