2023 (2) TMI 212 - HC - Income Tax

Rectification of mistake u/s 254 - Period of limitation - whether miscellaneous application under section 254 (2) of the I.T. Act was filed within a period of four years from the date of communication? - Scope of amendment - HELD THAT - The effect of amendment as amended w.e.f. 01.06.2016 by Finance Act, 2016 is that prior to amendment of Section 254(2), the assessee could bring to the notice of the appellate tribunal within 4 years from the date of the order for rectifying any mistake apparent from the record but after the amendment of the said section w.e.f. 01.06.2016, the same could be brought to the notice of the appellate tribunal within 6 months from the end of the month in which the order was passed. Appellant had filed the miscellaneous application much prior to amendment made in section 254 (2) of the Act w.e.f. 01.06.2016, but the Tribunal, in the impugned order, for the purpose of dismissing the said miscellaneous application filed by the appellant has wrongly relied upon an order passed by Mumbai Bench of Tribunal in the case of DCIT Vs. Hita Land Private Ltd. Ors, 2017 (4) TMI 1256 - ITAT MUMBAI . As in the instant case the appellant had filed miscellaneous application on 03.06.2014 i.e., much before said amendment dated 01.06.2016, therefore, in the impugned order the learned tribunal has wrongly mentioned that facts of the instant case and facts of the case of Hita Land Private Ltd. 2017 (4) TMI 1256 - ITAT MUMBAI are similar. The said order passed in Hita Land Private Ltd. 2017 (4) TMI 1256 - ITAT MUMBAI by the Mumbai Bench of I.T.A.T. is in the teeth of a judgment of the Gujarat High Court in the case of Peterplast Synthetics (P.) Ltd. 2015 (2) TMI 864 - GUJARAT HIGH COURT wherein the High Court has held that once it is found that the rectification application u/s 254(2) of the I. T. Act, 1961 has been submitted within a period of four years from the date of actual receipt of the judgment and order passed by the tribunal, which is sought to be reviewed, petitioner is entitled to relief. In the case of Sree Ayyanar Spinning Weaving Mills Ltd. 2008 (5) TMI 22 - SUPREME COURT has an occasion to interpret section 254(2) of the I.T. Act, 1961, wherein the fact in short was that miscellaneous application u/s 254 (2) of the Act was filed well within four years for rectification of the order and it was the Tribunal which took its own time to dispose of the said application and the High Court held that application could not have been entertained by the tribunal beyond four years and the Hon ble Supreme Court set aside the said judgment of High Court. We hold that the order of the tribunal requires interference in view of the fact that the learned tribunal has committed gross error in complying the law prevalent on the date of hearing and not the law prevalent at the date of filing of the miscellaneous application. At the cost of repetition, the judgment relied upon by the learned tribunal has already been distinguished in the preceding paragraphs. Hence, both the substantial questions of law are decided in favour of the assessed. The matter is remitted back to the learned tribunal with a direction to entertain the miscellaneous application filed by the appellant- assessee and decide the same on its own merit in accordance with law after hearing both the parties.

Summary

Issues:
1. Dismissal of the Miscellaneous Petition by the Income Tax Appellate Tribunal (I.T.A.T.) on the ground of limitation.
2. Justification of the findings recorded by the I.T.A.T., Ranchi Bench, as being perverse.

Analysis:
1. The appeal challenged the order passed by the I.T.A.T. dismissing the Miscellaneous Petition filed by the petitioner under Section 254 (2) of the Income Tax Act, 1961, on the ground of limitation. The appellant contended that the petition was filed within the prescribed time as per the existing law, within four years from the date of communication. The respondent, however, argued that as per the law at the time of hearing, the petition should have been filed within six months from the date of the order. The High Court examined the timeline of events and found that the petition was indeed filed within four years of the communication of the order, as per the law then in force. The Court emphasized that the dismissal based on the amended law was incorrect, and the appellant's petition was not barred by limitation.

2. The High Court further analyzed the judgment passed by the I.T.A.T. and the reliance on a similar case by the Mumbai Bench. It was highlighted that the facts of the instant case differed from the Mumbai case, as the appellant had filed the petition before the amendment of Section 254(2) came into effect. The Court cited judgments from the Gujarat High Court and the Supreme Court to support the argument that the application for rectification should be considered if filed within four years from the date of the order. The Court emphasized that the Tribunal erred in applying the amended law retrospectively and held that the findings of the I.T.A.T. were not in line with the prevailing legal provisions.

3. The High Court referred to relevant legal provisions and past judgments to establish that the Tribunal's decision was erroneous. By analyzing the timeline of events, the Court concluded that the dismissal of the appellant's Miscellaneous Application was unjustified. The Court set aside the I.T.A.T.'s order and directed the Tribunal to reconsider the appellant's application on its merits, without delving into the substantive issues of the case. Consequently, the High Court allowed the appeal, quashed the I.T.A.T.'s order, and remitted the matter back to the Tribunal for a fresh consideration in accordance with the law.

In conclusion, the High Court's judgment focused on the correct interpretation of the law regarding the filing of Miscellaneous Applications under Section 254(2) of the Income Tax Act, emphasizing that the application should be considered if filed within the prescribed time limit from the date of communication of the order. The Court's decision highlighted the importance of adhering to the legal provisions in effect at the time of filing such applications and underscored the need for consistency in applying the law to ensure justice and fairness in tax matters.