| The Tax Publishers2020 TaxPub(DT) 2146 (Bang-Trib) INCOME TAX ACT, 1961
Section 254(2) Section 255(4)
Where Tribunal's order dt. 23-6-2017 was subject matter of MPs suffers from an error apparent on face of record as precedent was not followed in taxing interest income on capital contribution in firm by partner(s), as an earlier view was contrary to the above order of Tribunal as such the order was therefore re-called.
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Appeal [Tribunal] - Rectification under section 254(2) - Tribunal's order disregarded earlier precedent(s) by Co-ordinate Bench of Tribunal -
AO was of the view that as per clause of the partnership deed interest income accrues to the assessee at 18% on the capital investment in the 7 firms as the assesse was following mercantile system of accounting. AO accordingly brought to tax a sm of Rs. 1,90,27,356. CIT(A) following the decision in assessee's own case of ITAT on same facts directed the AO to delete the addition made, held that interest income accrued to the assessee and was rightly brought to tax by the AO. The Tribunal refused to follow the earlier years orders of the Tribunal. Assessee filed two M.P.s. In the MP's so filed, the contention of the assessee was that the order of the Tribunal suffers from an error apparent on the face of the record. AM held that the ITAT decision was not brought to the notice of the Tribunal at the time of hearing of the appeal. There was no error apaprent on the face of record which was capable of being rectified. The JM took the view that he himself was a party to an an Order, dated 2-6-2017 in ITA No. 951 & 952/Bang/2016 for assessment year 2011-12 & 2012-13 and finally concluded that there was an error apparent on the face of the record and the MPs filed by the assessee had to be allowed to the limited purpose of considering all decisions of co-ordinate bench, which means that the order in the appeals were recalled and required to be heard afresh. Held: The mistake in the present case was manifest/apparent on the face of the record and this Tribunal agree with the JM that the MPs should be allowed. JM had rightly applied the ratio laid down in the decision rendered by the Supreme Court in the case of Honda Siel Power Products Ltd. in coming to the conclusion that the order of the Tribunal dated 23-6-2017 suffers from an error apparent on the face of the record. As laid down in the said decision of the Supreme Court, 'Rule of precedent' is an important aspect of legal certainty in rule of law and that principle is not obliterated by Section 254(2). The court has further held that when prejudice results from an order attributable to the Tribunal's mistake, error or omission, then it is the duty of the Tribunal to set it right and that atonement to the wronged party by the court or Tribunal for the wrong committed by it had nothing to do with the concept of inherent power to review. For the reasons given above, Tribunal concur with the view of the JM.
Followed:Supreme Court in the case of Honda Siel Power-Products Ltd. v. CIT (2007) 12 SCC 596 (SC), Relied: Minnow Trading Co. ITO in ITA No. 6640/M/2008 Order, dated 18-6-2010 for assessment year 1999-2000, ITO v. Minnow Trading Co. ITA No. 1473 to 1477/Bang/2010 & C.O. Nos. 12 to 16/Bang/2011 Order, dated 30-11-2011 for assessment year 2001-02 to 2008-09, ITO v. Minnow Trading Co. ITA No. 901/Bang/2013 Order, dated 18-3-2014 for assessment year 2009-10, Minnow Trading Co., v. ITO ITA No. 1468/Bang/2014 Order, dated 29-5-2015 for assessment year 2010-11. Express Newspapers Ltd. v. Dy. CIT (2010) 320 ITR 12 (Mad) : 2010 TaxPub(DT) 1013 (Mad-HC). Express Newspapers Ltd. v. Dy.CIT (2010) 320 ITR 12 (Mad) : 2010 TaxPub(DT) 1013 (Mad-HC),
REFERRED : Pr. CIT v. Maruti Suzuki India Ltd. (2019) 107 Taxmann.com 375 (SC) : 2019 TaxPub(DT0 4931 (SC).
FAVOUR : In assessee's favour.
A.Y. : 2000-01 & 2005-06
IN THE ITAT, BANGALORE BENCH
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