2016 (1) TMI 1027 - AT - Income Tax

Rectification of mistake - Carry forward and set off of losses in the case of certain companies - Held that - There is no dispute with regard to the fact that the share holding pattern, now presented before us, was not available before the tax authorities as well as the Tribunal during the hearing of appeal. The assessee has accepted throughout the proceedings that there was change in share holding pattern by more than 51%. The decision on the issue of eligibility of the assessee to set off the brought forward losses was adjudicated on the basis of the above said facts originally presented by the assessee. Through this miscellaneous application, the assessee is bringing altogether a new fact, which has the effect of changing the position by 360 degrees. Further, as submitted by the Ld D.R, the same is a new fact, which was not available on record and which requires verification also. It is a well settled proposition that the Tribunal is empowered to rectify the mistakes apparent from record, i.e., mistakes available on the face of record. The assessee may also agree with the position that the order passed by the Tribunal does not suffer from any mistake on the basis of facts available on record at the relevant point of time. Only, if the new facts are taken into account, the decision rendered by the Tribunal may turn out to incorrect one. However, in our considered view, the same may not result in a mistake apparent from record as contemplated u/s 254(2) of the Act. In our view, the remedy lies somewhere else and not before the Tribunal. The case laws, on which the Ld A.R placed reliance, have been well distinguished by the Ld D.R and we fully agree with him that they do not support the case of the assessee. Hence, we are of the view that the Tribunal is not empowered to rectify its order on the basis of new facts, as the same does not fall in the category of mistakes apparent from record. Accordingly, we are not convinced with the petition filed by the assessee and accordingly dismiss the same. - Decided against assessee.

Summary

Issues:
Rectification of order under sec. 254(2) of the Act based on new facts regarding shareholding pattern and eligibility for setting off brought forward losses.

Detailed Analysis:

1. Issue of Rectification under sec. 254(2) of the Act:
The assessee filed a miscellaneous application seeking rectification of the order passed by the Tribunal for the assessment year 2006-07, claiming a mistake apparent from the record under sec. 254(2) of the Act. The primary contention was the change in the shareholding pattern, affecting the eligibility of the assessee to set off brought forward losses as per sec. 79 of the Act.

2. Shareholding Pattern and Eligibility for Set Off:
During the assessment year, there was a change in the shareholding pattern due to the transfer of shares from one shareholder to another. The AO initially denied the set off of brought forward losses based on the information provided by the assessee. However, the assessee later realized that the transfer was not of the entire share capital as initially believed, but only a portion, leading to more than 51% shares being held by the same group of shareholders. This realization prompted the miscellaneous application.

3. Contentions of the Parties:
The AR argued that the assessee's failure to present the actual facts earlier was a genuine mistake rectifiable under sec. 254(2) of the Act. Citing relevant case laws, the AR emphasized the need for a justice-oriented approach by the Tribunal. In contrast, the DR contended that introducing new facts not previously on record does not constitute a mistake apparent from the record, as per the provisions of the Act.

4. Tribunal's Decision and Reasoning:
The Tribunal acknowledged that the new shareholding pattern presented by the assessee was not available during previous proceedings. It noted that rectification under sec. 254(2) is limited to mistakes apparent from the record, not based on subsequently introduced facts. The Tribunal emphasized that considering new facts requiring verification would amount to a review of its own order, beyond its powers under the Act.

5. Conclusion and Dismissal of Application:
After considering the arguments and case laws presented, the Tribunal concluded that the introduced facts did not constitute a mistake apparent from the record under sec. 254(2) of the Act. Consequently, the miscellaneous application filed by the assessee was dismissed on 1st Jan, 2016, upholding the original order passed by the Tribunal.

This detailed analysis encapsulates the key aspects and legal implications of the judgment delivered by the Appellate Tribunal ITAT MUMBAI regarding the rectification of an order based on new facts related to shareholding pattern and eligibility for setting off brought forward losses.