2024 (7) TMI 881 - AT - Income Tax

Rectification of mistake - recalling order passed in lieu of subsequent/later judgment - review based on subsequent judgment of the Hon ble Supreme Court - Delayed deduction of deposits on account of employees contribution to PF and ESIC - Deposit after due dates specified in PF /ESIC Acts, but before the due date filing of return as prescribed in Section 139(1) which was allowed - Revenue seeks to recall of the order on the ground that the issue of claim of deduction is not allowable, in view of the subsequent judgment of the Hon ble Supreme Court in the case of Checkmate Services P Ltd. 2022 (10) TMI 617 - SUPREME COURT as decided the controversy in favour of the department - as argued by assessee that once the matter has attained finality, then based on subsequent judgment of a Higher Court, cannot be the ground to recall or to review the order within the scope and ambit of Section 254(2). HELD THAT - As decided in Govt. of NCT of Delhi vs. M/s. K.L. Rathi Steels Limited and Others 2024 (7) TMI 811 - SUPREME COURT issue of power to rectify error and power to review and after referring to catena of decisions of the Hon ble Supreme Court categorically held that, if the judgment has been passed by the Court following another judgment and subsequently by later judgment, the decision has been overruled or reversed, cannot have the effect of reopening or reviewing the former judgment based on following overruled judgment nor can the same be reviewed. The aforesaid judgment clearly clinches the issue that the subsequent judgment of the Hon ble Supreme Court in the case of Checkmate Services P Ltd. 2022 (10) TMI 617 - SUPREME COURT the earlier judgment passed by the Tribunal based on the binding precedents cannot be recalled or reviewed. Once this is the law of the land, then we are unable to appreciate the contention of the Revenue that the judgment of the Tribunal should be recalled which has been passed following catena of judgment of the Hon ble Jurisdictional High Court and other High Courts prevalent at that time in light of the subsequent judgment of the Hon ble Supreme Court this would be against the principle of law laid down by the Hon ble Supreme Court in the aforesaid cases specially once this law has been upheld by the Hon ble Supreme Court in various judgments which we are bound to follow. Even otherwise also once in the latest decision in the case of CIT vs. Reliance Telecom Ltd. 2021 (12) TMI 211 - SUPREME COURT the Hon ble Supreme Court have clearly held that the powers u/s. 254(2) of the Income Tax are akin to Order XLVII Rule 1 CPC, then it cannot be held that scope of power u/s. 254(2) is beyond and much larger than scope of review as given in the Order XLVII Rule 1 of CPC. In fact, the scope of Section 254(2) is much limited and the scope of review is much wider. Thus we hold that order of the Tribunal cannot be recalled based on the subsequent judgment of the Hon ble Supreme Court when the order of the Tribunal had attained finality between the parties. Consequently, the Miscellaneous Application filed by the department is dismissed.

Summary

Issues Involved:
1. Recall of Tribunal's order based on subsequent Supreme Court judgment.
2. Allowability of deduction for employees' contribution to PF and ESIC deposited after due dates specified in respective Acts but before the due date of filing the return.
3. Scope and ambit of Section 254(2) of the Income Tax Act.

Detailed Analysis:

1. Recall of Tribunal's Order Based on Subsequent Supreme Court Judgment:

The Revenue filed a Miscellaneous Application under Section 254(2) of the Income Tax Act, seeking to recall the Tribunal's order dated 28/04/2022. The basis for this request was the subsequent judgment of the Hon'ble Supreme Court in the case of Checkmate Services P Ltd. Vs CIT, which clarified that the deduction for employees' contributions to PF and ESIC is not allowable if deposited after the due dates specified in the respective Acts, even if deposited before the due date of filing the return under Section 139(1).

2. Allowability of Deduction for Employees' Contribution to PF and ESIC:

The Tribunal had initially allowed the assessee's claim for deduction of employees' contributions to PF and ESIC, which were deposited after the due dates specified in the respective Acts but before the due date of filing the return under Section 139(1). This decision was based on various judgments from the Hon'ble Bombay High Court and other High Courts, which held that such contributions are allowable if deposited before the due date of filing the return.

The Revenue contended that the Supreme Court's subsequent judgment in Checkmate Services P Ltd. clarified that such deductions are not allowable unless deposited on or before the due dates specified in the respective Acts. The Revenue argued that this constituted a mistake apparent from the record, which warranted rectification under Section 254(2).

3. Scope and Ambit of Section 254(2) of the Income Tax Act:

The Tribunal examined the scope of Section 254(2), which allows rectification of any mistake apparent from the record. The Tribunal referred to the Supreme Court's judgment in CIT vs. Reliance Telecom Ltd., which held that the powers under Section 254(2) are akin to Order XLVII Rule 1 of the CPC. This means that the Tribunal can only rectify mistakes that are apparent from the record and cannot revisit the merits of the case.

The Tribunal also cited the Explanation to Order XLVII Rule 1 CPC, which states that a subsequent decision of a superior court cannot be a ground for review of an earlier judgment. The Tribunal highlighted several Supreme Court judgments, including Beghar Foundation vs. Justice K.S. Puttaswamy and CIT vs. Gracemac Corporation, which reinforced this principle.

The Tribunal concluded that the subsequent judgment of the Supreme Court in Checkmate Services P Ltd. could not be a ground for recalling its earlier order, which had attained finality. The Tribunal emphasized that the decision was based on the law as it stood at the time, supported by binding precedents from the Hon'ble Jurisdictional High Court and other High Courts.

Conclusion:

The Tribunal dismissed the Revenue's Miscellaneous Application, holding that the subsequent judgment of the Supreme Court could not be a ground for recalling or reviewing its earlier order under Section 254(2) of the Income Tax Act. The Tribunal reiterated that the scope of Section 254(2) is limited to rectifying mistakes apparent from the record and does not extend to revisiting the merits of the case based on subsequent judicial pronouncements.