2015 (7) TMI 947 - AT - Income Tax

Rectification of mistake - indirect expenses debited to the profit and loss account by the assessee - Held that - Assessing Officer has asked the assessee to furnish complete details and the assessee could not furnish the same. Similar was the position before the ld. CIT(A), but the ld. CIT(A) has deleted the addition having observed that the assessee was not under any obligation to maintain separate balance sheet and profit and loss account for each and every unit. While adjudicating the issue, the Tribunal has given a categorical finding that the assessee is not under any obligation to prepare separate balance sheet and profit and loss account for each and every unit, but whenever the assessee was asked by the Assessing Officer to furnish the details of a particular expense debited to the profit and loss account, the assessee is under obligation to furnish the complete details. Since the assessee has not furnished complete details before the ld. CIT(A), the deletion of addition was not proper. However, the Tribunal has restored the matter to the ld. CIT(A) for re-adjudicating the impugned issue afresh. The Tribunal has examined the facts and given a categorical finding on this issue. The findings of the Tribunal cannot be reviewed under the garb of rectification. If the assessee is aggrieved with the findings of the Tribunal on a particular issue, the remedy available to the assessee is not under section 254(2) of the Act but lies somewhere else. The ld. counsel for the assessee has tried to dispute the findings of the Tribunal and seeking a review of the order of the Tribunal which is not permissible under section 254(2) of the Act and we accordingly reject this Miscellaneous Application. - Decided against assessee.

Summary

Issues:
Controversy over indirect expenses debited to profit and loss account, Tribunal's decision conflicting with High Court mandate, Tribunal's order self-contradictory, rectification sought by assessee.

Analysis:
The case involved a Miscellaneous Application by the assessee challenging the Tribunal's order in an income tax appeal. The main issue revolved around indirect expenses of Rs. 2,78,26,506 debited to the profit and loss account by the assessee. The Assessing Officer had requested complete details of these expenses, which the assessee failed to provide both before the Assessing Officer and the CIT(A). The Tribunal acknowledged that the assessee was not obligated to maintain separate balance sheets for each unit but must furnish complete details when requested by the Assessing Officer. Despite this, the CIT(A) had deleted the addition. The Tribunal remanded the issue back to the CIT(A) for re-adjudication, as the deletion of the addition was deemed improper due to incomplete details provided by the assessee.

The Tribunal's decision was challenged by the assessee, claiming errors in the order and seeking rectification. However, the Tribunal clarified that the scope of rectification under section 254(2) of the Act is limited to correcting arithmetical or clerical mistakes apparent from the record. The Tribunal cannot review its own order based on a different interpretation of facts or law. Various High Courts have emphasized that rectification is not permissible for debatable points of law or matters requiring a re-evaluation of facts. The Tribunal's power is restricted to rectifying obvious and patent mistakes on the face of the record.

The Tribunal rejected the Miscellaneous Application, stating that no error apparent in its order was identified. The Tribunal emphasized that seeking a review of its decision was not permissible under section 254(2) of the Act. The decision was based on established legal principles that govern the scope of rectification by the Tribunal. Ultimately, the Miscellaneous Application was dismissed, affirming the Tribunal's original order.

In conclusion, the judgment highlighted the importance of adhering to the statutory limitations on the Tribunal's power to rectify orders. The case underscored the distinction between rectifiable mistakes and matters requiring a review of legal interpretations or factual assessments. The Tribunal's decision to remand the issue for re-adjudication was upheld, emphasizing the need for complete and accurate information to support financial claims in income tax assessments.