2020 (5) TMI 296 - AT - Income Tax

Rectification u/s 254 - obvious and patent mistake - Cost of acquisition AND deduction claimed u/s.54F - HELD THAT - Core of all these authoritative pronouncements is that 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. For fortifying this view, we make reference to the decision of the Hon'ble jurisdictional High Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ld. 2008 (9) TMI 11 - SUPREME COURT . Hon'ble Jurisdictional High Court in the case of CIT Vs. Ramesh Electric Trading Company 1992 (11) TMI 32 - BOMBAY HIGH COURT has held that the scope of section 254(2) is limited to rectification of mistake apparent from record itself and not rectification in error of judgment - 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) of the Act. Miscellaneous Application filed by assessee is dismissed.

Summary

Issues:
1. Review of Tribunal's ex-parte order under section 254(2) of the Income Tax Act, 1961.
2. Two main issues: (i) Cost of acquisition and (ii) deduction claimed u/s.54F of the Act.

Issue 1: Review of Tribunal's Order
The assessee filed a Miscellaneous Application under section 254(2) seeking a review of the Tribunal's ex-parte order in ITA No.645/PUN/2018, stating lack of opportunity to present its case. The Ld. AR explained reasons for non-appearance but failed to identify any apparent mistake in the Tribunal's order. The Ld. DR opposed the application, asserting the order's sound reasoning. The Tribunal examined the record, finding no apparent mistake for rectification. Reference was made to legal precedents emphasizing rectification for obvious errors, not errors requiring extensive arguments. Citing relevant case law, the Tribunal concluded that seeking a review beyond the scope of rectification under section 254(2) was impermissible.

Issue 2: Cost of Acquisition and Deduction u/s.54F
Regarding the first issue of the cost of acquisition, the Tribunal noted the assessee's admission to adopting a specific cost, leading to dismissal of the appeal. On the second issue of deduction u/s.54F, the Tribunal relied on a Bombay High Court decision, denying the deduction as the amount was not deposited in the capital gains scheme account by the due date. The Tribunal dismissed this ground based on legal precedent. The Tribunal's order dated 21.01.2019 was reviewed thoroughly, with no identified mistakes. The Tribunal emphasized the limited scope of rectification under section 254(2) to correct only apparent errors in the record, not errors of judgment. Consequently, the Miscellaneous Application was dismissed for lacking merit, as no mistake, let alone an apparent one, was found in the Tribunal's order.

In conclusion, the Tribunal dismissed the Miscellaneous Application, upholding its original order. The decision was pronounced on 10th January 2020, emphasizing the importance of rectification being limited to correcting apparent mistakes in the record, not for reviewing judgments beyond the scope of section 254(2) of the Income Tax Act, 1961.