2023 (5) TMI 316 - AT - Income Tax

Rectification of mistake u/s 254 - Scope of rectification order - allow correcting the errors of law or re-appreciating the factual findings - Tribunal quashed the intimation passed u/s. 143(1) passed by CPC, without affording an opportunity to the assessee to make out the adjustment either in writing or in electronic mode as per the 1st proviso to Section 143(1) of the Act - HELD THAT - As seen from the Tribunal order, the ld. D.R. could not contravent that any notice was sent by CPC as per first proviso to Section 143(1)(a) during the course of the hearing of the appeal. There is no further reference to the so called notice dated 03.09.2019 issued by CPC to the assessee for the proposed adjustment to be made in the 143(1) intimation order. Thus the Revenue failed to produce the required documents before the Tribunal and by this Misc. Application producing the new document that too from the office record of the Revenue and requesting to recall the order, which is not permissible u/s. 254(2) of the Act. The present Misc. Application filed by the Revenue is to review the earlier order/decision of the Tribunal which is not permissible u/s. 254(2) - Further as per Rule 18(6) of the ITAT Rules the so called notice dated 03.09.2019 is not part of the record of the Tribunal while passing the order. Thus the tribunal has not committed any mistake or error, therefore the present M.A. is devoid of merits and the same is liable to be dismissed. Misc. Application filed by the Revenue stands dismissed.

Summary

Issues Involved:
1. Whether the Tribunal erred in quashing the intimation passed under Section 143(1) of the Act.
2. Whether the communication dated 03.09.2019 was properly considered.
3. Scope of rectification under Section 254(2) of the Act.

Summary:

Issue 1: Quashing of Intimation under Section 143(1)
The Tribunal quashed the intimation passed under Section 143(1) by CPC, citing that the assessee was not afforded an opportunity to make the adjustment either in writing or electronically as per the first proviso to Section 143(1) of the Act. The Revenue contended that a communication was sent to the assessee on 03.09.2019 proposing disallowance under Section 36(1)(va), but the assessee did not respond. The Tribunal found no evidence of such communication during the hearing, leading to the adjournment of the Miscellaneous Application (M.A.) multiple times. The Tribunal ultimately held that the Revenue failed to produce the required documents, and thus, the intimation was rightly quashed.

Issue 2: Consideration of Communication Dated 03.09.2019
The Revenue produced the communication dated 03.09.2019 in the M.A., arguing that the Tribunal's earlier order was factually incorrect. However, the Tribunal noted that the document was not part of the record during the original hearing. The Tribunal emphasized that documents referred to and relied upon during arguments alone are treated as part of the record, as per Rule 18(6) of the ITAT Rules, 1963. The Tribunal concluded that the notice dated 03.09.2019 was not part of the record and thus could not be considered in the rectification application.

Issue 3: Scope of Rectification under Section 254(2)
The Tribunal reiterated that the scope of rectification under Section 254(2) is extremely limited and does not extend to correcting errors of law or re-appreciating factual findings. The Tribunal cited several judgments, including CIT vs. Reliance Telecom Ltd. and Vrundavan Ginning and Oil Mills vs. AR, which clarified that rectification is only for mistakes apparent from the record and does not allow for re-hearing or reviewing the merits of the case. The Tribunal concluded that the M.A. filed by the Revenue was an attempt to review the earlier decision, which is not permissible under Section 254(2).

Conclusion:
The Tribunal dismissed the Miscellaneous Application filed by the Revenue, holding that the Tribunal did not commit any mistake or error in its original order. The communication dated 03.09.2019 was not part of the record, and the scope of rectification under Section 254(2) does not allow for a review of the earlier decision. The order was pronounced in the open court on 03-05-2023.