2018 (8) TMI 1640 - AT - Income Tax

Application of rectification of mistake u/s 254(2) - Penalty u/s.271D or 271E - acceptance of loan and its repayment in cash so as to attract the provisions of Sec.269SS and 269T - rectification of mistake as tampering of the impounded records find - Held that - Admittedly, when the appeal was heard by the Tribunal no allegation of tampering of records was ever put forth on behalf of the revenue. When the appeal was heard by the Tribunal on 4.12.2014, there was already correspondence regarding tampering of records but still nothing was brought to the notice of the Tribunal when the appeal was heard. As rightly pointed out by the learned counsel for the Assessee, the MA does not disclose as to when the tampering was discovered and as to why the allegations regarding tampering were not brought to the notice of the Tribunal when the appeals were heard by the Tribunal. Besides the above, the position as on today is that there is no material to show that there was in fact tampering of impounded material and therefore the conclusion of the CIT(A) that there was no acceptance of loans in cash or repayment of loans in cash in the case of the Assessee violating the provisions of Sec.269SS & 269T of the Act holds good. No evidence to show as to who was responsible for tampering of the records. In this scenario, it is difficult to proceed on the assumption that the findings of the CIT(A) that there was no acceptance of loans in cash or repayment of loans in cash in the case of the Assessee violating the provisions of Sec.269SS & 269T of the Act emanating from the impounded documents is incorrect. We also agree with the submission of the learned counsel for the Assessee that in the garb of a miscellaneous application u/s.254(2) of the Act, one cannot seek review of the order of the Tribunal. The Tribunal does not have powers to review its own orders u/s.254(2) of the Act and the power u/s.254(2) of the Act is only to rectify mistakes apparent on the face of the record. MA dismissed.

Summary

Issues Involved:
1. Alleged errors in the Tribunal's order dated 22.1.2015.
2. Imposition of penalties under sections 271D and 271E of the Income Tax Act, 1961.
3. Allegation of tampering with impounded documents by the Assessee.
4. Applicability of CBDT Circular No. 3/2018 regarding low tax effect.

Issue-wise Detailed Analysis:

1. Alleged Errors in the Tribunal's Order:
The Revenue filed miscellaneous applications under section 254(2) of the Income Tax Act, 1961, claiming apparent errors in the Tribunal's order dated 22.1.2015. The Tribunal initially upheld the CIT(A)'s decision to cancel penalties imposed on the Assessee for various assessment years related to violations under sections 271D and 271E of the Act.

2. Imposition of Penalties:
The penalties were imposed for accepting and repaying loans in cash beyond the prescribed limit under sections 269SS and 269T. The CIT(A) canceled these penalties, noting that the impounded documents did not show any acceptance or repayment of loans in cash violating the provisions. The Tribunal upheld this decision, stating that the AO failed to establish any violation of sections 269SS/269T based on the impounded documents and revised financial statements.

3. Allegation of Tampering with Impounded Documents:
The Revenue alleged that the Assessee tampered with the impounded documents between the filing of appeals and the submission of additional evidence before the CIT(A). The Revenue claimed that certain books were replaced or tampered with to support the Assessee's claim that there was no cash loan acceptance or repayment. However, the Tribunal noted that the Revenue did not raise these allegations during the original hearing and failed to provide conclusive evidence of tampering. The Tribunal also highlighted that the CBI/ACB/Bangalore's investigation did not identify the persons responsible for the alleged tampering.

4. Applicability of CBDT Circular No. 3/2018:
The Assessee's counsel argued that the tax effect in these appeals was below ?20 lakhs, making the appeals non-maintainable under the CBDT Circular No. 3/2018 dated 11.07.2018, which applies to all pending appeals. The Tribunal agreed, noting that even if the order was recalled, the appeals would be dismissed due to low tax effect.

Conclusion:
The Tribunal concluded that there was no mistake apparent on the face of the record in its original order. The allegations of tampering were not substantiated with evidence, and the Revenue did not raise these issues during the initial hearing. Additionally, the appeals were non-maintainable due to the low tax effect as per the CBDT Circular. Therefore, the miscellaneous applications filed by the Revenue were dismissed.

Final Judgment:
The miscellaneous applications were dismissed, and the Tribunal's original order dated 22.1.2015 was upheld. The Tribunal clarified that the Revenue could pursue other legal remedies if available.