2021 (5) TMI 800 - AT - Income Tax

Rectification u/s 254 - Assessee contends that Ground No.3 is alternate to Ground Nos.1 2. If the first two grounds i.e. Ground Nos.1 2 are being allowed, Ground Nos. 3 becomes infructuous/academic - HELD THAT - We don't find any mistake apparent from record necessitating our jurisdiction as envisaged u/s.254(2) What the assessee contends is actually asking review of the entire decision already taken on facts by the Tribunal. Whether the Assessing Officer is giving appeal effect or not, there are other legal recourses available with the assessee. That however, the jurisdiction as envisaged u/s.254(2) of the Act does not entitle such remedy as claimed by the assessee before us. The 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. We are of considered view that 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 the assessee is dismissed.

Summary

Issues Involved:
1. Rectification of mistake under section 254(2) of the Income Tax Act, 1961.

Analysis:
The judgment pertains to a Miscellaneous Application filed by the assessee arising from an earlier order dated 21.02.2019. The Tribunal had observed that the case involved additions due to ad-hocism and lack of comparable cases, where the Assessing Officer failed to provide evidence to deem the payments excessive or unreasonable. The Tribunal allowed Ground Nos. 1, 2, and 3, emphasizing the Assessing Officer's obligation to prove the claims as unacceptable under section 40A(2)(b) of the Act. The assessee argued that if Ground Nos. 1 & 2 were allowed, Ground No. 3 became irrelevant. However, the Tribunal had already allowed all three grounds. The assessee also raised concerns about the Assessing Officer not implementing the Tribunal's order.

Upon review, the Tribunal found no apparent mistake in the earlier decision under section 254(2) of the Act. The Tribunal clarified that the assessee's request for a review was beyond the scope of rectification as envisaged by the Act. Citing the judgment in CIT Vs. Ramesh Electric & Trading Company, the Tribunal emphasized that rectification is limited to correcting mistakes apparent from the record, not errors of judgment. The Tribunal concluded that the assessee's attempt to seek a review through rectification was impermissible under section 254(2) of the Act.

Therefore, the Tribunal dismissed the Miscellaneous Application, stating that the assessee's request for review through rectification was not within the scope of powers granted under section 254(2) of the Income Tax Act, 1961. The order was pronounced on 25th May 2021.