2022 (5) TMI 1616 - AT - Income Tax

Rectification of mistake - miscellaneous application filed by the assessee stating therein that some errors apparent on record have occurred while adjudicating the appeal of the assessee - application seeking admission of additional ground has escaped attention of the Tribunal and no order has been passed by the Tribunal in respect of the said application - HELD THAT - The error apparent on record has occurred in the common order of the Tribunal dated 26.03.2021 on account of non-adjudication of the application of the assessee for admission of additional grounds. The order of the Tribunal is, therefore, recalled for the limited purpose for adjudication upon the application of the assessee for admission of additional grounds and if the application is accepted by the Tribunal then for adjudication of the aforesaid additional grounds. No adjudication upon Grounds pertaining to the levy of interest u/s 234B and 234D - As the aforesaid grounds have not been adjudicated by the Tribunal in the common order dated 26.03.2021. This being an error apparent on record, order of the Tribunal is hereby recalled on this limited issue also for the purpose of adjudication of Ground No.6 7 of the grounds of appeal of the assessee. Non-consideration of certain facts in the common order - Tribunal in para 7.4 inter alia has observed that no other transaction of purchase of AE is benchmarked with the prices in ICIS-LOR website; that however the applicant s purchase of Paraxylene from AE s was benchmarked using ICIS LOR - HELD THAT - We find from the order of the Tribunal that the point raised by the assessee was not the sole point to arrive at the final conclusion. The Tribunal has considered the overall facts and circumstances of the case. It cannot be said that any error apparent on record has occurred in the aforesaid order of the Tribunal. The applicant has raised this context in just by disputing one observation made by the Tribunal whereas the order passed by the Tribunal is based on overall facts and circumstances of the case. As decided in the case of Ramesh Electric And Trading Co. 1992 (11) TMI 32 - BOMBAY HIGH COURT while relying upon the decision of 'T. S. Balaram, ITO V. Volkart Brothers' 1971 (8) TMI 3 - SUPREME COURT categorically held that the power of rectification under section 254(2) of the Income-tax Act can be exercised only when the mistake which is sought to be rectified is an obvious and patent; mistake which is apparent from the record, and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinions. Failure by the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment and under such circumstances the Tribunal has no jurisdiction under section 254(2) to pass the second order. In view of our above observations and the legal position as stated above, we do not find any merit on this issue. Miscellaneous Application of the assessee is partly allowed.

Summary

Issues Involved:
1. Admission of additional grounds of appeal.
2. Non-adjudication of Grounds No. 6 & 7 regarding levy of interest under sections 234B and 234D.
3. Non-consideration of material facts related to Grounds No. 4 & 5 concerning transfer pricing addition.
4. Legal submissions and rectification under section 254(2).

Detailed Analysis:

1. Admission of Additional Grounds of Appeal:
The assessee-applicant filed a miscellaneous application stating that errors apparent on record occurred while adjudicating the appeal. The first contention was that the application dated 23.11.2020, seeking admission of four additional grounds of appeal (Ground No. 10 to 13), was not considered. These grounds included issues related to the computation of deduction under section 80HHC of the Income Tax Act, allowance of deduction under clause (ii) to Explanation 1 of Section 115JB(2), and computation of interest under section 244A. The Tribunal acknowledged that the application for additional grounds had escaped its attention and recalled the order dated 26.03.2021 for the limited purpose of adjudicating the application for admission of additional grounds.

2. Non-adjudication of Grounds No. 6 & 7:
The next contention was that the Tribunal did not adjudicate Grounds No. 6 & 7 in the impugned order dated 26.03.2021, which pertained to the levy of interest under sections 234B and 234D. Ground No. 6 challenged the imposition of interest under section 234B amounting to Rs. 3,99,100/-, and Ground No. 7 challenged the imposition of interest under section 234D amounting to Rs. 2,52,420/-. The Tribunal found that these grounds were indeed not adjudicated, constituting an error apparent on record. Therefore, the order was recalled for the limited issue of adjudicating Grounds No. 6 & 7.

3. Non-consideration of Material Facts Related to Grounds No. 4 & 5:
The assessee argued that material facts were not considered regarding Grounds No. 4 & 5, which related to the transfer pricing addition upheld by the CIT(A). The Tribunal observed in para 7.4 that no other transaction of purchase from AE was benchmarked with the prices in the ICIS-LOR website. The assessee contended that purchases of Paraxylene from AE were benchmarked using ICIS-LOR rates, as evident from the transfer pricing study report. The Tribunal, however, found that the point raised by the assessee was not the sole basis for the final conclusion. The overall facts and circumstances were considered, and the Tribunal upheld the transfer pricing adjustment. The Tribunal concluded that there was no error apparent on record in this respect, as the order was based on a comprehensive evaluation of the case.

4. Legal Submissions and Rectification under Section 254(2):
The assessee cited the decision of the Hon'ble Supreme Court in Honda Siel Power Product Ltd. v CIT, emphasizing that rectification is justified when prejudice results from a court's mistake, error, or omission. The Tribunal referenced the Hon'ble Bombay High Court's decision in Commissioner of Income-Tax vs. Ramesh Electric And Trading Co., which clarified that rectification under section 254(2) is permissible only for obvious and patent mistakes apparent from the record. The Tribunal held that the failure to consider an argument does not constitute an error apparent on record but may be an error of judgment. Consequently, the Tribunal found no merit in the assessee's legal submissions for rectification on this issue.

Conclusion:
The Tribunal partly allowed the miscellaneous application of the assessee, recalling the order dated 26.03.2021 for the limited purposes of adjudicating the application for additional grounds and Grounds No. 6 & 7. However, it found no error apparent on record regarding the non-consideration of material facts related to Grounds No. 4 & 5. The legal submissions for rectification under section 254(2) were also found to lack merit.