2023 (1) TMI 1419 - AT - Income Tax

Rectification u/s 254 - disallowance u/s. 14A - scope of amendment made vide Finance Act, 2022 - HELD THAT - The issues raised by the Ld. Counsel for the assessee, in our view, do not constitute mistake apparent on record. This Tribunal has limited jurisdiction u/s. 254 of the Act only to rectify the mistake apparent on record. This Tribunal has no power of review of its own orders. The application u/s 254(2) of the Act lies in case where, there is a mistake apparent on record in the order of the Tribunal. The order of the Tribunal cannot be assailed on merits in the garb of Miscellaneous Application u/s 254(2) of the Act. Reliance in this respect can be placed on the decision of the Hon'ble Bombay High Court in the case of 'Commissioner Of Income-Tax vs Ramesh Electric And Trading Co.' 1992 (11) TMI 32 - BOMBAY HIGH COURT wherein while relying upon the decision of T. S. Balaram, ITO v. Volkart Brothers' 1971 (8) TMI 3 - SUPREME COURT and further relying upon the decisions of the various High Courts has categorically held that the power of rectification under section 254(2) of the Income-tax Act can be exercised only when the mistake which is sought to be rectified is an obvious and patent; mistake which is apparent from the record, and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinions.

Summary

Issues:
Assailing the consolidated order passed by the Tribunal citing various judicial decisions and errors apparent on record.

Analysis:
The assessee filed Misc. Applications challenging the Tribunal's order dated July 6th, 2022, for AYs 2012-13 to 2014-15 and 2009-10. The applications alleged errors in the order, including the failure to confront the Ld. Counsel with certain decisions cited, dismissal of SLPs by the Supreme Court, and the impact of the amendment to section 14A of the Act. The applicant argued that errors were apparent on record, citing judicial precedents like Cheminvest Ltd. Vs. CIT and Pr. Commissioner of Income Tax Vs. Era Infrastructure (India) Ltd. The written submissions highlighted discrepancies in the effective dates of amendments and subsequent judicial decisions affecting the case.

The Tribunal noted that the assessee sought to challenge the order on factual and legal grounds, suggesting an appeal to the High Court. The Tribunal's jurisdiction under section 254 of the Act is limited to rectifying apparent mistakes, not reviewing its own orders. The Tribunal found that the decisions referenced in the order were well-known and public, and the Ld. Counsel failed to demonstrate prejudice caused by their inclusion. The Tribunal also clarified that subsequent decisions, like the one from the Delhi High Court, were not binding on it but could be considered in the future. Dismissal of SLPs without discussion does not establish legal precedent, unlike cases where the appeal is admitted for hearing.

The Tribunal emphasized that the application under section 254(2) of the Act is for rectifying apparent mistakes, not for challenging the order on merits. Citing the decision of the Bombay High Court in 'Commissioner Of Income-Tax vs Ramesh Electric And Trading Co.,' the Tribunal reiterated that rectification power can only address obvious and patent mistakes on record, not those requiring extensive arguments or reasoning. Consequently, the Misc. Applications were dismissed, affirming the Tribunal's original order.

In conclusion, the Tribunal's decision highlighted the limited scope of rectification under section 254(2) of the Act and the need for mistakes to be apparent on record for such applications to succeed. The judgment underscored the importance of clear legal precedents and the distinction between dismissing SLPs and admitting appeals for establishing legal principles.