2021 (10) TMI 1159 - HC - Income Tax

Rectification of mistake u/s 254 - HELD THAT - Once a mistake/error is brought to the notice of the Tribunal, which is apparent on face of record, either by the assessee or the assessing officer, the Tribunal would have the necessary power to rectify/amend its order. This power will also extend to a situation, such as the one obtaining in the present case, where the petitioner s counsel withdrew the appeal, for the reason that, the issue concerning transfer pricing adjustment in respect of the assessment year (AY) in issue i.e., AY 2011-12, stood resolved. The petitioner s counsel, inadvertently, failed to bring to the notice of the Tribunal, that the issues raised in ground nos. 6 and 7 of the appeal were outstanding, and that they needed to be adjudicated upon. Thus, having regard to the aforesaid, we are of the view that the impugned order, passed by the Tribunal in the miscellaneous application deserves to be set aside.

Summary

Issues:
1. Challenge against order of Income Tax Appellate Tribunal (ITAT) dismissing Miscellaneous Application (M.A.) seeking adjudication on additional grounds.
2. Invocation of power under Section 254(2) of the Income Tax Act, 1961 to rectify mistakes apparent on the face of the record.
3. Failure to adjudicate on outstanding issues raised in Ground Nos. 6 and 7 due to withdrawal of appeal by the petitioner's counsel.
4. Need for setting aside the ITAT's order and directing adjudication on outstanding issues.

Analysis:

1. The petitioner challenged the ITAT's order dismissing M.A. No. 555/Del/2019 seeking adjudication on additional grounds, specifically Ground Nos. 6 and 7 related to disallowance of advances and additional MAT credit. The petitioner withdrew the appeal due to resolution of transfer pricing adjustment issues for AY 2011-2012 through an Advance Pricing Agreement with the revenue.

2. The petitioner's counsel argued that the ITAT could have rectified the mistake under Section 254(2) of the Act, citing the Lachman Dass Bhatia Hingwala case. The judgment highlighted the Tribunal's power to rectify errors for justice and fair play, emphasizing the importance of rectification to avoid injustice.

3. The respondent's counsel was given time to examine the cited judgment. It was noted that no counter-affidavit was filed, and the issues raised in Ground Nos. 6 and 7 were not adjudicated by the ITAT due to the appeal withdrawal.

4. The Court held that the power under Section 254(2) is not limited to mistakes by the Tribunal but extends to errors brought to its notice by the parties. The failure to raise outstanding issues before the ITAT led to the order's amendment, setting aside the ITAT's decision and directing adjudication on Ground Nos. 6 and 7.

This comprehensive analysis covers the issues involved in the legal judgment, detailing the arguments presented by both parties and the Court's decision based on the applicable legal provisions and precedents cited.