2022 (5) TMI 1573 - AT - Income Tax

Rectification of mistake - Maintainability of the Revenue s appeal u/s. 268A - Tribunal dismissed the Revenue s captioned appeals as not maintainable u/s. 268A inasmuch as the tax effect is below Rs. 50 lakhs - Revenue s case is that there has been an omission on the part of the Tribunal while considering its instant appeals to have regard to the fact, expressly brought forth and conveyed to the Tribunal, that the same were covered under exceptional Cl.10 (c) of the Board Instruction 03/2018, dated 11/07/2018 and, that, therefore, the same stand wrongly dismissed as being in violation of the said Board Instruction (BI) and, thus, not maintainable - whether the Tribunal holding, per the impugned order, that there is nothing on record to prove the Revenue s contention, is correct or not? - HELD THAT - A perusal of the appeal folder/s reveals a clear mention of the exceptional clause under which the instant appeal/s stands preferred, filed along with the appeal papers, as indeed the communications between the ld. Departmental Representative and the field officer confirming this position, again duly furnished to the Tribunal prior to the date of hearing of the appeal/s. There being no reference to these documents, admittedly relevant, in the impugned order, reproduced in it s operative part hereinbefore, there has clearly been an omission on the part of the Tribunal in not noticing the same, much less have regard thereto, incumbent on it under law. The assessee s principal objection concerns the disregarding of the same by the Tribunal inasmuch as the same, having not been supplied to the assessee, could not form part of it s record. We, for the several reasons afore-stated, find the said argument misconceived. The argument presumes the non-consideration of the said material by the Tribunal in the first instance for this reason, even as there is no whisper of the same in it s order. That is, is wholly presumptuous. It further presumes that the Tribunal, though conscious of the said material, yet chose not to direct either the Revenue or it s Registry to supply a copy thereof to the assessee, as in that case, forming part of it s record, it would be obliged to take cognizance thereof. That is, acts in a partisan manner. Rather, where so, i.e., the material was not admitted by the Tribunal on this ground, the same ought to form part of it s order, which only would qualify the same as a judicial order inasmuch as the same has to be, by definition, a speaking order. On merits, to even suggest that the AM u/s. 253(2), which forms part of the appeal papers, is not a part of the Tribunal s record, is, to our mind, perverse. There is no requirement in law for the Revenue to have filed the same with the assessee who could though seek a copy of the same, nor any prescribed manner for communicating the same. Rather, inasmuch as the same concerns the legal competence for filing an appeal, mention thereof in and as part of the authorization memo u/s. 253(2), authorising the filing of an appeal with the Tribunal, which forms part of the appeal memo and, thus, part of the Tribunal s record, it s mention therein is most appropriate Ignoring the attendant circumstance, besides being in clear violation of the clear mandate of law (s. 268A(4)), itself constituting a mistake, liable for rectification, which extends to both mistakes of fact and law, could only be at the peril of causing a serious prejudice to the appellant, negating it s right of appeal. It is trite law that no Court or Tribunal could by it s action or, as the case may be, non-action, cause prejudice to any of the party before it, which, where so, is to be regarded as mistaken, liable for rectification u/s. 254(2), even as explained in Honda Siel Power Products Ltd. 2007 (11) TMI 8 - SUPREME COURT For us, it is therefore no more than a simple case a bona fide omission by the Tribunal in, while adjudicating the matter, failing to take note of the compelling documents on it s record in support of the contention of the ld. DR nothing more, and nothing less, and which therefore warrants being addressed by taking due notice of the said documents, all forming part of the appeal papers themselves (inasmuch as the communication between the Departmental officers is only toward and in substantiation of the eligibility note at para 2 of the AM, which is to accompany an appeal by the Revenue. The argument advanced which has been considered in all it s different facets, serving, to our mind, only to obfuscate the issue. The second argument, i.e., of an order, though mistaken, yet cannot be recalled inasmuch as scope of the instant proceedings is limited to making to amendments in respect of mistake/s apparent from record , the same glosses over the fact that the impugned order is not an order on merits, but an in limine dismissal of the appeal/s under reference for want of competence on technical, albeit mandatory, grounds. That a judgment is to be read as a whole, and it is the principle of law enunciated, it s ratio decidendi, that is binding, is trite law. The said argument is wholly misplaced and, if anything, itself mistaken. We cannot help observing the assessee s conduct in the matter. The Bench had in the instant proceedings on an earlier occasion, in response to Sh. Purohit s contention as to the assessee having not been supplied a copy of authorization memo by the Revenue, directed for the same to be provided to the assessee inasmuch as the same were relevant toward the maintainability of the Revenue s appeal u/s. 268A, as well as copy of the Revenue s Audit Objection, also called for by the Bench during hearing. Further instructions were also passed for the assessee to make arrangements for collecting copy thereof from the Registry. This is borne out by order sheet entries dated 11/9/2020, 18/9/2020 and 25/9/2020. The assessee, however, did not take the copy thereof. As it transpires, this was as that would defeat the assessee s case. We have, however, at our end, confirmed that the Revenue Audit Objections are in respect of the grounds assumed by the Revenue per it s instant appeals, validating it s assertions, which we have done for our satisfaction as indeed in discharge of the obligation cast on the Tribunal u/s. 268A(4). We, thus reject the assessee s contentions, and admit and decide the instant MAs by it in favour of the Revenue inasmuch as its instant appeals were wrongly dismissed u/s. 268A(1) r/w s. 268A(4) of the Act.

Summary

Issues Involved:
1. Maintainability of Revenue's appeals based on tax effect threshold.
2. Applicability of Clause 10(c) of Board Instruction 03/2018 regarding Revenue Audit Objection.
3. Tribunal's obligation to consider Board Instructions and relevant records.
4. Scope of rectification proceedings under section 254(2) of the Income Tax Act.

Detailed Analysis:

1. Maintainability of Revenue's appeals based on tax effect threshold:
The Tribunal initially dismissed the Revenue's appeals as not maintainable under section 268A of the Income Tax Act, 1961, because the tax effect was below Rs. 50 lakhs, the threshold limit specified in Board Instruction 03/2018, read with Instruction 17/2019. The relevant part of the Tribunal's order stated, "Admittedly, the tax effect in both the Departmental appeals is below Rs. 50 lakhs... both the appeals of the Revenue are not maintainable and are liable to be dismissed."

2. Applicability of Clause 10(c) of Board Instruction 03/2018 regarding Revenue Audit Objection:
The Revenue contended that their appeals were saved by Clause 10(c) of Board Instruction 03/2018, which excludes appeals filed on acceptance of Revenue Audit Objections from the tax effect threshold. The Tribunal acknowledged this contention but dismissed the appeals as there was no record to prove the contention. The Tribunal's order noted, "There is nothing borne out from the record so as to prove the contention raised by learned D.R."

3. Tribunal's obligation to consider Board Instructions and relevant records:
The Tribunal is obligated under section 268A to have regard for Board Instructions and the circumstances under which appeals are filed. The Revenue provided an Authorization Memo under section 253(2) and a communication between departmental officers confirming the appeals were filed under the exceptional clause 10(c). The Tribunal failed to notice these documents, leading to a dismissal based on incomplete information. The Tribunal's omission to consider these documents was deemed a mistake apparent from the record.

4. Scope of rectification proceedings under section 254(2) of the Income Tax Act:
The Tribunal can rectify mistakes apparent from the record under section 254(2). The Revenue argued that the Tribunal's failure to consider the Authorization Memo and related documents was such a mistake. The Tribunal agreed, stating, "The only consequence and, rather, concomitant of the Tribunal, in the rectification proceedings, finding it to have made a mistake in not having regard thereto is to recall the impugned order for deciding the Revenue's appeal/s on its merits."

Conclusion:
The Tribunal admitted that there was an omission in considering relevant documents that proved the appeals were filed under the exceptional clause 10(c) of Board Instruction 03/2018. The Tribunal's earlier dismissal of the appeals was found to be incorrect. Consequently, the Tribunal allowed the Revenue's Miscellaneous Applications, recalled the dismissal order, and directed the appeals to be heard on merits. The Tribunal emphasized its obligation to consider all relevant records and instructions, ensuring no prejudice to any party. The order was pronounced in open court on May 27, 2022.