2019 (3) TMI 566 - AT - Income Tax

Rectification of mistake u/s 254(2) - non-consideration of specific ground taken by the assessee challenging reopening of assessment and violation of principle of natural justice - estimation of income on bogus purchases - HELD THAT - We find that the Tribunal has decided the appeal filed by the assessee on merit and scaled down profit estimated by the CIT(A) on alleged bogus purchases from 20% to 12.5% by considering arguments advanced by both sides and also by relied upon various decisions of Co-ordinate Bench, where ITAT, Mumbai Bench, in number of cases has taken consistent view to direct the AO to estimate 12.5% profit on alleged bogus purchases. However, the Tribunal has not adjudicated other grounds taken by the assessee challenging the reopening of assessment u/s 147 r.w.s. 148 even though the assessee has taken specific ground vide ground no.1 and 2 of grounds of appeal filed along with Form No.36. We further noticed that the assessee also challenged violation of principle of natural justice on the ground that addition has been made based on third party statement, without providing opportunity to the assessee to contradict statement of Hawala Operators. Therefore, we are of the considered view that constitutes mistake apparent on record which can be rectified u/s 254(2) of the Act.u/s 254(2) - Miscellaneous application filed by the assessee is allowed.

Summary

Issues involved:
- Recalling an order passed by ITAT Mumbai "D" Bench in ITA No.5588/Mum/2016 dated 28/02/2018 for AY 2009-10.
- Mistakes apparent in the ITAT order: non-consideration of specific grounds challenging reopening of assessment and violation of principle of natural justice.

Analysis:
1. The assessee filed a Miscellaneous Application u/s 254(2) of the Income Tax Act, 1961 to recall the order passed by ITAT Mumbai "D" Bench in ITA No.5588/Mum/2016 for AY 2009-10. The application highlighted mistakes apparent in the ITAT order, including the non-consideration of specific grounds challenging the reopening of assessment and the violation of the principle of natural justice.

2. The assessee contested the addition made under section 69C of the Income Tax Act, 1961 based on information from a third party, claiming that the re-opening of assessment was unjustified. The CIT(A) upheld the re-opening but provided relief by confirming only the profit element in the transaction. The assessee challenged this decision before the ITAT Mumbai, citing violation of natural justice and non-adjudication of certain grounds.

3. The ITAT Mumbai, in its original order, scaled down the profit estimated by the CIT(A) but failed to address the specific grounds challenging the reopening of assessment and the violation of natural justice. The ITAT acknowledged these mistakes as apparent on record and decided to recall the order to rectify them. The Tribunal directed the Registry to schedule a new hearing to address the unresolved issues.

4. The decision to recall the order was based on the principle that mistakes apparent on record should be rectified to ensure justice and fairness. The ITAT's action aligns with legal precedents that allow for the reconsideration of orders when specific grounds have not been adequately addressed. The assessee's plea for recalling the order was granted, emphasizing the importance of addressing all relevant issues raised by the parties.

This detailed analysis showcases the procedural and substantive aspects of the judgment, highlighting the grounds for recalling the order and the legal principles guiding the decision-making process.