Punjab & Haryana H.C : Rectification u/s 154 Does Not Allow Review of Order

High Court Of Punjab And Haryana

Goel Die Cast Ltd. Vs. CIT

Section : 154,68

Adarsh Kumar Goel And Ajay Kumar Mittal, JJ.

IT Appeal No. 223 Of 2010

November  10, 2010

JUDGMENT

Adarsh Kumar Goel, J. – This appeal has been preferred by the assessee under section 260A of the Income-tax Act, 1961 (for short, “the Act”) against the order dated January 29, 2010 of the Income-tax Appellate Tribunal, New Delhi in I. T. A. No. 1247/DEL/2009 proposing to raise the following substantial questions of law :

“(i) Whether on the facts and in the circumstances of the case, the Tribunal acted illegally and perversely in reversing the order passed by the Commissioner of Income-tax (Appeals) under section 154 of the Income-tax Act, 1961 which was in conformity with the judgment rendered by the hon’ble Supreme Court in the case of CIT v. Lovely Exports P. Ltd. [2009] 319 ITR (St.) 5 (SC) ; [2008] 216 CTR 195 as well as the Tribunal’s own order in the case of the appellant for the assessment year 2003-04 ?

(ii) Whether on the facts and in the circumstances of the case, the Tribunal was legally correct in reversing the order of the Commissioner of Income-tax (Appeals) passed under section 154 of the Income-tax Act, 1961 thereby sustaining the addition on account of the amount of share capital being income from undisclosed sources of the appellant contrary to the stand of the appellant which stand having been accepted by the Department/Revenue for the assessment year 2003-04 in view of the order of the Tribunal for the said assessment year having attained finality ?

(iii) Whether the impugned order passed by the Tribunal reversing the order of the Commissioner of Income-tax (Appeals) is not sustainable in view of the applicability of the principle of judicial consistency and judicial discipline ?

(iv) Whether the impugned order passed by the Tribunal reversing the order of the Commissioner of Income-tax (Appeals) thereby having the effect of sustaining the addition under section 68 of the Income-tax Act, 1961 is based on irrelevant findings, illegal, perverse and a result of wholly erroneous approach not permitted by law ?”

During the course of assessment, the Assessing Officer made an addition to the declared income of the assessee, holding that the amount representing share capital was undisclosed income of the assessee. The said finding was affirmed by the Commissioner of Income-tax (Appeals), against which, the assessee filed an appeal before the Tribunal. During the pendency of the appeal, the assessee filed an application for rectification before the Commissioner of Income-tax (Appeals) on the basis of the observations in the judgment of the hon’ble Supreme Court CIT v. Lovely Exports (P.) Ltd. [Applications No. 11993 of 2007, dated 11-1-2008]. The said application was allowed by the Commissioner of Income-tax (Appeals), but the Tribunal accepted the plea of the Revenue that there was no case for rectification. The finding recorded by the Tribunal is as under :

“We also found that in the original appellate order of the Commissioner of Income-tax (Appeals) has confirmed the addition not only on the basis of creditworthiness but also on the basis of the identity as well as genuineness of the transaction, however, in the order passed under section 154, the Commissioner of Income-tax (Appeals) has just observed that in view of the decision in the case of Lovely Exports P. Ltd. [2009] 319 ITR (St.) 5 (SC), the addition and enhancement made in the hands of the assessee on account of lack of creditworthiness of share applicants, cannot be made. Whereas in the original appellate order addition was confirmed not only on the basis of creditworthiness but also on the basis of identity and genuineness of the transactions of the share applicants. There was no change in the facts in so far as the identity and genuineness of the transaction which was held to be not proved by the Commissioner of Income-tax (Appeals) during the course of original appellate proceedings. In the order under section 154, the Commissioner of Income-tax (Appeals) has not spoken about the identity of the share applicants and the genuiness of the transaction. Since the identity itself has not been established, there is no reason to apply the proposition of law laid down in the case of Lovely Exports P. Ltd. [2009] 319 ITR (St.) 5 (SC). Under section 154, only mistake apparent on record can be rectified and the considered decision taken on facts cannot be reversed unless wrong recording of facts are found subsequently. Change in the conclusion amounts to review of the order passed earlier and which is not empowered under section 154 of the Act.”

3. We have heard learned counsel for the parties.

4. In view of the finding of fact recorded by the Tribunal, reproduced above, which is not shown to be perverse, no substantial question of law arises and this appeal cannot be entertained against the impugned order and is disposed of accordingly.

5. It is, however, made clear that this order will not affect the remedy of the assessee in appeal against the order of the Commissioner of Income-tax (Appeals) dated November 28, 2007, which was earlier dismissed only on the ground that during pendency thereof, the assessee had succeeded in the rectification proceedings. While dismissing the appeal, the Tribunal itself had observed in its order dated February 16, 2009 that if the appeal of the Revenue succeeds against the order of rectification, the assessee would be at liberty to revive its appeal. Learned counsel for the assessee points out that in pursuance of the said liberty, the assessee has already filed Miscellaneous Application No. 122 of 2010. If that is so, the Tribunal may consider the said application in accordance with the liberty already granted.

[Citation : 333 ITR 141]

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