2019 (3) TMI 204 - AT - Income Tax

Rectification of mistake - limited mandate of Section 254(2) - adhoc disallowance of 15% of vehicle expenses, tea and sundry expenses - assessee submitted self supporting vouchers which could not be verified with third party evidence , which disallowance stood reduced to 5% by learned CIT(A) because personal element in these type of expenses cannot be ruled out - ITAT further reduced the disallowance to ₹ 1,00,000/- - HELD THAT - ITAT has taken a decision based on entire factual matrix of the case which cannot be faulted with and what assessee vide this MA is seeking review of the tribunal order dated 21.12.2017 which is not permissible within limited mandate of Section 254(2) of the Income-tax Act, 1961 as only mistakes apparent from record can be rectified within limited mandate of Section 254(2). Thus,this MA stood dismissed.

Summary

Issues:
Rectification of mistake apparent from records in an order passed by ITAT regarding adhoc disallowance of expenses for assessment year 2012-13.

Analysis:

1. The assessee filed a miscellaneous application seeking rectification of a mistake in an order dated 21.12.2017 passed by the Income-Tax Appellate Tribunal, 'C' Bench, Mumbai for the assessment year 2012-13. The application aimed to recall the order due to the tribunal's failure to delete the entire addition on account of adhoc disallowance of 5% of vehicle expenses, tea, and sundry expenses confirmed by the CIT(A). The learned counsel for the assessee argued that the additions on an adhoc basis cannot be made as the assessee is a company. However, the tribunal reduced the additions to ?1,00,000 out of ?1,82,609 sustained by the CIT(A) based on the factual matrix of the case.

2. The learned counsel for the assessee contended that there are tribunal decisions where entire additions were deleted in similar cases. The tribunal's order dated 21.12.2017 upheld the disallowance of ?1,00,000, and the Revenue did not file any appeal against the relief granted by the CIT(A). The tribunal's decision was based on the entire factual matrix of the case, and the assessee's plea for a review of the order was deemed impermissible under Section 254(2) of the Income-tax Act, 1961, as only mistakes apparent from the record can be rectified within the limited mandate of the said section. Consequently, the miscellaneous application seeking rectification was dismissed.

3. The tribunal's decision was considered to be based on a thorough evaluation of the factual circumstances, and the request for a review of the order was found to be outside the permissible scope of rectification under the Income-tax Act, 1961. The miscellaneous application filed by the assessee was thus dismissed, and the order pronounced in the open court on 27.02.2019 confirmed the dismissal of the application arising out of the appeal for the assessment year 2012-13.

This detailed analysis covers the issues involved in the judgment, the arguments presented by both parties, the tribunal's decision, and the legal rationale behind dismissing the miscellaneous application seeking rectification of the order.