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TMI Blog2024 (5) TMI 1556X X X X Extracts X X X X X X X X Extracts X X X X ..... olved in the captioned applications are identical and arises from a consolidated order passed by the Tribunal, therefore, the same are being taken up and disposed off by way of a common order. 2. We shall first take up the application filed by the revenue in MA No.108/RPR/2023 (arising out of ITA No.170/RPR/2018) as the lead matter for adjudication, and the order therein passed shall mutatis-mutandis apply to the remaining miscellaneous applications. For the sake of clarity, the grievance of the department by filing the present application is culled out as under: (relevant extract) " 6. The Hon'ble ITAT in its order has held that the penalty imposed on the assessee violation of the mandate of Sec. 274(1) of the Act as the AO fail to clearly put the assess to notice as regards the default for which penalty u/s.271(1)(c) was sought to be imposed. i.e, 'concealment of income' or 'furnishing of inaccurate particulars of income' or both in Show Cause Notices (SCNs) dated 31.01.2015, 11.04.2017 and 11.08.2017 which left the assessee guessing of the default for which he was being proceeded against, and divested of an opportunity to put forth an explanation before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not 'and'. In support of the contentions the learned counsel of the assessee referred to the following decisions for invoking two limbs of Section 271(1)(c) of IT Act by AO which are enumerated below: 1. CIT v. SSA's Emerald Meadows [2016] 73 taxmann.com 248/242 Taxman 180 (SC) 2. CIT v. Manjunatha Cotton & Ginning Factory [2013] 35 taxmann.com 250/218 Taxman 423/359 ITR 565 (Kar.) 3. CIT v. SSA's Emerald Meadows [2016] 73 taxmann. com 241 (Kar.) 4. Ventura Textiles v. CIT [2020] 117 taxmann.com 182 (Bom.) 5. S. Chandrasekar v. Asstt. CIT [2017] 88 taxmann.com 459/396 ITR 538 (Kar.) 6. Gayathri Exports v, Asstt. CIT [IT Appeal No. 640 of 2015, dated 24-4-2018] 7. S.P. Prasad v. Asstt. CIT [IT Appeal No. 170 of 2010, dated 20- 11-2018] 8. CIT v. Virgo Marketing (P.) Ltd. [2008] 171 Taxman 156 (Delhi) 9. CIT v. Manu Engg. Works [1980] 122 ITR 306 (Guj.) 10. Pr.CIT v. Smt. Baisetty Revathi [2018] 99 taxmann.com 442/[2017] 398 ITR 88 (Andhra Pradesh HC) 11. ITO v. Nayan C. Shah [IT Appeal No. 2822 (Ahd.) of 2011, dated 7-3-2012] 12. Muninaga Reddy v. Asstt. CIT [2017] 88 taxmann.com 545/396 ITR 398 (Kar.) 13. Safina Hotels (P.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen it goes to show that the assessee not prejudiced by the use of the expression 'or'." 9. This very question was considered in the case of Sundaram Finance Ltd., wherein an identical submission was made by the assessee by placing reliance on Manjunatha Cotton and Ginning Factory. The Court taking note of the fact that the authorities concurrently rejected the explanation offered by the assessee and refused to interfere with the factual finding. In paragraph 16 of the judgment, the argument regarding defective notice was considered and answered against the assessee which is quoted herein below: 16. We have perused the notices and we find that the relevant columns have been marked, more particularly, when the case against the assessee is that they have concealed particulars of income and furnished inaccurate particulars of income. Therefore, the contention raised by the assessee is liable to be rejected on facts. That apart, this issue can never be a question of law in the assessee's case, as it is purely a question of fact. Apart from that„ the assessee had at no earlier point of time raised the plea that on account of a defect in the notice, they were put ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rstood the notice to be under both heads, namely, furnishing of inaccurate particulars and concealment of income. This is evident from the assessee's reply dated 8-4-2015 to the show cause notice dated 12-3-2015. Therefore, the decision in the case of K. Lubna does not help the assessee, as there is no substantial question of law arising from such contention. 19. In the result, the tax case appeal is dismissed and the Substantial Questions of law are answered against the assessee. No costs. Consequently, connected miscellaneous petitions are closed." The Special Leave Petition (SLP) filed by the assessee against the aforesaid order has been I dismissed by the Hon'ble Apex Court in Gangotri Textiles Ltd. vs. Deputy Commissioner of Income Tax, Corporate Circle 2, Coimbatore [2022] 137 taxmann.com 198 (SC)/[2022] 286 Taxman 357 (SC)[18-02-2022]. 3. In view of the facts enumerated above and In the light of decision of Hon'ble Apex Court and Hon'ble Madras High Court in the cases of Sundaram Finance Ltd. vs. Asst. Commissioner of Income Tax, and Gangotri Textiles Ltd. vs. Deputy Commissioner of Income Tax, it is explicit that there is an apparent error in the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and allowing the appeal of the assessee." 3. The Ld. Departmental Representative (for short 'DR') has filed before us written submissions/report which reads as under: " The consolidated order in the case for AYs 2009- 10 to 2016- 17 has quashed penalty orders passed by the AO in these years considering the fact that by not clearly pointing out whether the penalty was being initiated for concealment of income or for furnishing of inaccurate particulars in the notice, the AO had failed to assume jurisdiction. Revenue has argued, following the principle set in the case of Sundaram Finance Ltd., [2018] 403 ITR 407 (Madras), upheld in [2018] 99 taxmann.com 152 (SC), that the issue herein is principally a question of putting the assessee to prejudice or not. In other words, whether principles of natural justice were violated or not. During the course of hearing, I had also pointed out that Hon'ble Apex court in the case of Selvi J. Jayalalitha, [2017] 392 ITR 97 (SC), at para 174 etc., has clearly pointed out that the issues involved in penalty proceeding are different from those involved in the assessment proceedings. Therefore, findings in the assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue that the failure of the Tribunal to consider the aforesaid material facts had rendered its order as suffering from a mistake apparent from record making it amenable for rectification under sub-section (2) of Section 254 of the Act. 5. Shri Ajit Korde, Ld. Authorized Representative (for short 'AR') for the assessee company at the threshold submitted that as the Tribunal after deliberating at length on the issue, had dismissed the appeal of the revenue, based on a well-reasoned order and the department had failed to point out any mistake apparent from record emanating therefrom, thus, the same falls beyond the scope and ken of the power vested with the Tribunal u/s. 254(2) of the Act which is confined only to rectification of a mistake apparent and obvious from record. It was submitted by the Ld. AR that the revenue could not bring out a case through its miscellaneous application which would bring it within the purview of "mistake apparent from record". It was further submitted by the Ld. AR that the department by filing the present application is seeking a review of the order of the Tribunal which is not permissible u/s.254(2) of the Act. The Ld. AR in support of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble non-jurisdictional High Courts are binding on the Tribunal in the course of the appellate proceedings, but the same as observed by us hereinabove, cannot form a basis for seeking u/s. 254(2) of the Act a rectification of the order passed by the Tribunal. 8. We are of the view that that in the garb of the aforesaid miscellaneous application the revenue is seeking a review of the order of the Tribunal, which is beyond the scope of its powers as envisaged u/s. 254(2) of the Act. Our aforesaid view is supported by the judgment of the Hon'ble Supreme Court in the case of T.S. Balaram, ITO v. Volkart Bros., (1971) 82 ITR 50 (SC), wherein the Hon'ble Apex Court had held as under: " ....A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may conceivably be two opinions. As seen earlier, the High Court of Bombay opined that the original assessments were in accordance with law though in our opinion the High Court was not justified in going into that question.......an error which has to be established by a long-drawn process of reasoning on points ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 254(2) is limited to rectification of a mistake apparent from record itself and not rectification in error of judgment. The relevant observations of the Hon'ble High Court are as under: "Under s. 254(2) of the IT Act, 1961, the Tribunal may, 'with a view to rectifying any mistake apparent from the record', amend any order passed by it under subs (1) within the time prescribed therein. It is an accepted position that the Tribunal does not have any power to review its own orders under the provisions of the IT Act, 1961. The only power which the Tribunal possesses is to rectify any mistake in its own order which is apparent from the record. This is merely a power of amending its order. In the present case, in the first order, there is no mistake which is apparent from the record at all. The Tribunal was required to decide whether the commission payment of Rs. 54,000 was deductible under s. 37. After examining the circumstances, the Tribunal came to a conclusion that it was not so deductible. The Tribunal cannot, in exercise of its power of rectification, look into some other circumstances which would support or not support its conclusion so arrived at. The mistake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been declared. For the sake of clarity the observations of the Hon'ble Apex Court are culled out as under: "Dismissal at stage of special leave - without reasons - no res judicata, no merger Having so analysed and defined the two stages of the jurisdiction conferred by Article 136, now we proceed to deal with a number of decisions cited at the Bar during the course of hearing and dealing with the legal tenor of an order of Supreme Court dismissing a special leave petition. In Workmen of Cochin Port Trust Vs. Board of Trustees of the Cochin Port Trust and Another 1978 (3) SCC 119, a Three-Judges Bench of this Court has held that dismissal of special leave petition by the Supreme Court by a non-speaking order of dismissal where no reasons were given does not constitute res judicata. All that can be said to have been decided by the Court is that it was not a fit case where special leave should be granted. That may be due to various reasons. During the course of the judgement, their Lordships have observed that dismissal of a special leave petition under Article 136 against the order of a Tribunal did not necessarily bar the entertainment of a writ petition under Article 226 ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was not a fit case where special leave should be granted. This conclusion may have been reached by this Court due to several reasons. When the order passed by this Court was not a speaking one, it is not correct to assume that this Court had necessarily decided implicitly all the questions in relation to the merits of the award, which was under challenge before this Court in the special leave petition. A writ proceeding is a wholly different and distinct proceeding. Questions which can be said to have been decided by this Court expressly, implicity or even constructively while dismissing the special leave petition cannot, of course, be re- opened in a subsequent writ proceeding before the High Court. But neither on the principle of res judicata nor on any principle of public policy analogous thereto, would the order of this Court dismissing the special leave petition operate to bar the trial of identical issues in a separate proceeding namely, the writ proceeding before the High Court merely on the basis of an uncertain assumption that the issues must have been decided by this Court at least by implication. It is not correct or safe to extend the principle of res judicata or cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made out merely because a special leave petition under Article 136 of the Constitution had already stood rejected by the Supreme Court by a non-speaking order. In M/s. Rup Diamonds and others Vs. Union of India and others AIR 1989 SC 674, the law declared by this Court is that it cannot be said that the mere rejection of special leave petition could, by itself, be construed as the imprimatur of this Court on the correctness of the decision sought to be appealed against. In Wilson Vs. Colchester Justices 1985 (2) All England Law Reports 97, the House of Lords stated; There are a multitude of reasons why, in a particular case, leave to appeal may be refused by an Appeal Committee. I shall not attempt to embark on an exhaustive list for it would be impossible to do so. One reason may be that the particular case raises no question of general principle but turns on its own facts. Another may be that the facts of the particular case are not suitable as a foundation for determining some question of general principle. . Conversely the fact that leave to appeal is given is not of itself an indication that the judgments below are thought to be wrong. It may well be that leave is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or non- speaking order or whether in limine or on contest, second special leave petition would not lie. However, this statement cannot be stretched and applied to hold that such an order attracts applicability of doctrine of merger and excludes the jurisdiction of the Court or authority passing the order to review the same. In State of Maharashtra and Anr. Vs. Prabhakar Bhikaji Ingle 1996 (3) SCC 463, the view taken by a Two-Judges Bench of this Court is that the dismissal of special leave petition without a speaking order does not constitute res judicata but the order dealt with in S.L.P., disposed of by a non-speaking order cannot be subjected to review by the Tribunal. In our opinion the law has been too broadly stated through the said observation. Learned Judges have been guided by the consideration of judicial discipline which, as we would shortly deal with, is a principle of great relevance and may be attracted in an appropriate case. But we find it difficult to subscribe to the view, as expressed in this decision, that dismissal of SLP without a speaking order amounts to confirmation by Supreme Court of the order against which leave was sought for and the order had stood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t could not be raised for the first time before the Court. Accordingly, as the facts involved in the present case are distinguishable as against those involved in the aforementioned case, therefore, on the said count also, support drawn by the department in the aforesaid case, would not carry its case any further. C) State of Karnataka Vs. Selvi J. Jaylalitha and others (2017) 392 ITR 97 (SC), 13. On a perusal of the aforesaid order of the Hon'ble Apex Court, we find that the same was rendered in context of the issue that income tax returns and order passed in the income tax proceedings would not by itself prove that income was lawfully earned by the assessee. We are of the view that as the issue involved in the present case before us is distinguishable on facts as against those involved in the aforementioned case before the Hon'ble Apex Court, therefore, the same would not assist the case of the revenue. 14. As we had after drawing support from a host of judicial pronouncements taken a conscious view while disposing off the appeal as regards the subject issue which was there before us, i.e. validity of the jurisdiction assumed by the A.O for imposing penalty u/s. 271(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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