2020 (10) TMI 979 - AT - Income Tax

Rectification of mistake - ITAT in its order has observed the fact that the matter needs to be examined and verified by the lower authorities in its paragraph No. 40 and 41 of the order but directed the AO in the paragraph No. 42 of the order to allow the claim of the assessee for the short recoveries as discussed above after necessary verification and examination which is contrary to the observation made in paragraph No. 40 and 41 of the order - HELD THAT - MA was filed by the Revenue dated 31st December 2019 whereas order of the Hon ble High Court was passed on 17th February 2020 2020 (2) TMI 1236 - GUJARAT HIGH COURT subsequent to the date of filing the MA by the Revenue. Thus it is inferred that the order of the Hon ble High Court was not available at the relevant point of time with the Revenue i.e. at the time of filing the MA. As the order of the ITAT has merged with the order of the Hon ble Gujarat High Court on the issue raised by the revenue in the MA as discussed above, therefore there is no question of any mistake in the order of the ITAT in terms to the provision of sub-section (2) of section 254 of the Act. The ld. DR at the time of hearing has not brought anything on record to support the grievance raised by the Revenue in the MA. Accordingly, we dismiss the MA filed by the Revenue.

Summary

Issues:
Rectification of order by ITAT regarding long-term capital gain declared by individual assessee from sale of shares based on recoveries made by buyer as per share purchase agreement.

Analysis:
1. The assessee, an individual, declared a long-term capital gain from the sale of shares of two companies to a buyer. The buyer claimed recoveries from the assessee and other family members as per the share purchase agreement, which the assessee reduced from the capital gain in the revised return.

2. The Assessing Officer (AO) rejected the recoveries claimed by the assessee as contingent and not ascertainable. The CIT (A) upheld the AO's decision.

3. On appeal, the ITAT set aside the issue to the AO for necessary verification, directing the AO to allow the claim of the assessee after examination.

4. The Revenue filed a Miscellaneous Application (MA) seeking rectification in the ITAT's order, alleging a mistake in directing the AO to allow the claim despite the need for verification.

5. The ITAT noted that the order was upheld by the Gujarat High Court, indicating no mistake in the ITAT's decision. The Revenue's claim of a mistake was dismissed.

6. Similar MAs filed by the Revenue in other cases were rejected following the decision in the main case, as the issues were identical.

7. In another case, where the Revenue did not appeal to the High Court, the ITAT dismissed the MA, stating that the reasoning from the main case applied mutatis mutandis due to identical facts.

8. All MAs filed by the Revenue were ultimately dismissed by the ITAT, upholding its original order.

This detailed analysis covers the issues involved in the legal judgment, including the declaration of long-term capital gain, the dispute over recoveries made by the buyer, the decision of the AO and CIT (A), the ITAT's directions, the Revenue's claim of a mistake, and the final dismissal of all MAs by the ITAT.