2021 (2) TMI 363 - AT - Income Tax

Rectification of mistake u/s 254 - Estimation of income - bogus purchases - Tribunal had restricted the disallowance on expenses to the extent of 20% - HELD THAT - No mistake, much less any apparent mistake that warrants rectification in the order of Tribunal dated 03.01.2019. The Tribunal in its own wisdom after considering the decisions of the Hon‟ble Jurisdictional High Court had adjudicated the appeal of the assessee. Therefore, we are of the considered view that the Tribunal has rightly adjudicated the issue in confirming 20% of the total expenses and therefore, prayer for making it as 100% of such expenses is not warranted within the scope of power as envisaged u/s.254(2) of the Act wherein only mistake apparent from record could be rectified. Accordingly, Miscellaneous Application filed by Revenue is dismissed.

Summary

Issues:
Rectification of order by ITAT regarding disallowance of expenses.

Analysis:
The Revenue filed a Miscellaneous Application seeking rectification of the ITAT's order dated 03.01.2019, which confirmed a 20% disallowance on total expenses instead of 100%. The Revenue argued that the disallowance should be increased to 100% as the Tribunal did not consider the enhanced amounts from the Assessing Officer and CIT(A). However, the assessee opposed the application, stating that the Tribunal's order was well-reasoned and did not contain any apparent mistake warranting rectification. The assessee argued that the Revenue's request for a review was beyond the scope of Section 254(2) of the Income Tax Act.

Upon reviewing the case records and arguments, the ITAT found that the Tribunal had considered all facts and circumstances before confirming the 20% disallowance on expenses. The ITAT noted that the Tribunal had also referred to relevant decisions of the Bombay High Court and confirmed the 20% disallowance. The ITAT emphasized that the power for rectification under Section 254(2) could only be exercised for obvious and patent mistakes apparent from the record, not for errors requiring extensive reasoning or arguments. The ITAT cited various authoritative pronouncements, including decisions by the Supreme Court and High Court, to support this view.

The ITAT highlighted that the scope of Section 254(2) was limited to rectifying mistakes apparent from the record itself, not errors of judgment. Citing the decision in ACIT Vs. Saurashtra Kutch Stock Exchange Ld., the ITAT emphasized that rectification could not be used for a review of the Tribunal's order. Ultimately, the ITAT concluded that the Revenue's Miscellaneous Application did not point to any mistake, let alone an apparent one, in the Tribunal's order dated 03.01.2019. The ITAT upheld the Tribunal's decision to confirm the 20% disallowance on total expenses and dismissed the Revenue's application as lacking merit.

In the final verdict, the ITAT pronounced the dismissal of the Revenue's Miscellaneous Application on 05th February 2021.