2016 (3) TMI 1421 - AT - Income Tax

Rectification of mistake u/s 254 - whether the findings in case of M/s. Madhucon Sino Hydro J.V. 2014 (2) TMI 138 - ITAT HYDERABAD are directions or observations ? - HELD THAT - This finding of ITAT was considered by Assessing Officer as direction of the ITAT and without following the due procedure as prescribed under the law initiated proceedings u/s. 163 and 147 of the IT Act. The ITAT in the impugned order ha s held that the same are null and void. While deciding, the ITAT elaborately discussed why the same cannot be considered as direction in para 9 and even if it is considered as direction , why the same cannot be considered as legal. Deficiencies in not recording a satisfaction, not taking approval from the prescribed authority and limitation of time in initiating proceedings were clearly discussed. Since the findings in the order are after due consideration and elaborate discussion, the same cannot come within the purview of mistake apparent from record . If there is any error of judgment, the same has to be challenged in a higher forum. The application clearly suggests that the decision taken require review which is not within the purview of the provisions of Section 254(2). As rightly held in the case of Ramesh Electric Trading Co Ltd. 1992 (11) TMI 32 - BOMBAY HIGH COURT , the power of review of its own order is not with ITAT and so the application made is not maintainable.

Summary

Issues:
1. Appeal against ITAT order in ITA No. 246/Hyd/2015.
2. Whether findings in ITA No. 646 and 701/Hyd/2010 are directions or observations.
3. Validity of assessment proceedings u/s. 147 initiated by the Assessing Officer.
4. Consideration of mistakes apparent from record for amending the ITAT order.
5. Jurisdiction of ITAT for review of its own order.

Analysis:

1. The Revenue filed a Miscellaneous Application against the ITAT order in ITA No. 246/Hyd/2015, contending mistakes apparent from the record. The grounds for the appeal included the initiation of proceedings u/s. 147 without proper direction, lack of appropriate authority sanction for notice u/s. 148, and time limitation for the notice. The ITAT annulled the assessment order, prompting the Revenue's application for amendment under Section 254(2) of the IT Act.

2. The key issue revolved around whether the findings in ITA No. 646 and 701/Hyd/2010 constituted 'directions' or 'observations.' The ITAT clarified that the Assessing Officer misinterpreted its earlier decision as a direction, leading to the improper initiation of proceedings u/s. 163 and 147 of the IT Act. The ITAT emphasized the need for a thorough examination before acting on its findings and highlighted deficiencies in the process followed by the AO.

3. The ITAT analyzed the legality of the assessment proceedings initiated by the Assessing Officer, emphasizing the necessity of recording satisfaction, obtaining approval from the prescribed authority, and adhering to time limitations. The ITAT concluded that the proceedings were null and void due to procedural irregularities and lack of proper justification for initiating the assessment under relevant sections of the IT Act.

4. The application for amending the ITAT order based on mistakes apparent from the record was dismissed by the ITAT. The ITAT reasoned that the decision was a result of due consideration and detailed discussion, indicating that any errors of judgment should be challenged in a higher forum rather than seeking an amendment based on Section 254(2) provisions. Citing precedent, the ITAT clarified that the power of review of its own order does not lie with the ITAT, rendering the application for amendment not maintainable.

5. Ultimately, the ITAT dismissed the Miscellaneous Application without any cost implications, affirming its decision on the annulment of the assessment order. The judgment highlighted the limitations on the ITAT's jurisdiction for reviewing its own orders, emphasizing the need for challenging decisions through appropriate legal channels for any perceived errors of judgment.