2015 (12) TMI 768 - AT - Income Tax

Rectification of mistake - lack of jurisdiction in absence of order u/s. 127 - Held that - The AR had referred to the letter of the assessee dated 14. 05. 2008. We find that the said letter pertains to the AY. 1995-96 only and not to the other years. The letter only proves that the assessee had asked for certain details from the AO, but it does not in any manner prove that the issue of change of jurisdiction u/s. 127 were agitated before the FAA. We find that the FAA had decided the appeal on 27. 3. 2008 whereas the letter to the AO is dated 14. 5. 2008. Naturally, the FAA had no occasion to deal with the issue. We find that while dealing with the issue the Tribunal has dealt all the arguments raised by the assessee and had arrived at a conclusion. In our opinion, while deciding the rectification application we cannot sit over the judgment of the earlier bench, because we do not have power of review. We have reproduced the grounds taken by the assessee before the FAA in the second round of litigation and there was no ground about change of jurisdiction. In our opinion, the Tribunal was right when it held that the issue is not arising out of the order of the FAA. While deciding the MA we cannot decide such an issue. As far as the argument of opening balance of cash credit is concerned, we would like to mention that the issue raised by the assessee was not argued by the assessee before the lower authorities as it had not taken the said ground. Considering the available material on record the Tribunal had decided the issue. Even if there is an error of judgment on part of the bench, same does not fall under the category of mistake apparent on the record, as held by the Hon ble Bombay High Court in the case of Ramesh Electricals (1992 (11) TMI 32 - BOMBAY High Court ). The assessee had not brought to our notice any case by which the said judgment has been reversed. We also find that it is not that kind of a mistake that has been dealt with by the Hon ble jurisdictional High Court in the case of Supreme Industries Ltd. (2014 (12) TMI 184 - BOMBAY HIGH COURT). It is not a case of typographical or arithmetical mistake. It is not the case that the judgment delivered by the Hon ble Bombay High Court or the Hon ble Apex Court has been not followed. The so called mistakes pointed out by the assessee are neither patent nor manifest nor self-evident and they require elaborate discussion of evidence or arguments to establish. Therefore, we agree with the argument advanced by the DR that the assessee wants us to review the order dated 15. 06. 2012 and that same is not permissible as per the provisions of section 254(2)of the Act. . The assessments were reopened for the above mentioned three years on the basis of subsequent AYs. It was found that the assessee had taken loans from same parties in AY. 1997-98 and had not filed confirmations. It not file any detail, so the AO invoked the provisions of section 68 of the Act. In the appellate proceedings, before the FAA it challenged the re-opening of the assessment as well as the additions made with regard to the creditors. The FAA dismissed the appeal filed by the assessee on both counts. Before, the Tribunal it did not press the ground that dealt with the re-opening of the assessment. Accordingly, the grounds were dismissed. The assessee made a request to the Tribunal to admit additional evidences and the Tribunal restored back the matter to the file of the AO. The assessee could produce confirmation of eight creditors only out of the 145 creditors. The AO, deleted the addition with regard to those eight creditors. In the appellate proceedings before the FAA it did not object the re-opening of the assessment. One more request was made to admit additional evidences as per Rule 46A of the Rules, before the FAA. He admitted the same and directed the AO to make necessary enquiries. Ample opportunity and time was given to the assessee to produce details about the creditors, but it failed to produce the same. In these circumstances the FAA upheld the addition made by the AO. Considering the above facts the Tribunal had in its order dated 15. 06. 2012 had taken a decision. In our opinion, the said decision cannot be rectified under the provisions of section 264(2) of the Act, as no mistake apparent from the record was brought to our notice. - Decided against assessee

Issues Involved:
1. Rectification of Tribunal's order under Section 254(2) of the Income Tax Act.
2. Validity of reassessment proceedings under Section 147.
3. Jurisdictional issues under Section 127.
4. Treatment of unsecured loans as unexplained cash credits under Section 68.
5. Disallowance of interest on unsecured loans.

Detailed Analysis:

1. Rectification of Tribunal's Order under Section 254(2) of the Income Tax Act:
The assessee filed miscellaneous applications contending that the Tribunal's order dated 15.06.2012 contained mistakes apparent from the record and sought rectification under Section 254(2). The Tribunal examined the scope and limitations of Section 254(2), emphasizing that only patent, manifest, and self-evident errors could be rectified. The Tribunal concluded that the issues raised by the assessee, including the concession made by the earlier AR, did not constitute mistakes apparent on the record. It was held that the Tribunal's earlier decision could not be reviewed or re-evaluated under the guise of rectification.

2. Validity of Reassessment Proceedings under Section 147:
The assessee argued that the reassessment proceedings were invalid due to errors in the reasons recorded for reopening the assessment. The Tribunal noted that the issue of reopening had attained finality as the assessee's counsel had not pressed this ground in the first round of proceedings. The Tribunal referred to various judicial precedents, including the Hon'ble Madras High Court's decision in M.S.P. Senthil Kumar (241 ITR 502), which held that a party conceding an issue in original proceedings is barred from re-agitating the same issue in subsequent proceedings. The Tribunal concluded that the reassessment proceedings were valid and could not be challenged again.

3. Jurisdictional Issues under Section 127:
The assessee contended that the Tribunal had not considered the issue of lack of jurisdiction due to the absence of an order under Section 127 for transferring jurisdiction from one Assessing Officer (AO) to another. The Tribunal found that the assessee had not raised this issue before the First Appellate Authority (FAA) in the second round of litigation. The Tribunal held that the issue of jurisdiction could not be raised for the first time in the rectification application and that there was no mistake apparent from the record regarding the jurisdictional issue.

4. Treatment of Unsecured Loans as Unexplained Cash Credits under Section 68:
The AO had treated unsecured loans as unexplained cash credits under Section 68 due to the assessee's failure to provide loan confirmations. The FAA upheld the AO's decision, noting that the assessee had not provided sufficient evidence to establish the identity and creditworthiness of the creditors or the genuineness of the transactions. The Tribunal, in its order dated 15.06.2012, had remanded the matter to the AO for re-adjudication. The Tribunal found no mistake in its earlier order regarding the treatment of unsecured loans and held that the issue could not be rectified under Section 254(2).

5. Disallowance of Interest on Unsecured Loans:
The AO had disallowed interest paid on unsecured loans due to the assessee's failure to prove the genuineness of the loans. The FAA upheld the disallowance, allowing only a small portion of the interest where sufficient evidence was provided. The Tribunal, in its earlier order, had directed the AO to re-adjudicate the issue of interest disallowance along with the issue of unexplained cash credits. The Tribunal found no mistake in its earlier order regarding the disallowance of interest and held that the issue could not be rectified under Section 254(2).

Conclusion:
The Tribunal dismissed the miscellaneous applications filed by the assessee for all three assessment years, holding that there were no mistakes apparent from the record that could be rectified under Section 254(2) of the Income Tax Act. The Tribunal emphasized the finality of its earlier order and the limited scope of rectification under Section 254(2). The issues of reassessment validity, jurisdictional transfer, treatment of unsecured loans, and interest disallowance were all found to have been correctly decided in the original order.

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