2022 (7) TMI 809 - AT - Income Tax

Rectification of mistake u/s 254 - Income from house property - AO rejected the annual letable value of a flat of assessee - Bench had taken into consideration the fact of unauthorized possession and concluded that therefore ALV can be considered on basis of municipal taxes - Assessee submits that it had filed a civil suit against the unauthorized occupants on 02.08.2013 for their eviction and necessary documentary evidences in this regard were placed but Bench has not taken this in consideration - HELD THAT - This Bench is of the considered opinion that there is no substance in the present application for rectification. In Para no. 6, the submission of asssessee have been reproduced while in para no. 9, the Bench had given a finding based upon appreciation of matter on record that assessee could not prove the fact that any legal action has been taken by the assessee against alleged unauthorized possession. Assessee s own case is that the civil suit was filed by the assessee company on 02.08.2013 after the Ld. CIT(A) decision in the case of assessee for Assessment Years 2006-07 2007-08. Even otherwise the alleged error cannot be considered to be one apparent on record which can be rectified within the powers of Section 254(2) of the Act as such the power is only for rectification and not review. The Bench is of considered opinion that averment of applicant that the Bench has made contradictory findings or failed to appreciate relevant evidence in correct perspective, is not an apparent error on record which can be rectified but it may amount to review which is not permissible under 254(2). Honourable Supreme Court in the case of Reliance Telecom Limited 2021 (12) TMI 211 - SUPREME COURT held Merely because the Revenue might have in detail gone into the merits of the case before the ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors Section 254(2) of the Act. As observed hereinabove, the powers under Section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record and not beyond that. Consequently the applications in hand are dismissed.

Summary

Issues:
1. Rectification of order regarding annual letable value of a flat.
2. Consideration of civil suit against unauthorized occupants in assessment.
3. Alleged contradictory observations by the Bench.
4. Scope of rectification under Section 254(2) of the Act.

Issue 1: Rectification of order regarding annual letable value of a flat:

The judgment involves a case where the Assessing officer rejected the annual letable value of a flat of the assessee, considering unauthorized possession. The Bench concluded that the annual letable value could be determined based on municipal taxes due to unauthorized possession. The assessee challenged this decision, highlighting a civil suit filed against unauthorized occupants for eviction. The Bench's observations were deemed contradictory, with the assessee arguing that the civil suit was not considered. However, the Bench maintained that the assessee failed to prove any legal action against unauthorized possession, leading to a dispute over the correctness of the order.

Issue 2: Consideration of civil suit against unauthorized occupants in assessment:

The crux of the matter lies in the consideration of a civil suit filed by the assessee against unauthorized occupants for eviction. The assessee contended that this suit was crucial evidence that was not adequately factored into the assessment. Despite the submission of documentary evidence related to the civil suit, the Bench's decision seemed to overlook this aspect, leading to a disagreement between the parties regarding the weightage given to the civil suit in determining the annual letable value of the flat.

Issue 3: Alleged contradictory observations by the Bench:

The judgment highlights the contention raised by the assessee regarding contradictory observations made by the Bench. The assessee argued that the Bench's statements regarding the civil suit and legal action against unauthorized possession were inconsistent. This discrepancy in the Bench's observations formed the basis of the assessee's plea for rectification of the order. However, the Bench maintained its stance, emphasizing the need for concrete evidence of legal action against unauthorized possession to support the assessee's case.

Issue 4: Scope of rectification under Section 254(2) of the Act:

The judgment delves into the scope of rectification under Section 254(2) of the Act, emphasizing that the power of rectification is limited to correcting mistakes apparent from the record and not for review purposes. The Bench clarified that rectification aims to address patent errors and not to revisit or substitute the original order. Citing legal precedents, including judgments from the Delhi High Court and the Supreme Court, the judgment underscores the narrow scope of rectification under the Act, highlighting that rectification is not intended for revisiting debatable legal or factual points but for addressing clear and undisputed errors.

In conclusion, the judgment dismisses the applications for rectification, emphasizing the limited scope of rectification under the Act and the need for errors to be apparent from the record for rectification to be warranted. The decision underscores the importance of concrete evidence and the adherence to legal principles in rectification proceedings.