2014 (7) TMI 643 - HC - Income Tax

Rectification application u/s 254(2) assessment order was passed u/s 153A - Genuineness of claim of capital gain Amount claimed as income from other sources u/s 68 tribunal in another case of the assessee has taken contrary stand - Held that - Even if one accepts the observations of the Tribunal in the impugned order dated 18.10.2013 that the order dated 20.10.2010 of the Tribunal in regular assessment proceedings is incapable of being implemented in view of Section 153(2A) of the Act. This by itself would not eradicate the finding of fact by the Tribunal in its order dated 20.10.2010. On merit of its application, the Tribunal may come to finding that in view of certain further facts available in the search and seizure appeal, the findings in order dated 20.10.2010 of the Tribunal may not apply to the present appeal. However, the order of the Tribunal dated 20.10.2010 in regular assessment proceedings cannot be shut out at the threshold. - Tribunal directed to recall its order dated 30.1.2013 Decided in favour of assessee.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal under Article 226 of the Constitution regarding rectification application; Ignorance of earlier Tribunal order in regular assessment proceedings; Tribunal's refusal to consider earlier order due to limitation under Section 153(2A); Petitioner's request for recall of Tribunal's order dated 30.1.2013; Tribunal's decision based on rectification application and relevance of earlier Tribunal order; Jurisdictional High Court and Supreme Court precedents on recalling orders under Section 254(2).

Analysis:

1. The judgment deals with a petition challenging the Income Tax Appellate Tribunal's order on a rectification application under Article 226 of the Constitution. The petitioner contested the Tribunal's decision dated 18.10.2013, which rejected the rectification application related to an Assessment Order from 2008 under Section 143(3) and 153A of the Income Tax Act, 1961. The issue arose from a claim for capital gains and the subsequent treatment of income under 'income from other sources' based on Section 68 of the Act.

2. The petitioner argued that the Tribunal's order dated 30.1.2013 overlooked a prior order from 2010 in regular assessment proceedings, where the Tribunal had accepted the genuineness of the capital gains claim but remanded the issue to verify the nature of capital gains. The petitioner cited the Counsel's lack of awareness of the 2010 order due to the Chartered Accountant's illness, leading to a mistake in the subsequent Tribunal order.

3. Despite acknowledging the Counsel's unawareness of the 2010 order, the Tribunal in its 2013 decision refused to consider the earlier order due to limitations under Section 153(2A) of the Act. The petitioner sought the recall of the 2013 order and a fresh consideration based on the 2010 order. The Tribunal's decision was contested on the grounds of inconsistency and relevance of the earlier order in the rectification application.

4. The High Court referred to a Supreme Court case regarding the Tribunal's authority to recall orders under Section 254(2) and emphasized the principle that parties should not suffer due to Tribunal mistakes. The Court highlighted the importance of the 2010 Tribunal order in the present proceedings and directed the Tribunal to recall its 2013 order for a fresh hearing, leaving all contentions open for further consideration.

5. The Court clarified that the decision did not reflect on the merits of the case but focused on the procedural correctness and the necessity of considering the earlier Tribunal order. The judgment allowed the petition, setting aside the Tribunal's 2013 order and instructing a reevaluation without influence from the Court's observations.

This detailed analysis outlines the key issues, arguments, and the Court's decision in the legal judgment, addressing the nuances of the petitioner's challenge and the Tribunal's refusal to consider the earlier order, leading to the direction for a fresh hearing based on relevant precedents and legal principles.