2020 (2) TMI 271 - HC - Income Tax

Rectification of mistake - Tribunal restriction of profit of the petitioner on sale and purchase from 3% to 1.5% - HELD THAT - Section 254(2) of the Act provides that Tribunal may, at any time within six months from the end of the month in which the order was passed, with a view to rectifying any mistake apparent from the record, amend any order passed by it while disposing of the appeal and shall make such amendment if the mistake is brought to its notice by the assessee or by the Assessing Officer. Substance of Section 254(2) of the Act is rectification of mistake apparent from the record. An error or mistake apparent from the record is one which is manifest on the face of the record. No long-drawn hearing is required for rectification of such mistake. In the instant case, what we notice is that not only was there no mistake apparent from the record but in the garb of the Misc. Application, petitioner had sought for review of the final order passed by the Tribunal and for rehearing of the appeal which is not permissible in law. In our view, Writ Petition does not appear to be bonafide. We dismiss both the Writ Petitions and impose cost of ₹ 10,000/- on each of the petitions on the petitioner.

Summary

Issues:
Challenge to the order of the Income Tax Appellate Tribunal regarding profit restriction for assessment year 1999-2000.

Analysis:
The petitioner challenged the order of the Commissioner of Income Tax (Appeals), which restricted the profit to 1.5% of sales and purchases. Initially, the petitioner raised specific grounds regarding the estimation and the rejection of audited book results. Subsequently, modified grounds were submitted during the appellate proceedings. The Tribunal affirmed the Commissioner's findings, leading the petitioner to file a Misc. Application under Section 254(2) of the Income Tax Act, contending that the modified grounds were not considered. However, the Tribunal dismissed the application, stating that the modified grounds were a reiteration of the core issue of profit restriction. The High Court compared the original and modified grounds, concluding that the Tribunal's decision was justified as the modified grounds did not present any new issues.

The High Court referred to Section 254(2) of the Act, emphasizing that rectification can only be made for a mistake apparent from the record. It noted that the petitioner's application sought a review of the final order and a rehearing, which is not permissible. The Court found no apparent mistake in the record and deemed the Writ Petition as not bonafide. Consequently, both Writ Petitions were dismissed, and a cost of ?10,000 was imposed on each petitioner to be paid to the Maharashtra State Legal Services Authority within two months from the date of the order.