(Per : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. By our order dated 1.10.2012, we had issued notice for final disposal. We have heard learned counsel for the parties for final disposal of the appeal. For the purpose of this appeal, we frame following substantial question of law for consideration :
“Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal is right in law and on facts in dismissing the appeal of the appellant without going into the merits of the case on the ground that it was not maintainable?”
2. Brief facts may be noted at this stage.
2.1 For the assessment year 1993-1994, assessment order under section 143(3) of the Act read with section 147 was passed on 27.3.2000. The Assessing Officer computed the total income of assessee at Rs.1,61,33,330/-. The assessee preferred appeal against such assessment order. The Commissioner(Appeals) passed his order on such appeal on 9.1.2002. Against such order, the assessee preferred two proceedings. An appeal was filed before the Income Tax Appellate Tribunal(“the Tribunal” for short) challenging the said order of the Commissioner(Appeals). On 17.3.2003, the assessee also preferred an application for rectification under section 154 of the Income Tax Act(“the Act” for short) before the Commissioner(Appeals) himself.
2.2 On 17.3.2003, the Commissioner(Appeals) granted substantial relief to the petitioner by passing an order of rectification. One of the major grounds of addition of Rs.1,48,00,000/- was deleted by the Commissioner in his rectification order dated 17.3.2003. Since the appellant was not thereafter, interested in pursuing the appeal before the Tribunal for the remaining small portion of the disputed additions, such appeal before the Tribunal came to be withdrawn on 10.3.2004. The Tribunal recorded that none appeared on behalf of the assessee. However, an application dated 15.12.2003 for withdrawal of the appeal was filed. Representative of department had no objection. Appeal was therefore, dismissed as withdrawn. Against the order dated 17.3.2003 passed by the Commissioner under section 154 of the Act, appeal was preferred by the department. Such appeal came to be allowed by the Tribunal by order dated 31.3.2008. The Tribunal examined the original order passed by the Commissioner (Appeals) as well as order of rectification. The Tribunal was of the opinion that the Commissioner(Appeals) erred in exercising power of rectification. The Tribunal allowed the Revenue's appeal making following observations :
“70. The power of rectification u/s 154 can be exercised only if there is mistake apparent from the record of the assessment of the assessee. In other words in order to attract the power to rectify u/s.154, it is not sufficient, if there is merely a mistake in the order sought to be rectified. This mistake to be rectified must be one apparent from the record. 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 be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. The plain meaning of the word “apparent” is that it must be something which appears to be so ex facie and is incapable of argument or debate. It, therefore, follows that a decision on a debatable point of law or fact or failure to apply the law to a set of facts which remain to be investigated cannot be corrected by way of rectification. Also an apparent error must be from the record of the assessee and not an error discovered from other sources. Any error discovered as a result of investigation of other records or other sources will not constitute an apparent error on the face of the record which alone confers jurisdiction on the authority concerned to rectify any order as enumerated.
11. In the present case before us the assessee before the CIT(A) in the original appellate proceedings argued that these are accommodative entries. He is not able to prove and the CIT(A) has taken a view that the assessee is not able to prove this entry and he is unable to prove that these are really accommodative entries. CIT(A) subsequently passing order u/s154 of the Act has no power to rectify the same and if rectification order is passed by the CIT(A) that tantamounts to review and the same power the CIT(A) does not have while acting u/s 154 of the Act. Accordingly, we feel that CIT(A) has wrongly invoked provisions of sec.154 of the Act for rectification of original appellate order of CIT(A) on the given facts. Accordingly, the Revenue's appeal is allowed and the order of CIT(A) passed u/s154 of the Act is reversed.”
2.3 Now that the Tribunal had reversed the order of Commissioner(Appeals) under section 154 of the Act, the assessee preferred rectification application before the Tribunal itself seeking to revive its previous appeal against order of the Commissioner. Such rectification application was dismissed by the Tribunal by order dated 15.5.2009 observing that under section 254(2) of the Act, the Tribunal has power to rectify at any time within four years from the date of order, mistake apparent from record. The assessee had consciously requested the Tribunal to grant permission to withdraw the appeal. Such appeal cannot be reopened in exercise of powers for rectification.
2.4 The assessee thereupon filed appeal against the Commissioner's original order dated 9.1.2002 before the Tribunal and also sought condonation of delay in doing so. In these proceedings, the Tribunal by impugned order rejected the appeal as being barred by limitation. The Tribunal noted that assessee had prayed for condonation of delay primarily on the facts narrated here-in-above. The Tribunal however, was of the opinion that long delay of 7 years and 3 months was not sufficiently explained. The Tribunal noted that the department's appeal against Commissioner's rectification order was already pending when the assessee sought permission to withdraw this appeal against original order of the Commissioner. The assessee cannot be allowed to file second appeal against the same cause. It is against this judgement of the Tribunal that assessee has preferred this appeal.
3. Having heard learned counsel for the parties and having perused the documents on record, we are of the opinion that the Tribunal committed an error in rejecting the assessee's appeal without examination of issues on merits. We may recall that after the Commissioner dismissed the assessee's appeal by an order dated 9.1.2002, the assessee's application for rectification was substantially allowed. In such rectification application, the assessee had raised two issues. One pertained to an addition of Rs.1,48,00,000/- and other pertained to Rs.43,300/-. The assessee's case with respect to addition of Rs.1,48,00,000/- was allowed. The request for deleting addition of Rs.43,300/- was not accepted.
4. During the pendency of such rectification application, the assessee had also preferred an independent appeal before the Tribunal. Upon rectification application being granted and since the assessee was not interested in pursuing remaining small claim of Rs.43,300/- which was not accepted by the Commissioner(Appeals) in the rectification order, assessee's appeal before the Tribunal was rendered infructuous. It is true that assessee had filed an application for withdrawal of the appeal. However, even if such application was not filed and if the Tribunal was to take up the appeal for hearing, the assessee had no case to argue against since the order impugned in such appeal was already reversed by the Commissioner himself in exercise of rectification power. In that view of the matter, assessee was perfectly justified in not pursuing his appeal before the Tribunal. The fact that Revenue's appeal at that time was pending before the Tribunal to our mind was of no consequence. The outcome of such appeal was not yet available. The date on which therefore, assessee sought permission to withdraw the appeal before the Tribunal, the order of the Commissioner which was originally adverse to him was already reversed in the rectification proceedings.
5. It was only when the Tribunal while allowing the Revenue's appeal and holding that the Commissioner erred in rectifying his own order that the Commissioner's original order dated 9.1.2002 was revived. It was therefore, only by virtue of Tribunal's order dated 31.3.2008 that the appellant's cause to challenge the Commissioner's order dated 9.1.2002 came to be revived. For the first time therefore, after rectification was allowed in favour of the assessee by the Commissioner(Appeals), he was aggrieved by the Commissioner's original order dated 9.1.2002 only when the Tribunal resorted to such an order by judgement dated 31.3.2008. Between 17.3.2003 when the Commissioner had allowed rectification application and 31.3.2008 when the Tribunal reversed such order, the assessee had no cause, no reason, no possibility of maintaining any appeal against the Commissioner's original order dated 9.1.2002.
6. Under the circumstances, he has filed fresh appeal before the Tribunal once the entire reason for challenging the Commissioner's order changed. In our view therefore, delay was technical in
responsibility to examine the assessee's challenge to the original order dated 9.1.2002 by which its appeal came to be dismissed by the Commissioner. The assessee only required an opportunity to challenge on merits the additions made by the Assessing Officer and confirmed by the Commissioner.
7. Under the circumstances, question is answered in the negative i.e. in favour of the appellant and against the Revenue. Order of the Tribunal is reversed. Delay caused in filing the appeal before the Tribunal stands condoned. Appeal shall be heard by the Tribunal on merits.
8. Counsel for the appellant clarified that in such appeal, the issue with respect to addition of Rs.43,300/- which the Commissioner had not altered even in the rectification order, will not be pressed by the assessee since such issue had achieved finality.
9. Appeal is accordingly disposed of.
(Akil Kureshi,J.) (Harsha Devani,J.) (raghu)