2019 (11) TMI 1229 - AT - Income Tax

Rectification of mistake - no addition can be made u/s 68 of the Act unless there is a credit in the books of accounts of the assessee - HELD THAT - One person can not travel on two boats at a same time, however in the instant case the Asseeee tried to take two inconsistent stands therefore the tribunal on the basis of material available on record realised that since the assessee has taken the clear-cut stands in his wife's assessment proceedings that the amount deposited in his wife's account belongs to the assessee, which the assessee has received as advance against his property from the buyer and in reply in response to notice u/s 142(1) of the Act in his assessee s wife case, specifically admitted that the deposit of ₹ 36 lacs in the Asst. Year 2011-12 does not belongs to assessee s wife but belongs to the assessee only therefore, the co-ordinate bench was constrained to deal with the contrary contention raised and new stand taken by the assessee which was inconsistent to record and admission made in his wife assessment proceedings and held the same as devoid of merit and unsustainable. While considering the peculiar facts and circumstances to the effect that the assessee though filed its reply but did not appear regularly before the Ld. CIT(A), therefore, on the basis of reply the Ld. CIT(A) decided the appeal of the assessee as ex-parte, hence, in that eventuality and in peculiar facts and circumstances of the case and for the ends of justice without going into further controversy and deciding the case on merit and other grounds/issues raised by the assessee, the Co-ordinate Bench remanded the case to the file of the Ld. CIT(A) for decision afresh and in the order it was specifically mentioned by the Co-ordinate Bench in the last Para No.6.2 of the order that as the Ld. CIT(A) has passed the order exparte therefore, we are not adverting to the other grounds/ issues raised in the appeal and the Ld. CIT(A) shall decide the appeal without being influenced by any of the observations made above. Claim of the assessee is that the Co-ordinate Bench did not consider the judgment of Supreme Court - We have already mentioned the facts and given thoughtful consideration to issue raised by the assessee. In our considered view, the courts including tribunal are bound to follow the judgments of the higher courts in case the it decides the case on merits. As in this case considering the peculiar facts, impugned order has been quashed and case is remanded back to the Ld. CIT(A) for decision afresh with specific direction that Ld. CIT(A) shall decide the appeal without being influenced by any of the observations made above, therefore as per our considered view, no error seems to be apparent on record which requires any rectification as sought for by the Assessee. Even we have failed to understand as to what prejudice has been caused to the assessee and what error is apparent from the record which requires rectification because at the time of passing order under rectification, no order survives against the assessee and the tribunal in view of contrary material available on record and which is not denied by the assessee but in fact admitted by the assessee, has dealt with inconsistent stand only but not otherwise and left it open to the Ld. CIT(A) to decide afresh without being influenced by any observation made in its order. Even liberty was given to the Asseeee to agitate the original ground of appeal as raised before the Ld. CIT(A). The inference can be drawn that in this case, no mistake is apparent from record which could warrant rectification. Miscellaneous Applications filed by the assessee stands dismissed.

Issues Involved:
1. Contradiction in ITAT's findings.
2. Applicability of Section 68 regarding unexplained credits.
3. Consideration of Supreme Court's judgment in CIT Vs K. Chinnathamban.
4. Scope of rectification under Section 254(2) of the Income Tax Act, 1961.

Detailed Analysis:

1. Contradiction in ITAT's Findings:
The assessee contended that the ITAT's order dated 22.03.2019 contained contradictory findings. Specifically, the ITAT remanded the case back to the CIT(A) to decide the appeal afresh without being influenced by previous observations. However, the ITAT also commented on the merits of the case, stating that the appellant's argument about the ?36 lakhs found in the wife's account being added to her assessment was devoid of merit. The ITAT clarified that the amount belonged to the appellant himself, as admitted in his replies during his wife's assessment proceedings.

2. Applicability of Section 68 Regarding Unexplained Credits:
The assessee argued that no addition could be made under Section 68 unless there was a credit in the books of accounts of the assessee. The ?36 lakhs appeared in the bank account of the assessee's wife, not in his own books. The ITAT noted that the appellant had categorically admitted that the amount belonged to him, thus rejecting the argument that the addition should be made in the wife's assessment only.

3. Consideration of Supreme Court's Judgment in CIT Vs K. Chinnathamban:
The assessee claimed that the ITAT failed to consider the Supreme Court's judgment in CIT Vs K. Chinnathamban, which states that the onus of proving the source of deposits rests on the person in whose name the deposits appear. The ITAT acknowledged this contention but emphasized that the peculiar facts of the case and the appellant's own admissions justified their decision. The ITAT remanded the case to the CIT(A) for a fresh decision without being influenced by previous observations, thus not directly addressing the Supreme Court's judgment.

4. Scope of Rectification Under Section 254(2) of the Income Tax Act, 1961:
The ITAT discussed the limited scope for rectification under Section 254(2), which allows for correction of mistakes apparent from the record but does not permit a review or revision of the order. The ITAT cited several judgments, including those from the Supreme Court and Delhi High Court, to emphasize that rectification is not a means to re-argue the entire matter. The ITAT concluded that no apparent mistake existed in the original order that warranted rectification and dismissed the Miscellaneous Application filed by the assessee.

Conclusion:
The ITAT found no apparent mistake in its original order that required rectification. It noted that the appellant's admissions during his wife's assessment proceedings justified the addition of ?36 lakhs to his income. The ITAT remanded the case to the CIT(A) for a fresh decision, emphasizing that the CIT(A) should not be influenced by previous observations. The application for rectification was dismissed, as the ITAT held that the scope of Section 254(2) did not allow for re-arguing the case.

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