Bombay High Court
Infantry Security And Facilities Thr. … vs The Income Tax Officer Ward 4(5) on 3 December, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2024:BHC-AS:50608-DB 13TO15-WP-17175-2024+.DOC
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 17175 OF 2024
WITH
WRIT PETITION NO. 17176 OF 2024
WITH
WRIT PETITION NO. 17177 OF 2024
Infantry Security and Facilities ... Petitioner
through, proprietor Tukaram M. Surayawanshi
Versus
The Income Tax Officer, Ward 4(5) ...Respondent
Ms. Madhavi M. Tavanandi, for the petitioner.
Mr. Vikas T. Khanchandani, for the respondent.
_______________________
CORAM: G. S. KULKARNI &
ADVAIT M. SETHNA, JJ.
DATED: 3 DECEMBER 2024
_______________________
ORAL JUDGMENT: [Per G. S. Kulkarni, J.]
1. Rule, returnable forthwith. By consent of parties heard finally.
2. These are three writ petitions filed under Article 226 of the
Constitution of India assailing a common order dated 20 October 2023 passed
by the Income Tax Appellate Tribunal (“Tribunal” for short) Bench at Pune,
whereby the Miscellaneous Applications filed by the respondent-Revenue
against the order dated 26 July 2022, passed by the Tribunal, have been
allowed. One of the factors which could have weighed in favour of the
petitioner/assessee and against the Revenue is the view taken by the Tribunal is
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that the decision of the Supreme Court in the case of Checkmate Services
Private Limited vs. Commissioner of Income Tax 1 being rendered subsequent
to the original decision of the Tribunal, hence the same would not be relevant
for setting aside the order passed by the Tribunal.
3. The facts are not in dispute. The Assessment Years in question are
2017-2018, 2018-2019 and 2019-2020. For these Assessment Years, the
petitioner had filed its returns of income. The assessing officer in carrying out
the assessment certain amounts in regard to the payment of the statutory dues
like the Provident Fund and Employees State Insurance Corporation amounts
were not allowed as expenses under Section 36(1)(va) of the Income Tax Act,
1961 (“IT Act” for short), for the reason that such payments were made beyond
the due date under the relevant legislations.
4. The petitioner, being aggrieved by the assessing officer not
allowing such expenditure under the said heads, approached the Commissioner
of Income Tax (Appeals) (“CIT(A)” for short). The CIT(A) partly allowed the
appeals. Against the orders passed by the CIT(A), the petitioner approached
the Tribunal. The Tribunal by judgment and order dated 26 July 2022 was
pleased to allow the appeals of the petitioner and delete the additions made by
the assessing officer.
1. 2022 (448) ITR 518 (SC).
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5. Being aggrieved by the said order passed by the Tribunal, the
Revenue, however, invoked the provisions of Section 254 of the IT Act and
approached the Tribunal by filing Miscellaneous Application Nos. 111, 112 and
113 of 2023, praying that the original orders dated 26 July 2022 passed by the
Tribunal, allowing the petitioner’s appeal, be set aside on the ground that the
view taken by the Tribunal qua setting aside of the additions as made by the
assessing officer, cannot be accepted to be a correct view, in view of the decision
of the Supreme Court in Checkmate Services Private Limited (Supra) which
was rendered subsequent to the orders passed by the Tribunal. It was
contended that in such decision the Supreme Court has held that deduction of
employees share can be allowed under Section 36(1)(va), only if, it is deposited
before the time limit under the respective statute and not before the due date
under Section 139(1) of the IT Act. In this view of the matter, it was urged by
the Revenue in the Miscellaneous Applications that due to such change in law,
the basis of the order dated 26 July 2022 passed by the Tribunal has vanished
and accordingly the same will be required to be set aside, by allowing the
Miscellaneous Applications filed under Section 254(2) of the IT Act.
6. The petitioner in assailing the impugned order passed by the
Tribunal, has urged two basic contentions: Firstly, it is submitted that the
jurisdiction of the Tribunal under Section 254(2) is akin to the jurisdiction of
the Civil Court of a review in terms of Order XLVII, Rule 1 read with Section
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114 of the Code of Civil Procedure, 1908 (” CPC ” for short) and hence it is
only when there is an error apparent on the face of the order, it can be
corrected by the Tribunal in exercise of its jurisdiction under Section 254(2);
secondly, it is submitted that this is not a case where the existing position in
law was not noticed by the Tribunal in rendering its decision on the
petitioner’s appeals in passing order dated 26 July 2022, as the decision of the
Supreme Court as relied by the Revenue in the case of Checkmate Services
Private Limited (Supra), was rendered subsequent to the decision of the
Tribunal i.e. on 12 October 2022. In this view of the matter, it is submitted
that the subsequent judgment being rendered by the Supreme Court, cannot be
a ground to invoke the provisions of Section 254(2) of the IT Act, as in this
event, the only remedy for the Revenue would be to assail the orders passed by
the Tribunal in an appeal to be filed before this Court under Section 260A of
the IT Act.
7. It is next submitted that in any event, the locus to file
Miscellaneous Application in terms of Section 254(2), was available provided
such Miscellaneous Application was to be filed within a period of six months
from the end of the month in which the order was passed by the Tribunal. It is
submitted that the limitation of six months is prescribed and/or available by
virtue of a statutory provision of sub-Section (2) of Section 254 of the IT Act.
In the present case, clearly the Miscellaneous Applications were filed with a
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delay of 92 days. It is, therefore, the petitioner’s submission that in terms of
Section 254(2), the Miscellaneous Application was per se barred by limitation.
It is submitted that this aspect is also not taken into consideration by the
Tribunal. It is submitted that the impugned order passed by the Tribunal is
contrary to the provisions of Section 254(2) hence the same would be required
to be held invalid and illegal.
8. In support of such contentions, Ms. Madhavi Tavanandi, learned
counsel for the petitioner has placed reliance on the decision of this Court in
the case of Commissioner of Income Tax (IT-4) vs. Income Tax Appellate
Tribunal2, Deputy Commissioner of Income Tax vs. ANI Integrated Services
Ltd3, as also the decision of the Constitution Bench of the Supreme Court in
Beghar Foundation vs. Justice K. S. Puttaswamy4.
9. On the other hand, learned counsel for the Revenue has
supported the impugned order. He would fairly submit that now the
parameters of the jurisdiction of the Tribunal under Section 254(2) of the IT
Act are well settled, while not disputing the principles of law as held in the
decision cited on behalf of the petitioner. He would also submit that the
decision in the case of Checkmate Services Private Limited (Supra), was
rendered subsequent to the decision of the Tribunal allowing the petitioner’s
2. [2017] 85 taxmann.com 42 (Bombay).
3. [2024] 162 taxmann.com 899 (Mumbai- Tribunal).
4. [2021] 123 taxmann.com 344/278 Taxman 1.
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appeal vide order dated 26 July 2022 and hence, such decision certainly was
not available when the Tribunal disposed of the petitioner’s appeal subject
matter of the Miscellaneous Applications filed by the Revenue.
10. Having heard the learned counsel for the parties and having
perused the record, we find that there is much substance in the contentions as
urged on behalf of the petitioner. At the outset, we may observe that the
jurisdiction of the Tribunal as invoked by the Revenue, was the jurisdiction as
conferred on the Tribunal under Section 254(2) of the IT Act provides, which
is in relation to the orders passed by the Tribunal. Section 254, is required to
be noted, which reads thus:
“254. Orders of Appellate Tribunal
(1) The Appellate Tribunal may, after giving both the parties to the
appeal an opportunity of being heard, pass such orders thereon as it
thinks fit.
(1A) [***]
(2) The Appellate Tribunal may, at any time within six months from
the end of the month in which the order was passed, with a view to
rectifying any mistake apparent from the record, amend any order
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:
Provided further that any application filed by the assessee in this sub-
section on or after the 1st day of October, 1998, shall be accompanied
by a fee of fifty rupees.
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13TO15-WP-17175-2024+.DOC(2A) In every appeal, the Appellate Tribunal, where it is possible, may
hear and decide such appeal within a period of four years from the end
of the financial year in which such appeal is filed under sub-section (1)
or sub-section (2) of section 253:
Provided that the Appellate Tribunal may, after considering the merits
of the application made by the assessee, pass an order of stay in any
proceedings relating to an appeal filed under sub-section (1) of section
253, for a period not exceeding one hundred and eighty days from the
date of such order subject to the condition that the assessee deposits not
less than twenty per cent of the amount of tax, interest, fee, penalty, or
any other sum payable under the provisions of this Act, or furnishes
security of equal amount in respect thereof and the Appellate Tribunal
shall dispose of the appeal within the said period of stay specified in
that order:
Provided further that no extension of stay shall be granted by the
Appellate Tribunal, where such appeal is not so disposed of within the
said period of stay as specified in the order of stay, unless the assessee
makes an application and has complied with the condition referred to
in the first proviso and the Appellate Tribunal is satisfied that the delay
in disposing of the appeal is not attributable to the assessee, so however,
that the aggregate of the period of stay originally allowed and the
period of stay so extended shall not exceed three hundred and sixty-five
days and the Appellate Tribunal shall dispose of the appeal within the
period or periods of stay so extended or allowed:
Provided also that if such appeal is not so disposed of within the period
allowed under the first proviso or the period or periods extended or
allowed under the second proviso, which shall not, in any case, exceed
three hundred and sixty-five days, the order of stay shall stand vacated
after the expiry of such period or periods, even if the delay in disposing
of the appeal is not attributable to the assessee.
(2B) The cost of any appeal to the Appellate Tribunal shall be at the
discretion of that Tribunal.
(3) The Appellate Tribunal shall send a copy of any orders passed
under this section to the assessee and to the Principal Commissioner or
Commissioner.
(4) Save as provided in section 256 or section 260A, orders passed by
the Appellate Tribunal on appeal shall be final.”
(emphasis supplied)
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11. A perusal of Sub-section (2) of Section 254 of the IT Act, clearly
indicates that the Tribunal at any time within six months from the end of
month in which the order was passed by the Tribunal, with a view to rectify
any “mistake apparent from the record”, amend any order passed by under sub-
Section (1) and shall make such amendment, if the mistake is brought to the
notice by the assessee or the assessing officer by following the procedure as set
out in the said provision. What is significant is that such jurisdiction on the
Tribunal is conferred with a view to “rectify any mistake apparent from the
record” and accordingly amend any order, that too on the applicant satisfying
the conditions, that such mistake is brought to the notice of the Tribunal by
the assessee or the assessing officer “within six months” from the end of the
month, when the order was passed.
12. Thus, from the plain language of sub-Section (2) of Section 254,
it is clear that the jurisdiction of the Tribunal as conferred under sub-Section
(2) of Section 254 is akin to the review jurisdiction of the Civil Court, that is to
be rectify any mistake apparent from the record.
13. The question in the present case is whether there was any mistake
apparent on the face of the record and/or whether a decision which was
rendered by the Supreme Court subsequent to the Tribunal’s decision of which
rectification is sought, could be relevant to come to a conclusion on the ground
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that there was a mistake apparent on the face of the order, the Tribunal could
substitute its original order.
14. In our clear opinion, the question would be required to be
answered against the Revenue and in favour of the assessee. The reasons for
which we discuss hereunder. In such context, at the outset, we may observe that
the petitioner had succeeded before the Tribunal on the basis of the position in
law as it prevailed on the day the decision was rendered on the petitioner’s
appeal on 26 July 2022. Subsequent to the said orders passed by the Tribunal,
on 12 October 2022, the Supreme Court rendered its decision in “Checkmate
Services Private Limited” (Supra), whereby the Supreme Court held that the
deduction of the employees’ share can be allowed under Section 36(1)(va) of
the IT Act, only if such share was deposited before the time limit under the
respective statutes and not before the due date under Section 139(1) of the IT
Act. In the fact situation, certainly it cannot be said that the Tribunal has
overlooked the existing position in law, as laid down by the Supreme Court or
the High Court, so as to bring about a situation that the law declared by the
Supreme Court was not followed by the Tribunal and/or the decision of the
Tribunal is contrary to the law as laid down by the Supreme Court. Such
decision of the Supreme Court which never existed when the Tribunal passed
the original order could never have been applied by the Tribunal, and hence it
cannot be said that there was any mistake on the face of the record, so as to
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confer jurisdiction on the Tribunal to exercise its jurisdiction under Section
254(2) of the IT Act.
15. There is also much substance in the contention as urged on behalf
of the petitioner, when it is contended that the Miscellaneous Application was
filed by the Revenue beyond the prescribed limitation of six months as
provided for in Sub-section (2) of Section 254 of IT Act, from the end of the
month in which the order was passed. The Miscellaneous Applications were
filed by the Revenue with a delay of 92 days. Considering the clear provisions
of Sub-section (2) of Section 254, it is clear that it prescribes a limitation to file
an application in invoking such provision. The Revenue could not make good,
that in these circumstances there was any power with the Tribunal to condone
delay if the Miscellaneous Application was to be filed beyond a period of six
months. In any event, there was no application on the part of the Revenue in
this regard. Thus, the impugned order would also be required to be faulted on
such count that the same was passed beyond the limitation as prescribed under
Sub-section (2) of Section 254 of the IT Act.
16. In so far as the petitioner’s contention on the jurisdiction of the
Tribunal to entertain the Miscellaneous Application is concerned, it appears
that the position in law is well settled. The jurisdiction as conferred under sub-
Section(2) of Section 254 is akin to the jurisdiction conferred on the Civil
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Court under the provisions of Order XLVII, Rule 1 of the CPC inter alia to
correct mistakes apparent on the face of the record. However, on a comparative
reading of sub-Section (2) of Section 254 of the IT Act, and Rule 1 of Order
XLVII of CPC, it appears that such jurisdiction conferred on the Tribunal is
more restricted.
17. In Beghar Foundation (Supra), the Supreme Court was
considering a review petition, filed against the final judgment and order dated
26 September 2018, passed on the main proceedings. In rejecting the review
petition, the Supreme Court observed that no case for review of such judgment
was made out, and most importantly on the ground that change in law or
subsequent decision/judgment of coordinate or larger bench by itself cannot be
regarded as a ground for review. Such principles of law are squarely applicable
in the facts of the present case.
18. In Sanjay Kumar Agrawal vs. State Tax Officer (1) and Another 5,
the Supreme Court following the decision in the Constitution Bench in Beghar
Foundation (Supra), made the following observations:
“15. It is very pertinent to note that recently the Constitution
Bench in Beghar Foundation v. K. S. Puttaswamy (Aadhaar
Review – 5 J.), held that even the change in law or subsequent
decision/judgment of coordinate Bench or larger Bench by itself
cannot be regard as a ground for review.”
5. (2024) 2 Supreme Court Cases 362.
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19. We may observe that recently a bench of the Tribunal in the case
of ANI Integrated Services Ltd (Supra), had the occasion to consider the very
issue as raised by the Revenue in light of the decision rendered by the Supreme
Court in Checkmate Services Private Limited (Supra). In such case similar
applications were filed by the Revenue praying that the Tribunal set aside its
orders in relation to Employees State Insurance Corporation (” ESIC ” for
short) (for the Assessment Year 2019-20) considering the changed position in
law in “Checkmate Services Private Limited” (Supra). The Tribunal by its
decision dated 29 May 2024 [ANI Integrated Services Limited (Supra)] did
not accept the contentions as urged on behalf of the Revenue and rejected the
Miscellaneous Applications filed by the Revenue, also considering the decision
in Beghar Foundation (Supra) and the scope of its limited jurisdiction under
Section 254(2) of the IT Act. We are in complete agreement with the view
taken by the Tribunal in ANI Integrated Services Ltd (Supra) and which is on
the very issue as urged by the petitioner .
20. In view of the aforesaid discussion, we are of the clear opinion
that the Tribunal was in a patent error in exercising jurisdiction under Section
254(2) in passing the impugned order. The petitions accordingly need to
succeed. The petitions are allowed in terms of prayer clause (a) of each of these
petitions.
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21. Rule is made absolute in these terms. No costs.
Digitally
signed by
GANESH
GANESH SUBHASH
SUBHASH LOKHANDE
LOKHANDE Date:
2024.12.27
19:44:28
+0530(ADVAIT M. SETHNA, J.) (G. S. KULKARNI , J.)
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