2018 (7) TMI 738 - AT - Income Tax

Rectification of mistake - basis for moving an application under section 254(2) - Held that - As during the course of hearing, the Bench is at liberty to ask questions and solicit response from the ld AR and in the process, if the AR has got some unilateral impression on the outcome of the hearing and that too, without the Bench even whispering a word, such impression cannot be a basis for holding some mistake on part of the Bench when the matter is being heard and the decision has not been pronounced. Till the final decision in the matter is not finally pronounced in the Open court, any impressions which either of the parties may get cannot be a basis for moving an application under section 254(2) of the Act. Regarding non-consideration of various Co-ordinate Bench decisions so relied upon by the ld AR, it is not essential that the Bench is required to gave its specific findings on each of the decisions so long as the said decisions have been duly considered before a final view has been taken. Regarding the penalty show-cause dated 18.06.2012, the Bench has considered the first show-cause dated 28.12.2011 and the second show-cause dated 18.06.2012 and in the totality of facts held that the assessee was made aware of the penalty proceedings having been initiated against him and he chooses to ignore the same. The said findings are in the context of issuance of show-cause and denial of reasonable opportunity being heard. Therefore, it is incorrect to hold that the Bench heavily relied upon only the communication dated 18.06.2012 as another show-cause notice. At the same time, we note that discussion regarding the second show-cause dated 18.06.2012 find mention in the penalty order only and there is no separate copy of the show-cause which is available on record. We, however, agree with the ld AR that the non-consideration of the decision of the Hon ble Rajasthan High Court in case of Sheveta Construction Co. Pvt Ltd vs ITO 2016 (12) TMI 1603 - RAJASTHAN HIGH COURT is a mistake apparent from record in the context of specific limb of section 271(1)(c) invoked by the AO and penalty finally levied by the AO

Issues Involved:

1. Mistake in the ITAT order regarding the deposit of TDS.
2. Non-consideration of several decisions cited by the assessee.
3. Serious deficiency in the show-cause notice issued under section 274.
4. Incorrect factual findings regarding the existence of reasonable cause for not attending penalty proceedings.

Issue-wise Detailed Analysis:

1. Mistake in the ITAT order regarding the deposit of TDS:
The assessee claimed that during the hearing, the ITAT was influenced by the contention that TDS was deposited in a later year (AY 2012-13) as permitted by the first proviso to Section 40(a)(ia). The ITAT allegedly told the assessee's representative to verify the deposit with the AO. However, the final order was issued without further hearing or clarification, resulting in a decision against the assessee without proper consideration of the TDS deposit issue.

2. Non-consideration of several decisions cited by the assessee:
The assessee argued that the ITAT failed to consider several decisions cited in the written submissions, including decisions of the Hon'ble Coordinate Benches of ITAT Jaipur and the Hon'ble Apex Court. The non-consideration of these decisions, which were directly applicable to the case, was claimed to be a mistake apparent from the record. The assessee contended that if these decisions had been considered, the outcome would have been different.

3. Serious deficiency in the show-cause notice issued under section 274:
The ITAT relied on a communication dated 18.06.2012 as another show-cause notice. The assessee argued that this notice was never seen by the ITAT nor filed in the paper book, and it was merely a reminder letter. The assessee claimed that the ITAT incorrectly stated that two show-cause notices were issued and that both limbs (concealing income and furnishing inaccurate particulars) were mentioned in the second notice. This misstatement allegedly violated the principles of natural justice and prejudiced the assessee's rights.

4. Incorrect factual findings regarding the existence of reasonable cause for not attending penalty proceedings:
The ITAT observed that the assessee did not show a reasonable cause for not attending the penalty proceedings. However, the assessee pointed out that submissions regarding the existence of reasonable cause were made in the written submissions, which the ITAT referred to but did not comment on. This omission was claimed to be a glaring mistake that prejudiced the assessee's rights.

Additional Analysis:

Hearing and Consideration of Submissions:
The ITAT clarified that the matter was properly heard, and written submissions were considered before pronouncing the order. The ITAT stated that any impressions formed by the assessee's representative during the hearing could not be a basis for claiming a mistake under Section 254(2) of the Act.

Consideration of Decisions:
The ITAT noted that it is not essential to provide specific findings on each decision cited by the assessee as long as they were duly considered before taking a final view. The ITAT referred to Para 26 of the Tribunal order, which explicitly stated that all decisions and authorities quoted by the assessee were considered.

Show-cause Notice and Reasonable Opportunity:
The ITAT considered both the first show-cause notice dated 28.12.2011 and the second show-cause notice dated 18.06.2012. The ITAT concluded that the assessee was made aware of the penalty proceedings and chose to ignore them. The ITAT found no violation of the principles of natural justice, as the assessee had waived its right to contest by not attending the penalty proceedings.

Non-consideration of Jurisdictional High Court Decision:
The ITAT acknowledged the non-consideration of the Hon'ble Rajasthan High Court decision in Sheveta Construction Co. Pvt Ltd vs ITO, which was a mistake apparent from the record. The ITAT recalled the order and directed the Registry to fix the matter for a fresh hearing.

Conclusion:
The ITAT concluded that while some of the assessee's claims were unfounded, the non-consideration of the jurisdictional High Court decision warranted a recall of the order. The ITAT directed that the matter be fixed for a fresh hearing to address this specific issue.

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