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2020 (8) TMI 149 - AT - Income TaxRectification of mistake u/s 254 - Bogus purchases - addition to the extent of 12.5% of the alleged bogus purchases without reducing the GP already shown by the appellant on these alleged bogus purchases - HELD THAT -Explanations given by the assessee have been duly considered. In the impugned order all the submissions and explanations by the assessee have been summarized and then a finding has been arrived at. The issue has been decided after considering the facts in entirety available on record. A perusal of the above facts clearly indicate that the applicant has not pointed out any mistake apparent from the record. A mistake apparent on the record must be an obvious mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. This view is supported by the decision of the Hon ble Supreme Court in T.S. Balaram, ITO v. Volkart Bros. 1971 (8) TMI 3 - SUPREME COURT . In fact, not a single error in the impugned order has been pointed out by the Ld. counsel for the applicant. What the applicant wants is a review of the order passed by the Tribunal. The Tribunal is a creature of the statute. The Tribunal cannot review its own decision unless it is permitted to do so by the statute. Hon ble Supreme Court has held in Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji 1970 (3) TMI 163 - SUPREME COURT that the power to review is not an inherent power. It must be conferred by law either specifically or by necessary implication. It is a settled law that the Tribunal has no power to review its order in the garb of section 254(2) of the Act as held in CIT v. Globe Transport Corpn. 1991 (1) TMI 23 - RAJASTHAN HIGH COURT - Rectification application dismissed.
Issues Involved:
1. Rectification of the Tribunal's order dated 14.12.2018. 2. Consideration of ground No. 4 of the appeal memo. 3. Determination of the profit element embedded in bogus purchases. 4. Tribunal's power to review its own order under section 254(2) of the IT Act. Issue-wise Detailed Analysis: 1. Rectification of the Tribunal's Order Dated 14.12.2018: The applicant sought rectification of the Tribunal's order on the grounds that the Tribunal did not consider ground No. 4 of the appeal memo, which argued that the gross profit already shown and assessed on bogus purchases should be reduced from the 5% addition approved by the Tribunal. The Ld. counsel contended that the Tribunal inadvertently overlooked this substantive argument, which constitutes a self-evident error correctable under section 254(2) of the Act. 2. Consideration of Ground No. 4 of the Appeal Memo: The Tribunal examined whether it had considered the 4th ground of appeal, which stated that the CIT(A) erred in sustaining an addition of 12.5% of the alleged bogus purchases without reducing the gross profit already shown by the appellant. The Tribunal noted that it had considered all grounds, including the 4th one, while deciding the case. The Tribunal had reduced the addition from 12.5% to 5% based on the facts and circumstances of the case, taking into account the VAT rate and the possibility of the assessee making savings through VAT and discounts. 3. Determination of the Profit Element Embedded in Bogus Purchases: The Tribunal reviewed the background facts, noting that the AO had made an addition of ?31,65,79,780/- towards bogus purchases. The CIT(A) had sustained the addition to the extent of 12.5% of the value of bogus purchases, following judgments from the Hon’ble Gujarat High Court. The Tribunal found that the profit rate of 12.5% was on the higher side and reduced it to 5%, considering the VAT rate and potential savings by the assessee. The Tribunal directed the AO to restrict the addition to 5% of the alleged bogus purchases. 4. Tribunal's Power to Review Its Own Order Under Section 254(2) of the IT Act: The Tribunal emphasized that it does not have the power to review its own orders under section 254(2) of the IT Act. The Tribunal can only rectify mistakes apparent from the record, which must be obvious and not require elaborate reasoning. The Tribunal cited several judgments, including T.S. Balaram, ITO v. Volkart Bros., to support this view. The Tribunal concluded that the applicant had not pointed out any mistake apparent from the record and was essentially seeking a review of the order, which is beyond the Tribunal's jurisdiction. Conclusion: The Tribunal dismissed the Miscellaneous Applications filed by the appellant, concluding that there was no mistake apparent from the record in the impugned order. The Tribunal reiterated that it does not have the power to review its own decisions under section 254(2) of the Act. The decision for AY 2011-12 applied mutatis mutandis to AY 2012-13. The Tribunal also addressed procedural issues related to the delay in pronouncing the order due to the COVID-19 lockdown.
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