2024 (5) TMI 444 - HC - Income Tax

Rectification u/s 254 - Tribunal had made error apparent in its order by saying transportation loss in respect of coal was not accepted - Its opinion was the assessee must have claimed the same on the responsible transporter which has not been shown in the case - HELD THAT - On perusal of the two passages from appellate order made by the Tribunal we do not find any dispute raised regarding details of loss on account of shortage of coal supplied as were filed before the AO and thereafter also before the Commissioner. Assessee s contention is the Tribunal opined on it having claimed from the transporter(s). Revenue s contention is there was no loss. This contention was upheld by the Tribunal on a finding that the Commissioner had not observed as to whether the shortage was passed on by the assessee to the transporter(s) and without examining that the Commissioner deleted the addition. The passage relied upon by assessee is an expression of opinion in support of held omission of the Commissioner to observe as to whether the shortage was passed on to the transporter(s). The Tribunal opined the assessee must have passed it on. There is nothing in impugned order to show that the AO had made an inquiry or verification regarding the coal as not actually lost. A fact can be proved on a positive assertion. The assessee cannot prove existence of coal when it says it has been lost. The AO in asserting it was not lost could have demonstrated existence of the coal. We are satisfied that in the fact situation the Commissioner correctly came to the conclusion that proper internal control system for accounting and finances of assessee had resulted in the details filed before the AO and thereafter before the Commissioner. The details explained and accounted for the shortage of coal. This finding was overturned by the Tribunal in revenue s appeal on saying that the Commissioner had not observed whether the shortage had been passed on to the transporter(s). Commissioner could have had no occasion to so observe as the authority was sitting in appeal over the assessment order. Neither in the appellate order of the Tribunal nor in its rectification order there is any reference to the AO having made a finding on passing on the loss to the transporter(s). Tribunal being the last forum to find on facts purported to find a fact on surmise. It is an error apparent. We therefore set aside and quash impugned order.

Summary

Issues Involved:
The issues involved in the judgment are the interpretation of Section 254 of the Income Tax Act, 1961, regarding rectification of mistakes apparent from the record by the Income Tax Appellate Tribunal (ITAT), and the assessment of transportation loss of coal by the assessee for the assessment year 2009-10.

Interpretation of Section 254 of the Income Tax Act, 1961:
The petitioner, represented by Mr. Singh, challenged the order of the ITAT invoking power under sub-section (2) of Section 254, alleging an error apparent in the Tribunal's disposal of the appeal. The Tribunal refused to rectify the mistake as per Section 254(2), stating that it is the last forum to ascertain facts and any aggrieved party can appeal under Section 260-A.

Assessment of Transportation Loss of Coal:
The petitioner contended that the Tribunal erred in its order by not accepting the transportation loss of coal claimed by the assessee. The Commissioner had deleted the addition based on proper records maintained by the assessee regarding the shortage of coal supplied by Mahanadi Coal Field. However, the Tribunal reversed this decision, stating that the assessee must have claimed the loss from the responsible transporters, which was not shown in the case.

The Tribunal's order highlighted discrepancies in the assessee's explanation regarding the claimed shortage of coal and the lack of evidence provided to support the claim. The Tribunal opined that the assessee should have passed on the shortage to the transporters, which was not adequately addressed.

The High Court found that the Tribunal's decision was based on a surmise and not on actual facts, leading to an error apparent in the judgment. The Court set aside the impugned order, emphasizing that the Commissioner's conclusion on the internal control system of the assessee was correct and the Tribunal's decision lacked a factual basis.

The judgment was delivered by Justice Arindam Sinha and Justice Sanjay Kumar Mishra of the Orissa High Court, with Mr. S.K. Singh representing the petitioner and Mr. Tushar Kanti Satapathy as the Senior Standing Counsel for the Revenue.