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2022 (8) TMI 1458 - AT - Income TaxRectification u/s 254 - Validity of reopening of assessment - ITAT has erred in holding that the reason to believe for escapement of income was recorded without application of mind and without specifying failure on the part of the assessee to disclose all the material facts before AO in the regular assessment - HELD THAT - ITAT after elaborate discussion on the issue of reason to believe has taken a view that reason recorded by the AO was nothing but borrowed satisfaction. In holding so the ITAT analyzed the facts available on record, given various reasoning and also referred several judicial precedent. As Such the Revenue in M.A. has not pointed out any specific mistake in the order which is apparent from the record. The issue raised by the Revenue in M.A. requires long drawn argument which is not allowed under section 254(2) of the Act. If the Revenue feels the order passed by the Revenue is erroneous on account of law or on fact then the only remedy available is to challenge the order at higher forum. In holding so we draw support and guidance from the judgment of Hon ble Supreme Court in case of CIT vs. Reliance Telecom Ltd. 2021 (12) TMI 211 - SUPREME COURT ITAT erred in holding that no addition was made based on reasons to believe recorded - Again it is noted that the ITAT has considered all the materials available on record and also made comparable reference to the income identified by the AO in reasons recorded and final addition made by the AO in the assessment order passed under section 143(3) read with 147 of the Act. Thus, in our considered view, there is no mistake apparent in the order of the ITAT. At the this juncture we again feel pertinent to refer the judgment of Hon ble Supreme Court in case of CIT vs. Reliance Telecom Ltd 2021 (12) TMI 211 - SUPREME COURT where it was held that even if the order passed by the ITAT is erroneous on merit the only remedy available to the aggrieved party to prefer appeal before Hon ble High Court. It is also not out of place to mention that the Revenue against the order of the ITAT has already preferred an appeal before the Hon ble High Court which has been admitted. This argument of the ld. AR was not controverted by the ld. DR appearing on behalf of the Revenue. We hold that there is no apparent mistake in the order of ITAT as alleged by the Revenue in its miscellaneous application as discussed above. Therefore, we do not find any merit in the argument of Ld. Counsel for the Revenue. Rectification u/s 254 - Validity of assessment u/s 153A - ITAT has erred in holding that in the proceeding u/s 153A of Act addition or disallowance can only be made on the basis of incriminating material found in the course of search and in holding so ITAT misinterpreted the judgment of Saumya Construction (P) Ltd. 2016 (7) TMI 911 - GUJARAT HIGH COURT and Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT - HELD THAT - ITAT has considered all the materials available on record and the ITAT also analyses the decision of Hon ble SC in case of VLS Finance Ltd 2016 (4) TMI 1133 - SUPREME COURT and after making reference to other judgment of Hon ble High Court held that principles laid down by the Hon ble SC are not applicable to the facts on the hand. Thus, in our considered view, there is no mistake apparent in the order of the ITAT. At the this juncture we again feel pertinent to refer the judgment of Hon ble Supreme Court in case of CIT vs. Reliance Telecom Ltd 2021 (12) TMI 211 - SUPREME COURT where it was held that even if the order passed by the ITAT is erroneous on merit, the only remedy available to the aggrieved party is to prefer an appeal before Hon ble High Court. We hold that there is no apparent mistake in the order of ITAT as alleged by the Revenue in its miscellaneous application as discussed above. Therefore we do not find any merit in the argument of Ld. Counsel for the Revenue. Hence, the MA filed by the Revenue is dismissed. Whether materials found during the search on the basis of which proceedings under section 153C of the Act were initiated, were not belonging to the assessee? - ITAT after elaborate discussion on the issue whether search materials belong to assessee or not, has taken a view that such materials do not belong to the assessee. In holding so the ITAT analyses the fact available on record, gives various reasoning and also refer the several judicial precedent. As Such the Revenue in M.A. has not pointed out any specific mistake in the order which is apparent from the record. The issue raised by the Revenue in M.A. requires long drawn argument which is not allowed under section 254(2) of the Act. If the Revenue feels the order passed by the Revenue is erroneous on account of law or on fact then the only remedy available is to challenge the order at higher forum. M.A s in this segment filed by the Revenue are hereby dismissed.
Issues Involved:
1. Alleged errors in ITAT's order regarding the application of mind by AO in recording reasons to believe for income escapement. 2. Alleged errors in ITAT's order regarding additions made based on incriminating materials found during search proceedings. 3. Alleged errors in ITAT's order regarding the interpretation of prohibitory orders under section 132(2) and the calculation of limitation periods. 4. Alleged errors in ITAT's order regarding the ownership of seized materials and their use in assessment proceedings under section 153C. Detailed Analysis: Issue 1: Application of Mind by AO in Recording Reasons to Believe for Income Escapement The Revenue argued that the ITAT erred in holding that the AO did not properly apply his mind while recording reasons to believe for income escapement. The ITAT held that the reasons recorded by the AO were based on borrowed satisfaction and lacked the necessary application of mind. The Tribunal noted that the AO's reasons were not self-evident and required long-drawn arguments, which is not permissible under section 254(2) of the Act. The Tribunal emphasized that any mistake apparent from the record must be obvious and patent, not requiring extensive reasoning. The Tribunal dismissed the Revenue's M.A., stating that if the Revenue believed the order was erroneous, the appropriate remedy was to appeal to a higher forum. Issue 2: Additions Based on Incriminating Materials Found During Search Proceedings The Revenue contended that the ITAT erred in holding that additions during search proceedings under section 153A of the Act could only be based on incriminating materials found from the premises of the assessee. The ITAT relied on the judgments of the Hon'ble Gujarat High Court in Saumya Construction P. Ltd and the Hon'ble Delhi High Court in Kabul Chawla. The Tribunal maintained that the Revenue's argument required long-drawn reasoning and was not a mistake apparent from the record. The Tribunal reiterated that the proper course of action for the Revenue was to appeal to a higher forum if they believed the order was erroneous. Issue 3: Interpretation of Prohibitory Orders Under Section 132(2) and Calculation of Limitation Periods The Revenue argued that the ITAT erred in its interpretation of prohibitory orders under section 132(2) and the calculation of limitation periods. The ITAT held that the prohibitory orders were passed to prolong the search proceedings and that the last date of the panchnama was March 2015, not May 2015. The Tribunal found that the ITAT had considered all the materials on record and analyzed the relevant judgments. The Tribunal concluded that there was no mistake apparent in the ITAT's order and that any perceived errors should be addressed through an appeal to a higher forum. Issue 4: Ownership of Seized Materials and Their Use in Assessment Proceedings Under Section 153C The Revenue contended that the ITAT erred in holding that the seized materials did not belong to the assessee and could not be used in assessment proceedings under section 153C. The ITAT had concluded that the materials did not belong to the assessee after an elaborate discussion and analysis of the facts and judicial precedents. The Tribunal noted that the Revenue's argument required long-drawn reasoning and was not a mistake apparent from the record. The Tribunal emphasized that the proper remedy for the Revenue was to appeal to a higher forum if they believed the order was erroneous. Conclusion: The ITAT dismissed all 94 Miscellaneous Applications (M.A.s) filed by the Revenue, finding no apparent mistakes in its original order. The Tribunal emphasized that any perceived errors should be addressed through appeals to higher forums, as the issues raised by the Revenue required extensive reasoning and were not self-evident mistakes. The ITAT's decision was based on a thorough analysis of the facts, judicial precedents, and the relevant provisions of the Income Tax Act.
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