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TMI Blog2024 (7) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... in Govt. of NCT of Delhi vs. M/s. K.L. Rathi Steels Limited and Others [ 2024 (7) TMI 811 - SUPREME COURT] issue of power to rectify error and power to review and after referring to catena of decisions of the Hon ble Supreme Court categorically held that, if the judgment has been passed by the Court following another judgment and subsequently by later judgment, the decision has been overruled or reversed, cannot have the effect of reopening or reviewing the former judgment based on following overruled judgment nor can the same be reviewed. The aforesaid judgment clearly clinches the issue that the subsequent judgment of the Hon ble Supreme Court in the case of Checkmate Services P Ltd. [ 2022 (10) TMI 617 - SUPREME COURT ] the earlier judgment passed by the Tribunal based on the binding precedents cannot be recalled or reviewed. Once this is the law of the land, then we are unable to appreciate the contention of the Revenue that the judgment of the Tribunal should be recalled which has been passed following catena of judgment of the Hon ble Jurisdictional High Court and other High Courts prevalent at that time in light of the subsequent judgment of the Hon ble Supreme Court this wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date in defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees' contributions- which are deducted from their income. They are not part of the assessee employer's income, nor are they heads of deduction per se in the form of statutory pay out. They are others' income monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of delay in deposits of employee's contribution towards provident fund and ESIC, beyond the due date of the respective Acts. Against the disallowance made by the CPC u/s. 143(1), assessee had preferred appeal before the ld. CIT(A) on the following ground:- "The appellant had received employees' contribution to Provident Fund (PF and ESI) and from the total contribution received a part of funds i.e. Rs. 1,74,09,948/-was deposited by the appellant after the due date of the respective act but before the due date of filling of return as per section 139(1) of the Income Tax Act, 1961. The appellant did not fail to pay the employees PF and ESI so deducted by it. It was a mere delay of depositing the PF and ESI payments. The CPC also failed to appreciate the fact of the judgments passed by the various appellate authorities viz. High Courts and Supreme Court in favour of the appellants allowing such payments even if paid after the due date of respective acts but before the due date of filing income tax return as specified under section 139(1) of the Income Tax Act 1961. We therefore, request your good self to allow these employee contributions of PF and ESIC paid by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Bombay), it was held that no distinction is to be made between employer & employee's contribution to PF & the business deduction can be allowed as per the provisions mentioned in Section 438 of the Act & can be allowed if payment is made before the due date of furnishing the return of income. 3. High Court Of Bombay in the case of Commissioner of Income-tax4, Mumbai v. Hindustan Organics Chemicals Ltd [2014] 48 taxmann.com 421 (Bombay). The matter was in Supreme Court and the SLP has been dismissed as the department has subsequently withdrawn the appeal due to low tax effect (Commissioner of Income Tax v. Hindustan Organics Chemicals Ltd. [2020] 122 taxmann.com 171 (SC)) Hence, the Bombay High court decision still holds the ground. 4. In the case of Pr. Commissioner of Income Tax -2 v. Pranav Agro Industries Ltd., Official Liquidator, High Court, Mumbai (INCOME TAX APPEAL 333 OF 2017) Order Dated - July 8, 2019, the Honourable Bombay High Court has reiterated its earlier decision passed in the case of Commissioner of Income tax (Central), Pune v/s Ghatge Patil Transports Ltd." 7. Apart from that assessee also quoted and relied upon more than 30 judgments of different Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uot;passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the "[Assessing] Officer: Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub-section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard: 11. Thus, the scope is of rectifying the mistake which is apparent from the record on the date of passing the order. On the scope of section 254(2) of the Act, it would be relevant to refer to the judgment of the Hon'ble Supreme Court in the case of CIT vs. Reliance Telecom Ltd, reported in (2022) 440 ITR 1 (SC) wherein Hon'ble Court has defined the scope of powers u/s. 254(2). The Hon'ble Supreme Court held that the powers u/s. 254(2) of the Act are akin to Order XLVII Rule 1 CPC and while considering the application u/s. 254(2) of the Act, the Appellate Tribunal is not required to re-visit its earlier order and to go into details on merits. The powers u/s. 254(2) are that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent, he can present to the Appellate Court the case on which he applies for the review. [Explanation. The fact that the decision on a question of law on which the judgment of the Court is based has been reversed or modified by the subsequent decision of a superior Court in any other case, shall not be a ground for the review of such judgment.] 13. Ergo, the Explanation clearly envisages that the decision on a question of law on which judgment of the Court is based has been reversed or modified by the subsequent decision of a superior Court in any of the case shall not be the ground for review of said judgment. Thus, there is a clear prohibition to review or revive the order simply based on the subsequent decision of a superior Court. This dictum has to be followed especially in the cases where lis has attained finality and qua both the parties the matter has been settled by the Court. 14 The Constitution Bench of the Hon'ble Supreme Court in the case of Beghar Foundation vs. Justice K.S. Puttaswamy reported in (2021) 123 taxmann.com 344 (SC) wherein the Hon'ble Supreme Court made following observations:- "4. The present review petitions have been filed against the final j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d there is no lis pending, and then based on subsequent judgment of a superior Court do not alter the finality of the judgment. If the Revenue's contention is to be accepted, then whenever a judgment is reversed by a higher Court or by any Constitutional Court subsequently in some different case, then all the appeals and matters which have been decided following the earlier order of the Constitutional Courts / High Court or Supreme Court does not mean that all such orders should be recalled even when there is no lis pending and to disturb the finality. 17. This principle has been reiterated by the Hon'ble Supreme Court again in the case of CIT vs. Gracemac Corporation reported in (2023) 456 ITR 135 vide order dated 03/07/2023, wherein the Hon'ble Supreme Court had made the following observations:- "5. Apart from this, it has also been brought to our notice by the learned ASG that in CIT (International Taxation) v. Microsoft Corporation (MS Corp.) [2023] 151 taxmann.com 372/453 ITR 746 (SC) bearing SLP (C) Dy. No. 7076/2023, a coordinate Bench of this Court by an order dated 20-3-2023 dismissed the special leave petition and liberty has been reserved to reopen and/or revive the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The object and purpose of the Explanation can be related to the following three maxims: (i) Nemo debet bis vexari pro una et eadem causa (No man should be vexed twice for the same cause); (ii) Interest reipublicae ut sit finis litium (It is in the interest of the State that there should be an end to a litigation); and (iii) Res judicata pro veritate occipitur (A judicial decision must be accepted as correct)." (Emphasis added) 18. Again the Hon'ble Supreme Court reiterated the same principle in the case of Commissioner of CGST and Central Excise (J And K) vs. Saraswati Agro Chemicals Pvt. Ltd in SLP (Civil) Diary No(s).18051/2023 and others, vide judgment and order dated 04/07/2023 had made following observations:- "………………………………………………………………………………………………………………………………………………………&hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to fulfilment of the above conditions, on setting up by the review petitioner any of the following grounds: (i) discovery of new and important matter or evidence; or (ii) mistake or error apparent on the face of the record; or (iii) any other sufficient reason. 40. Insofar as (i) (supra) is concerned, the review petitioner has to show that such evidence (a) was actually available on the date the court made the order/decree, (b) with reasonable care and diligence, it could not be brought by him before the court at the time of the order/decree, (c) it was relevant and material for a decision, and (d) by reason of its absence, a miscarriage of justice has been caused in the sense that had it been produced and considered by the court, the ultimate decision would have been otherwise. 41. Regarding (ii) (supra), the review petitioner has to satisfy the court that the mistake or error committed by it is self-evident and such mistake or error can be pointed out without any long-drawn process of reasoning; and, if such mistake or error is not corrected and is permitted to stand, the same will lead to a failure of justice. There cannot be a fit-in all definition of "mistake or err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutiny before the Constitution Bench the same is not relevant for deciding the review petition for two obvious reasons -- firstly, this was not pointed out to the Bench which decided the civil appeal; and secondly, by the time the impugned order was passed the three-Judge Bench judgment had not been upset and even in future if the Constitution Bench takes a contrary view it would be a subsequent event which cannot be a ground for review as is clear from the explanation to Order 47 Rule 1(2) of the Code of Civil Procedure ***". (emphasis supplied) The principle, thus, laid down is that a decision being upset in the future would be a subsequent event which could not be a ground to seek review. 51. In Nand Kishore Ahirwar v. Haridas Parsedia, a Bench of three Hon'ble Judges, while dismissing the review petitions before it, made pertinent observations reaching out to the very core of the said Explanation. This Court observed that simply because there has been a Constitution Bench decision, passed in the aftermath of the judgment impugned, would be no ground for a review of the said judgment. It also went on to observe that a reference to a Constitution Bench would stand on a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not within its knowledge and even after the exercise of due diligence, the same could not be produced before the court/tribunal earlier." (emphasis supplied) 53. This Court, in Subramanian Swamy v. State of Tamil Nadu33, has read the Explanation as follows: "52. *** The Explanation to Order XLVII, Rule 1 of Code of Civil Procedure 1908 provides that if the decision on a question of law on which the judgment of the court is based, is reversed or modified by the subsequent decision of a superior court in any other case, it shall not be a ground for the review of such judgment. Thus, even an erroneous decision cannot be a ground for the court to undertake review, as the first and foremost requirement of entertaining a review petition is that the order, review of which is sought, suffers from any error apparent on the face of the order and in absence of any such error, finality attached to the judgment/order cannot be disturbed." 54. The final one is a decision of the Constitution Bench in Beghar Foundation v. K.S. Puttaswamy34. The majority was of the following view: "2. The present review petitions have been filed against the final judgment and order dated 26-9-2018. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LVII of the CPC. (Emphasis added) The aforesaid judgment of the Hon'ble Supreme Court had elaborately dealt the issue of power to rectify error and power to review and after referring to catena of decisions of the Hon'ble Supreme Court categorically held that, if the judgment has been passed by the Court following another judgment and subsequently by later judgment, the decision has been overruled or reversed, cannot have the effect of reopening or reviewing the former judgment based on following overruled judgment nor can the same be reviewed. The aforesaid judgment clearly clinches the issue that the subsequent judgment of the Hon'ble Supreme Court in the case of Checkmate Services P Ltd. Vs CIT reported in 143 Taxmann.com 178, the earlier judgment passed by the Tribunal based on the binding precedents cannot be recalled or reviewed. Once this is the law of the land, then we are unable to appreciate the contention of the Revenue that the judgment of the Tribunal should be recalled which has been passed following catena of judgment of the Hon'ble Jurisdictional High Court and other High Courts prevalent at that time in light of the subsequent judgment of the Hon'ble Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the parties and in subsequent judgment is rendered by the superior Court, the same should also be recalled within the scope of Section 254(2). Though the Hon'ble Supreme Court had referred to a decision of Gujarat High Court in the case of Suhrid Geigy Ltd vs. Commissioner of Surtax reported in (1999) 237 ITR 834 that if the point is covered by the decision of the Hon'ble Jurisdictional High Court rendered prior or even subsequent to the order of rectification, it could be a mistake apparent from the record u/s. 254(2) and could be corrected by the Tribunal. However, the Hon'ble Supreme Court has referred this judgment and only held that if a judgment is being rendered by any High Court or Supreme Court that means the law was always being the same and if a subsequent decision alters the earlier one, the later decision does not make a new law. This observation of the Court does not lead to any inference to draw that any rectification order u/s. 254(2) can be based on subsequent judgment which comes later on. On the contrary, all the aforesaid judgments of Hon'ble Supreme Court which we have quoted above extenso have clearly held that there would be no review or recall of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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