While elaborating the Income Tax Appellate Tribunal’s (ITAT) powers under section 254(2) of the Income Tax Act, 1961, the Mumbai bench of the Tribunal has held that such powers cannot be invoked in cases where the decision was rendered on a debatable issue.
According to the two-judge bench, the Tribunal cannot re-adjudicate such matters for the reason that a decision on a debatable issue does not form a “mistake apparent from the record” for the purpose of the said provision.
While passing an order against the assessee, the AO brought the undisclosed income under the category of concealment of income since the assessee did not disclose the same in the return of income. However, the penalty was levied for furnishing of inaccurate particulars of income and therefore, penalty was liable to be quashed since the same was levied on an inappropriate charge.
The Assessee, during the appellate proceedings, contended that AO did not strike down the inappropriate portion in the penalty notice issued by him and therefore, the penalty was liable to be quashed in terms of binding judicial pronouncements.
On the second appeal, the Tribunal accepted the assesses contentions and deleted the penalty order.
Against the above Tribunal order, the department approached the Tribunal for rectification of its own Order wherein the bench observed that the review of the order is outside the ambit of Section 254(2) and the bench has passed a reasonable order which does not contain any mistake apparent from the record.
“It is well settled that a statutory authority cannot exercise the power of review unless such power is expressly conferred. There is no express power of review conferred on the Tribunal. Lastly, Hon’ble High Court of Calcutta in CIT V/s Bhagwati Developers P. Ltd. (261 ITR 658) observed that a mistake apparent from the record must be an obvious and patent mistake and not something which could 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 is not mistaken apparently from the record. A mistake apparent from the record is one for which no elaborate argument is required. It must be a glaring, obvious or self-evidenced mistake. If it is a mistake that requires to be established by the complicated process of investigation, argument or proof, it cannot be held to be mistake apparent from the record. A debatable issue does not come with the scope of provisions of Sec. 254(2). Respectfully following the ratio of these decisions, we are of the considered opinion that the pleas urged by the revenue are beyond the scope of Sec. 254(2) and therefore, we are not inclined to accept the same. Resultantly, the application stand rejected,” the Tribunal said.
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