2019 (10) TMI 190 - AT - Income Tax

Rectification u/s 254 - default in reopening of assessment u/s 147 - whether the change of address was communicated by the assessee to the Department; the AR submitted that change of address was not communicated to the Department by the assessee - HELD THAT - On the date of hearing i.e. 07.02.2019, when the Bench re-enquired whether the change of address was communicated by the assessee to the Department; the Ld. AR submitted that change of address was not communicated to the Department by the assessee. The assessee is silent about the fact as to why he has not communicated his new address to the Department. In whatever manner satisfaction is recorded by the Assessing Officer for re-opening of assessment, the principles of natural justice demands that the reasons for re-opening the assessment should convey in an unambiguous manner for which the assessee is being penalized. AO in his order has given a clear-cut findings regarding re- opening of assessment and also on enquiry regarding genuineness of the transactions, the assessee has not responded to and on the basis of which, the Tribunal observed on verification of AST data, that the assessee has not furnished his return of income for the assessment year 2008-09. The assessee has not offered the amount of ₹ 16.04 Lakh for taxation. AO has reason to believe the amount HAS escaped the assessment within the meaning of section 147 Power for rectification under section 254(2) of the Act can be exercised only when mistake, which is sought to be rectified, is an obvious and patent mistake, which is apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two opinions. See SAURASHTRA KUTCH STOCK EXCHANGE LTD 2008 (9) TMI 11 - SUPREME COURT Thus in the guise of rectification, the assessee is seeking review of the order of Tribunal, which is beyond the scope of powers as envisaged u/s. 254(2)

Summary

Issues:
Rectification under section 254(2) of the Income Tax Act, 1961 for an order dated 07.02.2019.

Analysis:

1. Issue of Non-Appearance of Assessee:
The Miscellaneous Application was filed by the assessee seeking rectification in the Tribunal's order. Despite due notice, the assessee or their representative did not appear during the hearings. The Tribunal proceeded ex-parte due to the assessee's non-appearance, indicating an evasive attitude towards court proceedings.

2. Contentions of the Revenue:
The Revenue argued that the Tribunal's order was well-reasoned, and the assessee failed to point out any apparent mistake warranting rectification. The Revenue contended that the assessee was attempting to review the entire order under the guise of rectification, urging the dismissal of the Miscellaneous Application.

3. Reasons for Re-Opening of Assessment:
The Tribunal reviewed the case records and considered the reasons for re-opening the assessment. The Assessing Officer's findings indicated that the assessee did not communicate a change of address to the Department, leading to the re-opening of the assessment. The Tribunal highlighted the necessity for clear communication and response from the assessee in such matters.

4. Scope of Rectification under Section 254(2):
The Tribunal referred to various judicial decisions, emphasizing that rectification under section 254(2) can only correct obvious and patent mistakes apparent from the record. Citing relevant case law, the Tribunal clarified that rectification is not meant to rectify errors of judgment but only mistakes evident from the record itself.

5. Adjudication of Legal Grounds and Merits:
The assessee contended that only legal grounds were adjudicated, while merits remained unaddressed. However, the Tribunal clarified that grounds on merits were set aside for adjudication by the CIT(Appeals) in compliance with principles of natural justice. The Tribunal dismissed the contention, stating that the grounds on merits were appropriately dealt with in the order.

6. Dismissal of Miscellaneous Application:
After a thorough review, the Tribunal concluded that there was no mistake, let alone an apparent mistake, warranting rectification in the order dated 07.02.2019. Consequently, the Miscellaneous Application filed by the assessee was dismissed for lacking merit.

7. Final Decision:
The Tribunal pronounced the order on 27th September 2019, officially dismissing the Miscellaneous Application filed by the assessee. The judgment highlighted the importance of clear communication, adherence to legal procedures, and the limited scope of rectification under section 254(2) of the Income Tax Act, 1961.

This detailed analysis of the judgment provides insights into the issues addressed, arguments presented, judicial considerations, and the final decision rendered by the Appellate Tribunal ITAT Pune in the context of rectification under the Income Tax Act, 1961.