2017 (10) TMI 633 - AT - Income Tax

Scope of rectification of mistake - ITAT power under the Act to consider miscellaneous application in so far as Section 254(2) - Held that - Hon ble Supreme Court in the case of K. Ravindranathan Nair (2017 (8) TMI 537 - SUPREME COURT OF INDIA) where Hon ble Supreme Court observed that right to appeal is vested in the litigant at the commencement of Lis and therefore, such vested right cannot be taken away and cannot be impaired or made more stringent by any subsequent legislation unless the subsequent legislation said so either expressly or by necessary intendment. An intention in interfere or impair a vested right cannot be presumed unless such intention be clearly manifested by the express words or by necessary implication. Applying the proposition of law laid down by Hon ble Supreme Court, we can safely infer that right to appeal which includes right to file rectification application arises at the time of passing the original order and such right can only be taken away when there is a retrospective amendment. In the instant case before us, the amendment so brought in u/s.254(2) was prospective and applicable to the orders passed after 01/06/2016, and not the orders passed prior to 01/06/2016. Undisputedly in the instant case the order of Tribunal sought to be rectified was dated 06/09/2013 which is much prior to the date of amendment. Accordingly amended provisions of Section 254(2) limiting the period of filing rectification application within a period of six months is not applicable to the instant case before us. We do not find any justification in declining the rectification application which was filed within the prescribed time limit prevailing prior to amendment brought in Section 254(2) of I.T. Act w.e.f. 01/06/2010.

Summary

Issues:
Rectification of mistake apparent on the record in the order passed by the Tribunal dated 06/09/2013. Interpretation of Section 254(2) of Income Tax Act post-amendment. Applicability of limitation period for filing rectification applications. Right to appeal as a substantive right.

Analysis:

1. The Miscellaneous Applications were filed by the assessee seeking rectification of a mistake apparent on the record in the order dated 06/09/2013 passed by the Tribunal while disposing of appeals filed by the department.

2. The issue revolved around the interpretation of Section 254(2) of the Income Tax Act post-amendment, restricting the power of ITAT to consider rectifications within six months from the end of the month in which the order was passed.

3. The learned DR contended that the amendment applied from 01/06/2016, thereby limiting the power of ITAT to consider rectifications. However, the learned AR argued that the limitation period should be determined based on the law at the time of the original order, citing the decision of the Hon’ble Supreme Court in Honda Siel Power Products Ltd. v/s. CIT.

4. The AR referred to a similar case in the ITAT, Pune Bench, where it was held that a miscellaneous application can be filed within four years in respect of orders passed prior to the amendment date.

5. The AR argued that the right to appeal, including the right to file a rectification application, arises at the time of the original order and can only be taken away by a retrospective amendment. The AR relied on the decision of the Hon’ble Supreme Court in K. Raveendranathan Nair v/s. CIT to support this argument.

6. The Tribunal, after considering the arguments and judicial pronouncements, held that the amendment to Section 254(2) was prospective and not applicable to orders passed before 01/06/2016. Therefore, the limitation period for filing rectification applications was not restricted to six months in the instant case.

7. The Tribunal emphasized that the right to appeal, including the right to file a rectification application, gets crystallized at the time of passing the original order, unless taken away by a retrospective amendment. Therefore, the rectification application filed within the prescribed time limit prior to the amendment was justified.

8. On merits, the Tribunal allowed the miscellaneous applications based on the decision in the case of Reliance Communication Ltd. and Others, which was subsequently approved by the Bombay High Court.

9. Consequently, the Tribunal recalled the order passed by the Tribunal and directed the Registry to fix the appeals for hearing afresh by a regular bench, ultimately allowing the Miscellaneous Applications.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision based on the arguments presented by both parties and relevant legal precedents.