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2017 (10) TMI 627 - AT - Income TaxRealm of rectification under section 254(2) - Scope of rectification - penalty levied on 25% of the disallowance made in respect of purchases made from three parties, who were stated to be not found at their given address - ITAT held separate inquiries of the proceedings were not required to be conducted by the A.O. at the stage of penalty proceedings - Held that - There is no dispute with regard to the fact that the scope of Section 254(2) of the Act is to the extent of any mistake apparent from record. The Tribunal cannot re-appreciate the law and the facts in the garb of rectifying the mistake. If there is any non-appreciation of fact in a particular manner which as per assessee should have been done, would not constitute a mistake. The grievance of the assessee is that the Tribunal has considered those decisions which were not cited during the course of hearing. Section 254(2) of the Act does not permit the Tribunal to review its order. The re- appreciation of facts, without any apparent factual error in the nature of facts and figures would not fall in the realm of rectification under section 254(2) of the Act. Hence, the present application is beyond the scope of the Section 254(2) of the Act. Therefore, same is hereby dismissed.
Issues involved:
Rectification of Tribunal's order regarding penalty levied on purchases made from parties not found at given address. Detailed Analysis: The Miscellaneous Application was filed by the assessee seeking rectification of the Tribunal's order dated 14.09.2016 passed in ITA No. 112/JP/2014 pertaining to A.Y. 2006-07. The penalty was levied on 25% of the disallowance made in respect of purchases made from three parties not found at their given address. The assessee contended that the parties were traceable at the given address and requested further inquiry, which was not conducted by the authorities. The assessee argued that penalty should not be levied based on estimation, citing decisions of other ITATs and the Delhi High Court. The assessee highlighted that no separate inquiries were conducted by the Assessing Officer (A.O.) at the penalty stage, and the Tribunal's reliance on a decision not argued before it was a mistake apparent on record. The assessee further argued that the facts of the case differed from the decision of the Delhi High Court relied upon by the ITAT, as the A.O. in the present case did not record statements of the parties in question despite their availability at the given address. The assessee emphasized that penalty proceedings should be distinct from assessment proceedings, citing Supreme Court judgments on the burden of proof in penalty proceedings. The assessee contended that the Tribunal failed to consider vital facts demonstrating the genuineness of the purchases and the absence of inflation in the transactions when confirming the penalty levy. The Departmental Representatives opposed the submissions, asserting that there was no mistake apparent from the record, and the assessee was seeking a review of the order through the rectification application. The Tribunal, after hearing the contentions, held that Section 254(2) of the Act limited the scope of rectification to correcting mistakes apparent from the record. The Tribunal clarified that re-appreciating facts or reviewing the order based on decisions not cited during the hearing was beyond the purview of rectification under the Act. Consequently, the Tribunal dismissed the assessee's application, stating it was outside the scope of Section 254(2) of the Act. In conclusion, the Tribunal dismissed the Miscellaneous Application of the assessee, emphasizing that rectification under Section 254(2) of the Act was limited to correcting mistakes apparent from the record and did not permit a review of the order based on new arguments or decisions not cited during the proceedings.
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