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2018 (9) TMI 1787 - AT - Income TaxRectification of mistake - non consideration of Apex court decision - Penalty u/s 271(1)(c) - treatment of loss declared by the assessee at 3, 69, 63, 900/- to a profit of 34.63 lacs - Held that - CIT(A) in its order while confirming and enhancing the amount of penalty had quoted the decision of the Hon ble Apex Court in the case of Virtual Soft Systems Ltd 2007 (2) TMI 147 - SUPREME COURT OF INDIA held that reduction of loss will also have to be taken into account while considering the quantum upon which the penalty is to be levied. Admittedly in its order as above this Tribunal failed to take into account this order from the Hon ble Apex Court and had held that reduction of the loss to nil by the ITAT would also result in non levy of penalty. In this regard we note that in the case of Asst. CIT vs. Saurashtra Kutch Stock Exchange Securities Ltd. 2013 (10) TMI 310 - GUJARAT HIGH COURT has expounded that non consideration of Hon ble Apex Court decision even if it is not cited before the Tribunal would result in the order of the Tribunal suffering from mistake apparent from the record. Hence in our considered opinion in light of the above said Hon ble Apex Court decision a mistake apparent from the record has crept into the order of this Tribunal - Accordingly we recall the aforesaid order. The Registry is directed to fix the case before the regular bench in the normal course of hearing.
Issues Involved:
1. Recall of the Tribunal's order dated 28.07.2015. 2. Levy and enhancement of penalty under Section 271(1)(c) of the Income Tax Act, 1961. 3. Determination of income and treatment of returned loss. 4. Consideration of relevant judicial precedents and their applicability. Detailed Analysis: 1. Recall of the Tribunal's Order: The Revenue filed a Miscellaneous Application (MA) seeking the recall of the Tribunal's order in ITA No. 5289/Mum/2011 for the assessment year 2001-02, dated 28.07.2015. The Tribunal had previously decided in favor of the assessee, determining the income at NIL and negating the penalty imposed by the Assessing Officer (A.O.) and enhanced by the First Appellate Authority (FAA). 2. Levy and Enhancement of Penalty under Section 271(1)(c): The A.O. initially levied a penalty of ?13,69,656/- on the assessee for concealing income, which was confirmed and enhanced by the CIT(A) to ?4,04,27,000/-. The CIT(A) referred to the Supreme Court decision in Virtual Soft Systems Ltd. vs. CIT [2007] 289 ITR 83 (SC), which stated that the reduction of loss to NIL income would attract penalty under Section 271(1)(c). The Tribunal, however, deleted the penalty, reasoning that the company's income was determined at NIL and it had suffered significant losses in the preceding year. 3. Determination of Income and Treatment of Returned Loss: The assessee declared a loss of ?3.69 crores, which the A.O. converted to a profit of ?34.63 lakhs. The Tribunal, in its order dated 22.08.2008, determined the income at NIL, rejecting both the positive income and the claimed loss. The Tribunal's decision was based on the fact that the assessee did not furnish adequate details of purchases, leading to the rejection of its books of account. However, the Tribunal found no basis for the A.O.'s application of a 10% net profit rate on sales. 4. Consideration of Relevant Judicial Precedents: The Tribunal's deletion of the penalty was challenged by the Revenue on the grounds that the Tribunal did not consider the CIT(A)'s reliance on the Supreme Court decision in Virtual Soft Systems Ltd. The Revenue argued that the non-consideration of this decision constituted a mistake apparent from the record. The Tribunal acknowledged this oversight and cited the Supreme Court decision in Asst. CIT vs. Saurashtra Kutch Stock Exchange Securities Ltd. [2013] 33 taxmann.com 118 (Gujarat), which held that non-consideration of a jurisdictional or Supreme Court decision is a mistake apparent from the record. Conclusion: The Tribunal concluded that a mistake apparent from the record had occurred due to the non-consideration of the Supreme Court decision in Virtual Soft Systems Ltd. Consequently, the Tribunal recalled its previous order and directed the Registry to fix the case before the regular bench for a fresh hearing. The miscellaneous petition filed by the Revenue was allowed, emphasizing the importance of considering relevant judicial precedents in penalty proceedings.
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