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2020 (8) TMI 747 - AT - Income TaxRectification of mistake u/s 254 - mistake apparent from the record - debatable issue - Department has not disturbed the figures of cost incurred by the assessee as well as net loss returned by the assessee over next four years and deciding an issue without putting it to the assessee and not considering facts available on record amounts to mistake apparent on the record - HELD THAT - In the instant case, as mentioned above, the explanations given by the assessee have been duly considered. In the impugned order all the submissions and explanations by the assessee have been summarized and then a finding has been arrived at. The issue has been decided after considering the facts in entirety available on record. In fact full opportunity had been given to the assessee to make submissions. The arguments of the assessee during the course of hearing for the impugned assessment year have been examined at length and then the order has been passed. No fact has been lost sight of. No argument has been lost sight of. A perusal of the above facts clearly indicate that the applicant has not pointed out any mistake apparent from the record. A mistake apparent on the record must be an obvious mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. See T.S. Balaram, ITO v. Volkart Bros. 1971 (8) TMI 3 - SUPREME COURT . In fact, not a single error in the impugned order has been pointed out by the applicant. What the applicant wants is a review of the order passed by the Tribunal. The Tribunal is a creature of the statute. The Tribunal cannot review its own decision unless it is permitted to do so by the statute. The Hon ble Supreme Court has held in Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji 1970 (3) TMI 163 - SUPREME COURT that the power to review is not an inherent power. It must be conferred by law either specifically or by necessary implication. It is a settled law that the Tribunal has no power to review its order in the garb of section 254(2) of the Act as held in CIT v. Globe Transport Corpn. 1991 (1) TMI 23 - RAJASTHAN HIGH COURT - MA rejected.
Issues Involved:
1. Alleged mistakes apparent from the record in the ITAT order dated 28/10/2019. 2. Reliability of the figures provided by the assessee. 3. Application of the matching principle and mercantile system of accounting. 4. Consideration of the assessee's explanations and submissions. 5. Tribunal's power to rectify its order under section 254(2) of the Income Tax Act. Issue-wise Detailed Analysis: 1. Alleged Mistakes Apparent from the Record in the ITAT Order: The assessee filed a Miscellaneous Application (MA) under section 254(2) seeking recall of the ITAT order dated 28/10/2019, alleging mistakes apparent from the record. The assessee argued that the Tribunal did not consider the explanation provided in the rejoinder regarding the difference in figures of anticipated loss, which was due to the presentation of Work-in-Progress (WIP) with and without 'profit declared in the earlier years'. 2. Reliability of the Figures Provided by the Assessee: The Tribunal noted discrepancies in the figures provided by the assessee regarding the total cost incurred and the estimated loss on the project "S.S. House". The Tribunal observed that the figures ?91,07,85,390/- or ?97,88,86,048/- for total cost incurred and ?3,95,51,736/- or ?10,84,31,736/- for total estimated loss were not reliable due to the lack of supporting computation. The assessee's explanation that the difference of ?6.81 crores was due to profit offered in earlier years was not considered sufficient to rectify the discrepancies. 3. Application of the Matching Principle and Mercantile System of Accounting: The Departmental Representative (DR) argued that the reversal of profits declared in earlier years on account of estimated loss in WIP dislocated the mercantile system of accounting and the matching principle. The Tribunal agreed, stating that recording expenses in the same accounting period in which the revenues were earned is essential, and the assessee's reversal of profits did not adhere to this principle. 4. Consideration of the Assessee's Explanations and Submissions: The Tribunal reviewed the assessee's explanations and submissions, including the reasons for cost escalation due to project delays and disputes. However, it found that no supporting details were filed before the Assessing Officer (AO). The Tribunal emphasized that the assessee's explanations were considered, but the decision was based on the entirety of the facts available on record. 5. Tribunal's Power to Rectify its Order under Section 254(2): The Tribunal highlighted that its power under section 254(2) is limited to rectifying mistakes apparent from the record and does not extend to reviewing its own orders. The Tribunal referred to various judicial precedents, including the Supreme Court's decision in Honda Siel Power Products Ltd. v. CIT, which clarified that non-consideration of a decision of a co-ordinate Bench amounts to a mistake apparent from the record. However, in this case, the Tribunal found no such mistake and concluded that the assessee's request was essentially for a review rather than a rectification. Conclusion: The Tribunal dismissed the Miscellaneous Application, holding that the alleged mistakes were not apparent from the record and that the Tribunal had duly considered all explanations and submissions. The Tribunal reiterated that it does not have the power to review its own decisions under the guise of rectification under section 254(2). The order was pronounced in the open Court on 20/03/2020.
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