2021 (12) TMI 1347 - AT - Income Tax

Rectification u/s 254 - challenging the validity of selecting the case of the assessee under compulsory scrutiny based on incomplete survey dated 06.01.2021 - AO has initiated the compulsory scrutiny without any prior approval of the competent authority and therefore, the question arises whether the initiation of the compulsory scrutiny by the Assessing Officer is in accordance with the criteria prescribed by the CBDT or not? - HELD THAT - It is settled proposition of law that the scope and jurisdiction of this Tribunal under section 254(2) is very limited and circumscribed to rectify a mistake apparent from record. Therefore, the Tribunal cannot review its own order in the proceedings under section 254(2). The case law relied upon by the DR on this point are binding and there is no quarrel on this issue however, the failure to consider an important fact or contention raised during the hearing would certainly be a mistake apparent from record as the said relevant fact is likely to effect the decision on an issue. Non consideration of such a crucial and relevant fact and point out which is going to influence the decision is an apparent mistake from record requires to be rectified under section 254(2) - DR has also relied upon the various decisions on the point that the assessee has not raised any objection regarding jurisdiction of the AO during the assessment proceedings and therefore cannot be permitted to raise this issue. It is pertinent to note that those decisions are only on the issue of jurisdiction of the AO to assess the assessee and not on the validity of the initiation of compulsory scrutiny. Therefore, even if the AO is having jurisdiction to assess the assessee, he may not have the authority to initiate the compulsory scrutiny if the prescribed criteria for such selection of compulsory scrutiny are not satisfied. Hence the decision relied upon by the learned DR on the jurisdiction of the AO are not relevant for the issue under consideration. As there is an apparent mistake in the impugned order and particularly while deciding the additional issue which goes to the root of the matter then, in the facts and circumstances of the case and in the interest of justice, the impugned order dated 21st October, 2021 of this Tribunal is recalled for deciding the appeal of the assessee afresh. Mis application allowed.

Summary

Issues Involved:
Rectification of mistake/recalling of order regarding validity of selecting case under compulsory scrutiny based on incomplete survey dated 06.01.2021 without proper authorization and criteria.

Analysis:
1. The assessee filed a misc. application seeking rectification of a mistake/recalling of the order passed by the Tribunal. The additional ground raised challenged the validity of selecting the case under compulsory scrutiny based on an incomplete survey. The AR argued that the Assessing Officer was not authorized to carry out the survey under section 133A, as per the authorization letter filed by the assessee.

2. The learned DR contended that there was no apparent mistake in the Tribunal's order, as it was decided on merits. The DR argued that the Tribunal cannot review its own order passed on merits. Additionally, the DR stated that the assessee cannot challenge the jurisdiction of the Assessing Officer post-assessment if no objection was raised during the assessment proceedings as per the provisions of the Income Tax Act.

3. The Tribunal considered the statement recorded under section 131 on 27.01.2012 as part of the survey proceedings, presuming the Assessing Officer conducted the survey. However, it was revealed that the Assessing Officer was not authorized for the survey. The Tribunal failed to consider the CBDT instructions for selecting cases under compulsory scrutiny without prior approval. The Tribunal recalled the order to decide the appeal afresh due to the mistake in presuming incorrect facts.

4. The Tribunal's scope under section 254(2) is limited to rectifying a mistake apparent from the record. Failure to consider crucial facts or contentions raised during the hearing constitutes a mistake apparent from the record. The Tribunal's decision to recall the order was based on the importance of the unconsidered facts that could influence the decision. The DR's reliance on jurisdiction issues was deemed irrelevant to the validity of initiating compulsory scrutiny.

5. The Tribunal allowed the misc. application, recalling the order for fresh adjudication in the interest of justice. The appeal was scheduled for a fresh hearing on a specified date. The decision was pronounced in the open court through video conferencing on 21.12.2021.