2016 (2) TMI 747 - AT - Income Tax

Levy of penalty u/s 271(1)(c)- rectification of mistake - whether Tribunal had failed to adjudicate the ground that the show cause notice was issued, before levy of penalty u/s 271(1)(c) of the IT Act, 1961, in a mechanical manner without application of mind - Held that - On mere perusal of the grounds of appeal raised in the memo of appeal shows that no such ground was raised before this Tribunal nor the counsel for the assessee could demonstrate before us that the issue was argued during the course of hearing of the appeal before the Tribunal. No doubt, the decision of the Hon ble jurisdictional High Court in the case of CIT Vs Manjunatha Cotton & Ginning Factory (2013 (7) TMI 620 - KARNATAKA HIGH COURT ) was referred by the counsel during the course of hearing of the appeal, but it was only in support of the proposition that in the absence of mala fide on the part of the assessee, no penalty can be levied u/s 271(1)(c) of the IT Act, 1961. This Tribunal had considered this decision and rendered a finding at para-5.2 of the order. There is no whisper either in the order of the CIT(A) or in the order of the Tribunal that the assessee had advanced this plea. No new plea can be raised by invoking the jurisdiction of the Tribunal u/s 254(2) of the IT Act, 1961. The Tribunal is bound to adjudicate only on the grounds which are specifically raised and urged by the assessee to which specific attention of the Tribunal was drawn. It is crystal clear that there is no mistake apparent from record which is capable of being rectified by exercising the power vested u/s 254(2) of the IT Act, 1961. Hence, the Miscellaneous Petition filed by the assessee is dismissed.

Summary

Issues:
Rectification of mistake in the order passed by the Tribunal regarding the levy of penalty under sec.271(1)(c) of the IT Act, 1961 for the assessment year 2006-07.

Analysis:
The assessee filed a Miscellaneous Petition seeking rectification of a mistake in the Tribunal's order confirming the penalty under sec.271(1)(c) of the IT Act, 1961. The assessee argued that the Tribunal did not consider the submission that the show cause notice was issued mechanically without proper application of mind. The Tribunal noted that the grounds of appeal did not include this issue, and the counsel failed to demonstrate that it was argued during the hearing. The Tribunal emphasized that it can only adjudicate on grounds specifically raised by the assessee, as per the provisions of the Income-tax (Appellate Tribunal) Rules, 1963.

During the hearing, the learned counsel referred to a decision of the Hon'ble High Court of Karnataka, but the Tribunal found that the plea was not advanced by the assessee. The Tribunal highlighted that invoking sec.254(2) of the IT Act, 1961 does not allow for raising new pleas not previously argued. Referring to the scope of sec.254(2), the Tribunal cited a judgment by the Hon'ble Madras High Court, emphasizing that rectification can only be made for mistakes that are apparent from the record and do not require elaborate reasoning or examination.

The Tribunal clarified that a mistake apparent on the face of the record must be manifest and clear without the need for extensive argument. It cited various judgments to support the principle that rectification is not possible for debatable issues. The Tribunal concluded that there was no mistake apparent from the record in this case, dismissing the Miscellaneous Petition filed by the assessee.

In summary, the Tribunal held that the grounds not raised during the appeal cannot be considered for rectification under sec.254(2) of the IT Act, 1961. The Tribunal emphasized that rectification is only applicable for clear and manifest mistakes that do not require extensive examination. As the issue regarding the show cause notice was not raised during the appeal, the Tribunal dismissed the assessee's Miscellaneous Petition.