2023 (11) TMI 1317 - AT - Income Tax

Rectification of mistake - Validity of assessment u/s 153C or 148 - first claim projected by assessee is such that the erstwhile counsel has chosen not to press Ground No. 1 for expediting the disposal of appeal - HELD THAT - If the assessee had a point that his case was to be governed by section 153C and not by section 148 it was for the assessee/assessee s counsel to examine the facts/evidences of assessee and raise such a claim before ITAT. Even in that situation the assessee would perhaps be required to raise an additional ground because the existing ground No. 1 with which we are concerned here in its present form coupled with the adjudication made by CIT(A) in first-appeal is confined to section 148 only and may not be sufficient enough to admit the consideration of applicability or non-applicability of section 153C. We may also add one more point at this stage. On one hand the assessee claims that his counsel agreed for not pressing Ground No. 1 to expedite the disposal of case and on other hand it is being claimed that it happened so because the counsel was not aware of the earlier decision favouring the assessee on section 148 Vs. 153C. Thus there is a clear contradiction in two stands taken by assessee. Therefore we do not find any substance in assessee s claim. We do not have any quarrel for the decision in Federal Mogul Goetze (India) Ltd. 2021 (10) TMI 1159 - DELHI HIGH COURT referred to by Ld. AR wherein it was held that the power of rectification u/s 254(2) is not limited to a mistake committed by Tribunal alone it is available even for a mistake of counsel. But that decision is also not applicable to present case where the Counsel has made a conscious withdrawal of Ground No. 1 while arguing other grounds of appeal. Therefore we do not find any merit in the second contention of assessee. Erstwhile counsel was not having any authorization to withdraw the grounds raised by the assessee and yet the ITAT has allowed withdrawal of ground - The assessee has given authority to his counsel to appear and present assessee before ITAT. Such authority was fullest unlimited and unrestricted and there is no rider mentioned therein. Secondly the assessee has specifically authorized his counsel to compound matters wherever necessary . This compounding in a way authorized assessee s counsel to withdraw full or part of the appeal i.e. one or more grounds. Ld. AR submitted that this authority of compounding was limited for compounding of matters before income-tax authorities but neither the Ld. DR nor we are influenced to accept such submission of Ld. AR. Lastly the assessee has also mentioned in the authority that the statements and explanations shall be binding upon him. ITAT clearly reveals that the counsel has simply submitted/stated what was instructed by the assessee i.e. the assessee did not want to press ground No. 1. That means the decision of non-pressing was taken by assessee himself (may or may not be with the consultation of counsel) and the counsel has simply made a statement conveying assessee s decision. This situation in our view very smoothly falls within the last sentence of Letter of Authority wherein the assessee has acknowledged that the statement made by counsel shall be binding upon him. Thus the withdrawal/non-pressing of ground by counsel was within the power and authority being representative of assessee and the assessee s claim that the ITAT has accepted withdrawal/non-pressing without authority of counsel is devoid of any merit. DR is very much justified in claiming that if the non- pressing of a ground by counsel is treated as a mistake apparent from record it will open a window for the parties/counsels for not pressing any ground at the time of hearing of appeal and subsequently coming with a M/A u/s 254(2) when the order of ITAT goes against them on other grounds. Such approach shall be very fatal to judicial proceeding and it must be stopped and should not be entertained encouraged and allowed in any case. MA dismissed.

Summary

Issues Involved:

1. Alleged mistakes in the ITAT's order regarding the non-pressing of Ground No. 1 by the assessee's counsel.
2. The applicability of Section 148 versus Section 153C of the Income-tax Act, 1961.
3. Authorization of the counsel to withdraw or not press the grounds of appeal.

Issue-wise Detailed Analysis:

1. Alleged Mistakes in the ITAT's Order Regarding Non-pressing of Ground No. 1:

The assessee filed a Miscellaneous Application under Section 254(2) of the Income-tax Act, 1961, seeking rectification of the ITAT's order, which dismissed the assessee's appeal on the grounds that it was not pressed. The assessee claimed that the decision to not press Ground No. 1 was taken by the erstwhile counsel to expedite the disposal of the appeal due to time constraints indicated by the ITAT. The assessee argued that this constituted a mistake apparent from the record, warranting rectification.

The ITAT, however, found this claim unconvincing. It noted that the usual procedure is to address legal grounds first, and it was unusual for the counsel to skip Ground No. 1 and argue other grounds first. The ITAT emphasized that even if the case was adjourned, the bench was functioning in both physical and virtual modes, and there was no reason for the counsel to withdraw the ground, thereby harming the client's interests. The tribunal concluded that the claim of withdrawal to expedite the hearing was not credible.

2. Applicability of Section 148 versus Section 153C:

The assessee contended that the ITAT was unaware of a prior decision by a Co-ordinate Bench, which held that proceedings under Section 148 based on information from a third-party search were invalid, and Section 153C should have been applied. The assessee argued that had this decision been known, a different course of action might have been pursued.

The ITAT dismissed this argument, noting that it was the responsibility of the assessee and their counsel to bring relevant decisions to the tribunal's attention. The tribunal also highlighted that the issue of Section 148 versus Section 153C was not raised before the CIT(A), and the existing ground was confined to Section 148. The tribunal found no merit in the claim that unawareness of the decision constituted a mistake apparent from the record.

3. Authorization of Counsel to Withdraw or Not Press Grounds:

The assessee argued that the counsel lacked authorization to withdraw Ground No. 1, and the tribunal's acceptance of the withdrawal constituted a mistake. The ITAT examined the "Letter of Authority" given to the counsel, which was broad and included the power "to compound matters wherever necessary." The tribunal interpreted this as sufficient authorization for the counsel to withdraw grounds. It noted that the counsel's statement in open court, indicating the ground was not pressed, was binding on the assessee.

The tribunal rejected the assessee's reliance on case law, distinguishing the facts of those cases from the present situation where only one ground was withdrawn, not the entire appeal. The ITAT concluded that the counsel acted within their authority, and there was no mistake in the tribunal's acceptance of the withdrawal.

Conclusion:

The ITAT dismissed the Miscellaneous Application, finding no merit in the claims of mistakes apparent from the record. The tribunal emphasized that accepting non-pressing of grounds as mistakes could undermine judicial proceedings and should not be entertained. The order was pronounced in open court on November 30, 2023.