2020 (11) TMI 950 - HC - Income Tax

Rectification u/s 254 - Addition u/s 68 - non-consideration of certain facts in Order of the Tribunal - HELD THAT - Rectification of the earlier order dated 16.3.2016 passed by the Tribunal falls within the four corners of Section 254 and when once the learned Tribunal, particularly, the same Member of the Tribunal admitted that the record or Paper Book before the Tribunal already contained relevant material which was lost sight of and ignored by the learned Tribunal, there was a justifiable cause for recall and rectification of the earlier order and considering the materials which was already on record of the learned Tribunal and the learned Tribunal, therefore, rectified the order and granted the requisite relief by deleting the additions under Section 68 of the Act with respect to the said two Dealers. Contention of Revenue that the said material was never before the original Assessing Authority or before the first Appellate Authority and therefore, the Tribunal has erred in taking the same into account, is rather misconceived. Powers of assessment vested with all the three Authorities including the Appellate Authorities are co-extensive in law and there is no prohibition in law in producing the relevant materials before the permission of the second Appellate Authority viz., the Tribunal. There is no dispute or question raised about the manner in which the said documents were placed before the learned Tribunal. It is only the question whether the learned Tribunal failed to take note of the said relevant evidence while passing the original Appellate Order. Since Tribunal found that the said material was already on the record of the learned Tribunal, when it passed the order on 16.3.2016, we cannot doubt that the material was produced before the learned Tribunal in a doubtful manner. No such objection was raised by the Revenue before the learned Tribunal itself. Therefore, the question of material being on record of the learned Tribunal is beyond the pale of doubt and the finding of the learned Tribunal binds us. Additions under Section 68 - Tribunal, after considering the materials which were already on the record of the Tribunal, like TIN Number, PAN Number, Invoices, etc., of these two Trade Creditors/Sellers and it has granted the requisite relief to the Assessee, we do not find any question of law to be arising on this issue - with regard to the scope of Section 254 we find that ignoring the material already on record on the part of the learned Tribunal was a mistake apparent on the face of record u/s 254 and Tribunal has, in our opinion, rightly recalled its order and rectified the mistake and it has rightly set aside the additions under Section 68 of the Act and they are only findings of facts based on relevant material. - Decided in favour of assessee.

Summary

Issues Involved:
1. Power of the Income Tax Appellate Tribunal to review its order on a Miscellaneous Application.
2. Deletion of additions made by the Assessing Authority under Section 68 of the Income Tax Act.
3. Whether the Tribunal's failure to scrutinize documentary evidence amounts to a mistake apparent on the face of the record under Section 254(2) of the Income Tax Act.

Issue-wise Analysis:

1. Power of the Income Tax Appellate Tribunal to review its order on a Miscellaneous Application:
The Court examined whether the Tribunal has the power to review its order on a Miscellaneous Application filed by the Revenue Department and pass a fresh order on merits contrary to the earlier order under Section 254(2) of the Income Tax Act, 1961. The Tribunal initially upheld the additions made in the declared income of the Assessee but later accepted a Miscellaneous Application from the Assessee pointing out that relevant material (PAN Numbers, Invoices, etc.) was overlooked. The Tribunal acknowledged this oversight and recalled its earlier order, stating that the documents were lost sight of and were not examined by the Bench. The Court found that the Tribunal's rectification of the earlier order falls within the four corners of Section 254 of the Act since the relevant material was already on record but ignored.

2. Deletion of additions made by the Assessing Authority under Section 68 of the Income Tax Act:
The Tribunal initially confirmed the additions made by the Assessing Officer under Section 68 due to the inability to establish the identity and genuineness of the sundry creditors, M/s. Sree Ganesh Steels and M/s. D.G. Traders. The Assessee contended that the additions were based on enquiries conducted behind their back, violating principles of natural justice. The Tribunal, upon reviewing the Miscellaneous Application and the material provided (TIN Numbers, CST Numbers, PAN, etc.), found that the identity of the creditors was genuine and that the purchases were not in dispute. The Tribunal concluded that the transactions could not be treated as bogus, and thus, the additions under Section 68 were unjustified. The Court upheld this view, stating that the Tribunal rightly set aside the additions based on the relevant material.

3. Whether the Tribunal's failure to scrutinize documentary evidence amounts to a mistake apparent on the face of the record under Section 254(2) of the Income Tax Act:
The Court addressed whether the Tribunal's failure to scrutinize documentary evidence on record constitutes a mistake apparent on the face of the record under Section 254(2). The Tribunal admitted that the documents proving the identity and genuineness of the creditors were overlooked in the original order. The Court agreed that this oversight was a mistake apparent on the face of the record, justifying the Tribunal's decision to recall and rectify its earlier order. The Tribunal's action was deemed appropriate, and the Court found no question of law arising on this issue.

Conclusion:
The Court dismissed the Revenue's appeal, affirming the Tribunal's power to review its order under Section 254(2) and uphold the deletion of additions under Section 68 of the Income Tax Act. The Tribunal's rectification was found to be justified as it was based on material already on record but initially overlooked. The questions of law framed were answered against the Revenue and in favor of the Assessee.