Cit, Kanpur vs M/S. Sahara India Financial ...
2013 Latest Caselaw 7199 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

COURT NO. 32
 
								    Judgment Reserved on  10.10.2013
 
								    Judgment Delivered on 29.11.2013
 

 
		INCOME TAX APPEAL DEFECTIVE NO.44 OF 2000
 
		The Commissioner of Income Tax , Kanpur
 
						Vs.
 
		M/s Sahara India Financial Corporation Ltd., Lucknow
 
				--------------------------------  
 

 
		HON'BLE SUNIL AMBWANI, J.

HON'BLE SURYA PRAKASH KESARWANI,J.

(Delivered by Hon'ble Surya Prakash Kesarwani,J.)

1- This Income Tax Appeal has been filed by the revenue under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as the 'Act ') against the order date 14.2.2000 passed by the Income Tax Appellate Tribunal, Bench Allahabad (hereinafter referred to as the 'ITAT') on Misc. Application No.01 (Alld.) of 1999 in I.T.A. No. 374 (Alld.) of 1996 relating to the Assessment Year 1992-93, whereby the ITAT recalled its order dated 30.6.1998 and has partly allowed the rectification application of the assessee.

2- We have heard Sri Shambhu Chopra, Senior Standing Counsel appearing for the revenue and Sri P.J. Pardiwala, learned counsel appearing for the respondent-assessee. The appeal was admitted on the following question of law :

"Whether on the facts and in the circumstances of the case the ITAT was justified in law in recalling its order dated 30.06.1998 in ITA No.372 to 374 under provisions of Section 254(2) of the Income Tax Act, 1961 ?"

3- Briefly stated the facts of the present case are that the respondent-assessee is a limited company. Its assessment for the Assessment Year 1992-93 was completed under section 143(3) of the Act, by the assessing officer vide assessment order dated 28.3.1995 on a total income of Rs.24,65,76,400/- against the disclosed income of Rs.30,49,770/-.

4- Aggrieved the assessee filed an appeal before the C.I.T. (Appeal ). By order dated 15.1.1996, the C.I.T. (Appeal ) confirmed the entire addition, but on the question of disallowance of depreciation of Rs.1,92,583/- he remanded the matter to the assessing officer to consider the claim of depreciation with reference to the disposal of the assets available during the year and also its written down value of the preceding year. As per directions of CIT (Appeal) the assessing officer passed the order dated 7.11.1997 under section 143(3)/251 of the Act, giving relief of Rs.1,92,583/- and thus, the total assessed income was computed at Rs. 24,63,83,820/-.

5- Aggrieved with the order of the CIT (Appeal) dated 15.1.1996, the assessee filed ITA No.374 (Alld.) of 1996 before the ITAT which was partly allowed vide order dated 30.6.1998.

6- The assessee filed a Misc. Application No.01 (Alld.) of 1999 as amended by application dated 6.10.1999 before the ITAT under section 254(2) of the Act, praying for the following reliefs :

"(a) that the Tribunal be pleased to rectify its order and allow the applicant's

claim for a deduction of Rs.11,44,08,593/- as claimed.

	 (b)	The Tribunal be pleased to recall its order in respect of ground No.3 in the 			assessee's appeal for assessment year 1992-93 and decide the same afresh ;
 

 
	 (c)  	for such further and other reliefs as the nature and circumstances of the case 			may require."
 

 
7-	By an order dated 14.2.2000 under challenge in this appeal the ITAT allowed the prayer made in Clause-(b) and rejected the prayers of Clause (a) and (c) and recalled  its order dated 23.6.1998. Para 34 and 66 to 74 of the order dated 30.6.1998 passed by the ITAT is  reproduced below :			
 

" (34)- We have considered the matter carefully. One may not hesitate in saying that in terms of the MOU dated 17th August, 1987, pages 15-19, between the parties the Agent firm was to be reimbursed the amount "on the basis of actual expenses supported by valid documents in case of direct allocable expenses" as envisaged by clause 5. There is no dispute that but for the debit notes, no details were furnished by the company before the assessing officer or the Ld. CIT(A). There is no improvement in this state even before us. An estimate in the assessee's claim is, therefore, the only answer. In an estimate subjectivity element cannot altogether be ruled out. However, it is the duty of the judicial or quasi- judicial authority deciding a lis or adjudicating a controversy to arrive at an estimate as objectively as possible by minimising, if not possible to eliminate, the element of subjectivity. Examining the figures for the earlier years it may be seen that the deposits in the year 1988-89 stood at a miniscule figure of 1.53 crores, jumped to 24.96 crores during 1989-90, more than doubled upto 53.68 crores during 1990-91 and yet showed a better performance by notching a figure of 70.12 crores during the year under consideration. We would like to ignore the small figure of 1.53 crores collected during 1988-89. The most relevant figure for a proper and meaningful comparison would be of the assessment year 1990-91 when the assessee collected 53.68 crores through their Agent, M/s Sahara India. That year the percentage of expenditure stood at 2.79. However, with the increase in the deposits of 70.13 crores this percentage registered a steep increase coming to 6.18. It is common knowledge that after a particular point, progress in business requires concerted efforts and more often than not incurring of heavy expenditure. Even if the figures of collection for the assessment years 1990-91 and 1991-92 are considered comparatively, the increase roughly is 31%. With the corresponding increase In the expenditure, as against 2.79 of the assessment year 1990-91, this figure should be more by 1%. However, there is no mathematical principle on which such increases could be based. For example, during the assessment year 1989-90 when the collections were only 24.96 crores, the expenditure stood at 2.92% which belies the aforesaid average rule. Considering all the facts and circumstances of the case, we would restrict the assessee's claim to 4.5% (four and a half percent ) as against 3% allowed by the authorities below.

(66)-Further on facts, which are slightly different for this year, the assessing officer noted that the assessee firstly claimed an amount of Rs.2,52,65,200/- towards "service charges" on the strength of Clause 6(1) of the MOU dated Ist April,1991 relevant for the assessment year under consideration ; pages 20-24 of the assessee's paper book for the assessment year 1991-92. He also noted that the assessee claimed another amount of Rs.11,44,08,593/- towards "reimbursement of expenses to Agent (M/s Sahara India )". Further, while the P & L A/c of the Agent firm for the assessment year 1992-93 showed a credit of Rs.13,51,13,893/- under the head " service charges", the company was found to have debited only an amount of Rs.2,52,65,200/- ( in short 2.5 crores ), the different of the two figures coming to Rs.10,98,48,683/-, found by the A.O. as excess credit by the Agent firm in their books. On a query raised by the A.O. Vide his letter dated 16.12.94, about the amount of Rs.10.98 crores, the assessee company vide its reply dated 17.1.95 submitted that in so far as the payment of Rs. 2.52 crores was concerned, this was paid by them to the Agent firm at the rate of 2% of the total collection in terms of the MOU dated Ist April, 1991 executed between them ( referred to supra). About the discrepancy in the figures (amounting to Rs.10.98 crores ), the appellant took the stand that " the same will be explained in the case of M/s Sahara India as it acting as the Agent of other companies as well." Followed then a letter dated 20.1.95 from the A.O. To M/s Sahara India, the assessee's Agent. They, inter-alia, submitted that they were also collecting service charges from the members directly for extending facility to them for day to day, weekly door step collection etc. on the basis of the aforesaid material, the A.O. Took the view that the appellant company failed to credit in their P & L Account a sum of Rs.10.98 crores which was collected by the Agent from the depositors on their (company's ) behalf. In coming to this conclusion, he also took into consideration the various clauses of the MOU dated 1.1.91 between the parties referred to supra and came to a categorical finding that whatever sum was collected by the Agent firm belonged to the principal company. The A.O. Thus noted that the amount of Rs.10.98 crores was allowed by the appellant company to remain with the Agent firm as a revenue receipt "in a surreptitious manner." He found the assessee's reply dated 17.1.95, in response to his query dated 16.12.94 referred to supra as evasive, which finding was affirmed by the Ld. CIT (A).

(67)-Dealing with the amount of Rs.11,44,08,593/- claimed to have been reimbursed by the company to the Agent firm, the A.O. With reference to the corresponding figures for the assessment year 1988-89, 89-90 and 90-91 observed that the percentage of the expenses the total deposits collected stood only at three. By adding the two figures of Rs.2,52,65,200/- being expenses claimed as service charges @ 2% in terms of the MOU dated 1.4.91, and the amount of Rs.11,44,08,593/-, the aggregate coming to Rs.13,96,73,793/- and taking the figure of total collection at Rs.1,26,32,59,971/- the assessing officer restricted the assessee's claim to 3% of the total collections which worked out to Rs.3,78,97,797/-. This amount deducted from the total claim of the assessee at Rs.13,96,73,793/-, an amount of Rs.10,17,75,996/- was disallowed, affirmed during the first appeal, also in dispute before us.

(68)-Assailing, the Ld. Counsel for the assessee submitted that in so far as the amount of Rs. 2.52 crores ( in short ) was concerned, the assessee was entitled in terms of the clear clause incorporated to this effect in the MOU dated 1.4.91. About the other amount of Rs. 11.44 crores ( in short), Shri Dastur submitted that this was also the entitlement of the assessee company being expenses actually incurred and reimbursed by them to the firm.

(69)-Opposing, Shri Bharatji Agarwal, Ld. Senior Standing counsel fairly submitted that in respect of the amount of Rs.2.52 crores, he did not have any serious objection as with the change of the facts, the assessee became entitled to get service charges in terms of the MOU dated 1.4.91. However, as far as the amount of Rs.11.44 crores was concerned, in the absence of any details etc. provided by the agent firm to the assessee company, the only course which was left for the revenue authorities was to make the assessment and the same having been done keeping in view the past treatment did not call for any interference.

(70)-We have considered the matter carefully. As pointed out earlier, it would appear that the facts obtainable for the year under consideration are slightly different, infact better than the earlier year disposed of by us by this order. The MOU dated 1st April 1991 relevant for the assessment year 1992-93, unlike the earlier one dated 17th August 1987 relevant for the assessment year 1991-92 specifically provided in para 6(1) for the payment of service charges by the company to the Agent firm at the rate of 2% of the total deposits collected by the latter. This being the position, in so far as the amount of Rs.2.52 crores is concerned, the same being 2% of the total deposits collected by the firm because rightly payable by the appellant to the Agent firm. Ordered accordingly.

(71)-Now coming to the other amount of Rs.10,98,48,683/-, it represented the excess of the amount credited by the firm in their P & L account under the head "service charges" said to have been received by them from the appellant firm over the much lesser figure (of Rs.2,52,65,200/-) debited by the assessee company under the same head. That the firm, M/s Sahara India, was acting only as an Agent on behalf of the appellant company being the admitted case of both sides, there cannot be any quarrel that Agent being extended arm of the principal, whatever amount was collected by the Agent became the receipt of the principal. As already held in respect of the earlier year, we may state even at the cost of repetition that the amount of Rs.10,98,48,683/- has to be taken as the receipt of the assessee. However, as in respect of the assessment year 1991-92, the issue for the determination as to whether any expenses incurred by the Agent firm in collecting this amount were not claimed by them from the appellant company on the basis of the two of them proceeding on a wrong assumption that the amount in question although collected on behalf of the appellant could be retained by the firm, would go back to the Assessing Officer with similar directions as contained in paragraph 32 above excepting that this year, since in terms of para 6(1) of the MOU dated 1st of April,1991 at pages 20-24 there is a specific provision about the payment of 2% service charges by the appellant company to the agent firm, the Assessing Officer will not permit the assessee or address himself on this aspect of the matter, the service charges @ 2% amounting to Rs. 2.52 crores already allowed by us. The issue, therefore, stands remanded for this limited purpose.

(72)-Coming to the other disallowance of Rs.10,17,75,996/-, (10.17 crores for brief), representing the partly rejected claim of the assessee in respect of the expenses reimbursed to their agent, reference was first made to the internal page 22 of the MOU referred to supra, as per which "the expenses so incurred by the firm in conducting the business of the company shall be reimbursed on the basis of the actual expenses supported by valid documents in case of direct allocable expenses." The MOU also says that all the reimbursement for expenses shall be made against bills raised by the firm for the expenses incurred on behalf of the company. There is no dispute that at no stage any details much less supported by documents were furnished by the firm to the appellant company or by the company to the Revenue authorities excepting giving the following bifurcation :

	      Sl. No.			Particulars 					Amount (Rs.)
 

 
		1.			Establishment				3,45,57,775/-	
 
		2.			Travelling and conveyance 		   74,32,621/-
 
		3.			Stationery & Printing			   78,29,267/-
 
		4.			Advertisement & Publicity		   34,72,820/-
 
		5.			Business development			6,11,16,112/-
 
									  		----------------------			
 
											11,44,08,593/-
 
										         ----------------------
 

 

(73)-We are unable to disagree with the Ld. Senior Standing counsel that the above figures only bifurcated the huge amount of Rs.11.44 crores ( in short ) in five major heads and it was far from saying that it stood to provide the details of actual expenses much less they being supported by valid documents, as stipulated by the parties with reference to the MOU referred to supra. To say so, Shri Agarwal submitted, would be travesty of facts.

(74)-On a consideration of the facts and circumstances, we are inclined to agree that the details of the so-called actual expenses were not provided by the assessee at any stage and therefore an estimate is the only answer. Without providing bulk to this order, by referring to paragraph 34 of this order, we would say that instead of 3% of the total deposits collected by the assessee firm as has been held by the assessing officer and affirmed by the Commissioner (Appeals ), they would be entitled to 4.5% towards expenses on the total deposits. To repeat, the assessee would be entitled on this count 4.5% of the total collection shown by the assessing officer at Rs.1,26,32,59,971/- ( not in dispute ), i.e. additional of 1.5% on the last figure. The remainder disallowance is affirmed. Needless to say that the allowance of 4.5% of the total collections ( as against the allowance of 3% ) is in addition to the service charges of Rs.2,52,65,200/-, allowed by us in para 70 above."

8- In Misc. Application under section 254(2) of the Act, the assessee applicant objected to the findings of the ITAT on the following grounds :

"(a) That the Tribunal had given a clear finding in para 34 of its order that a substantial entries in the turnover can be achieved only by incurring an additional expenditure, which is dis-proportionate to the increase in deposits mobilisation but while deciding the appeal for A.Y. 1992-93, the Tribunal has lost sight of its earlier finding recorded in para 34 and the omission to apply its own finding given in the earlier part of the order while dealing with the appeal for A.Y., 1991-92 to the facts prevailing in A.Y. 1992-93 disclosed a mistake apparent from records which needs to be rectified.

(b) That in support of its contention that the expenditure of Rs.11,44,08,593/- should be allowed as deduction, the assessee applicant had filed a supplementary paper book containing a copy of the assessment order of the firm for the A.Y. 1992-93 at pages 32-40 and also the statement of expenditure apportioned to the applicant which statement disclosed that the total expenditure incurred by the firm on deposit mobilization was Rs. 33,07,53,274/- and out of that, the deposit mobilization of the applicant amounted to 82.28%. The Tribunal has not referred to these material facts in coming to its conclusion that the expenditure to be allowed should be restricted to only 4.5% of the total deposits mobilization notwithstanding the fact that the firm has been assessed to tax, inter-alia, on the said sum of Rs.11,44,08,593/- reimbursed by the applicant."

9- The ITAT disposed of the aforesaid Misc. Application by the impugned order observing as under :-

"12. Coming to the next point, the specific submission of the Ld. Counsel for the assessee was that the materials produced before the Tribunal, particularly the assessment order of the firm for the A.Y. 1992-93, which was filed in the supplementary paper book at pages 23 to 31 and 32 to 40 as well as other documents, including the chart and statement of expenditure apportioned to Sahara India Investment Savings Corporation Limited and the assessee company etc. filed in another supplementary paper book, which were very much relevant for adjudicating the issue for the A.Y. 1992-93, have not been considered by the Tribunal. It was further submitted by the Ld. Counsel for the applicant, that detailed submissions were made on behalf of the assessee on this point but the same have not been considered nor dealt with in the order of the Tribunal which amount to mistake apparent from the record. In this regard the specific plea of the ld. Counsel for the assessee, Shri Thakkar, was that in the case of the firm, the expenses reimbursed by the assessee company have been considered and allowed and, therefore, this aspect becomes very material for the determination of the actual expenses incurred by the assessee company. For supporting this contention, the Ld. Counsel also invited our attention to page 4 of the supplementary paper book which is statement of expenditure appointed to the assessee company by the firm M/s Sahara India, according to which in the A.Y. 1992-93, total expenditure incurred by the firm on deposit mobilization was to the tune of Rs.33,07,53,274/- and as the share of the assessee company out of the total deposits collected by the firm M/s Sahara India, was 82.28% the expenses fell and allocated to the assessee company were to the tune of Rs.27,21,43,794/-.

13. The Ld. D.R. On the other hand, submitted that there is no mistake apparent from the record. Shri B.Dogra, the Ld. Sr. D.R. also submitted that section 254(2) does not clothe the Tribunal with the power to re-write or review its judgment. According to him, the assesseee wants that the Tribunal should re-write para 34 and 37 of its order which course is not available to the Tribunal while exercising power U/s 254(2) of the I.T. Act. In support of this submission, the Ld. Sr. D.R. Heavily relied on the decision reported in 210 ITR 397. The Ld. Sr. D.R. Also pointed out that the entire facts and the evidence was before the Tribunal which have been considered and there was no mistake in fixing the rate of 4.5% for working out the expenses out of the total deposit. The Ld. D.R. Also referred to the decisions reported in ITR 229 P.651.

14. We have carefully considered the facts and circumstances relating to this matter, the material to which our attention was invited and the rival submissions. The documents referred to by the Ld. Counsel for the assessee, viz. The copy of assessment order of the firm dated 28.3.1995 for the A.Y.1992-93 and copy of assessment order of the firm dated 12.11.1997 for the assessment year 1992-93 U/s 143(3)/251 are available in the paper book at pages 23 to 31 and 32 to 40 respectively. Likewise, the chart showing the collection in the assessment years 1989-90 to 1992-93 made by the firm as well as the expenses reimbursed by the assessee company as also appear in the supplementary paper book of Sahara India Savings and investment corporation Limited, Lucknow for the A.Y. 1991-92. It is not the case of the department that these documents were not before the Tribunal at the time of the hearing of the appeals. The Ld. Sr. D.R. Also did not dispute the assertion of the Ld. Counsel for the assessee that arguments were advanced before the Tribunal on the basis of these documents. Thus, the existence of the above mentioned material before the Tribunal at the time of hearing of the appeal for the A.Y.1992-93 is not disputed. So far as the consideration of the issue relating to deduction on account of expenses reimbursed by the assessee company to the firm for the A.Y. 1992-93 is concerned, the issue has been dealt with from page 66 to page 74.

20. In view of the above cited authorities, the legal position is clear. The settled legal position is that if at the time of deciding an issue, the relevant material which has got bearing on the issue was placed before the Tribunal and arguments were made in relation thereto but the same was not considered, then such non-consideration amounts to a mistake apparent from the record and such mistake has to be rectified U/s 254 (2) of the I.T. Act.

25. To conclude, so far as the instant matter is concerned, the assessee has prayed for rectification of mistake on the basis of non-consideration of relevant material available before the Tribunal at the time of hearing. The instant case, therefore, does not involve any interpretation of any legal term nor re-consideration of any material fact and evidence nor reappraisal of the evidence already considered by the Tribunal. Rather, it is a plain and simple case of omission to consider the relevant material which omission or failure to consider the relevant material and relevant aspect amounts to a mistake apparent from the record.

26. Under the circumstances, in view of the above facts undisputedly, the material pointed out by the Ld. Counsel for the assessee, being available on record and the same being relevant for decision of the issue and which was not considered by the Tribunal while deciding the appeal for 1992-93, a mistake has been committed in not looking into the material already on record and this mistake, in our view, needs to be rectified. Thus we hold that there is a mistake in the order which is apparent from record and hence we set aside the order on this limited point, i.e., the adjudication and finding of the Tribunal on ground Nos. 4 and 5 in assessee's appeal for the A.Y.1992-93 and direct that the appeal shall be re-heard on this point and issue relating to allowing of alleged expenses reimbursed to the agent amounting to Rs.11,44,08,593/- shall be adjudicated afresh, after hearing both the parties and after considering the relevant material on record.

27. Under these circumstances, the prayer of the assessee made in clause (b) stands allowed. The prayers made in paras (a) and (c)are rejected.

28. In the result, Misc. Application is partly allowed."

10- A perusal of the findings of fact recorded by the ITAT paragraph-34 and paragraphs-66 to 74 of the original order dated 30.6.1998 as extracted above clearly shows that the ITAT has considered the entire facts and circumstances and evidences on record including the paper book and thereafter, recorded the findings of fact, which may be briefly summarized as under :

(i) There is no dispute that but for the debit notes, no details were furnished by the company before the assessing officer or the Ld. CIT(A). There is no improvement in this state even before us. An estimate in the assessee's claim is, therefore, the only answer.

(ii) Considering all the facts and circumstances of the case, the assessee's claim was restricted to 4.5% (four and a half percent ) as against 3% allowed by the authorities below.

(iii) The assessee firstly claimed an amount of Rs.2,52,65,200/- towards "service charges" on the strength of Clause 6(1) of the MOU dated Ist April,1991 relevant for the assessment year under consideration ; pages 20-24 of the assessee's paper book for the assessment year 1991-92.

(iv) the assessee claimed another amount of Rs.11,44,08,593/- towards "reimbursement of expenses to Agent (M/s Sahara India ).

(v) By adding the two figures of Rs.2,52,65,200/- being expenses claimed as service charges @ 2% in terms of the MOU dated 1.4.91, and the amount of Rs.11,44,08,593/-, the aggregate coming to Rs.13,96,73,793/- and taking the figure of total collection at Rs.1,26,32,59,971/- the assessing officer restricted the assessee's claim to 3% of the total collections which worked out to Rs.3,78,97,797/-. This amount deducted from the total claim of the assessee at Rs.13,96,73,793/-, an amount of Rs.10,17,75,996/- was disallowed, affirmed during the first appeal, also in dispute.

(vi) For the other disallowance of Rs.10,17,75996/-, (10.17 crores for brief), representing the partly rejected claim of the assessee in respect of the expenses reimbursed to their agent, reference was first made to the internal page 22 of the MOU referred to supra, as per which "the expenses so incurred by the firm in conducting the business of the company shall be reimbursed on the basis of the actual expenses supported by valid documents in case of direct allocable expenses." The MOU also says that all the reimbursement for expenses shall be made against bills raised by the firm for the expenses incurred on behalf of the company. There was no dispute that at no stage any details much less supported by documents were furnished by the firm to the appellant company or by the company to the revenue authorities excepting giving the following bifurcation.

		 Sl. No.			Particulars 				Amount (Rs.)
 

 
		1.			Establishment				3,45,57,775/-	
 
		2.			Travelling and conveyance 		   74,32,621/-
 
		3.			Stationery & Printing			   78,29,267/-
 
		4.			Advertisement & Publicity		   34,72,820/-
 
		5.			Business development			6,11,16,112/-
 
									  		----------------------			
 
											11,44,08,593/-
 
										         ----------------------
 

(vii) The ITAT found itself unable to disagree with the Ld. Senioir Standing counsel that the above figures only bifurcated the huge amount of Rs.11.44 crores ( in short ) in five major heads and it was far from saying that it stood to provide the details of actual expenses much less they being supported by valid documents, as stipulated by the parties with reference to the MOU referred to supra. To say so, Shri Agarwal submitted, would be travesty of facts.

(viii) On a consideration of the facts and circumstances, the ITAT agreed that the details of the so-called actual expenses were not provided by the assessee at any stage and therefore an estimate is the only answer. Without providing bulk to the order, by referring to paragraph 34 of this order, the ITAT held that instead of 3% of the total deposits collected by the assessee firm as has been held by the assessing officer and affirmed by the Commissioner (Appeals ), they would be entitled to 4.5% towards expenses on the total deposits.

11- From the conclusion in the nature of findings of fact recorded by the ITAT in the original order dated 30.6.1998 it is evident that the deduction in respect of "service charges" was allowed on the strength of Clause 6(1) of the MOU dated Ist April,1991. The claim of the assessee with regard to another amount of Rs. 11,44,08,593/- towards reimbursement of expenses to the agent (M/s Sahara India ) was found to be referable to the internal page-22 of the MOU which provided that "the expenses so incurred by the firm in conducting the business of the company shall be reimbursed on the basis of actual expenses supported by valid documents in case of direct allocable expenses. The ITAT further noted in paragraphs- 72 and 73 that the MOU says that reimbursement for expenses shall be made against the bills raised by the firm for the expenses incurred on behalf of the company and that there was no dispute that at no stage any details muchless supported by documents were furnished by the firm to the appellant company or by the company to the revenue authorities except giving bifurcation in five heads.

12- Thus, on the basis of MOU the claim of direct allocable expenses was allowable if the expenses so claimed were actually incurred, supported by valid documents and such expenses were reimbursed against bills raised by the firm for expenses incurred on behalf of the company. The ITAT recorded the findings of fact after scrutiny of the documents/records; that there is no dispute that at no stage any details muchless supported by documents were furnished by the firm to the appellant company or by the company to the revenue authorities except giving the bifurcation in five heads. Thus, neither the details of actual expenses nor the documents in support of such expenses as stipulated in the MOU were produced by the assessee at any stage of the assessment proceedings or in appeal before the CIT (A) and ITAT.

13- By the impugned order passed under section 254(2) of the Act, the ITAT recalled its original order dated 30.6.1998 on the grounds mentioned in paragraphs-12, 13, 14, 20,25 and 26 which have been reproduced above. A perusal of the reasons recorded in the impugned order of the ITAT shows that the ITAT re-appreciated the evidences on record completely ignoring the terms of MOU that expenses in question is allowable only when it is supported by valid documents and the amount has been reimbursed by the assessee company to the firm against the bills raised by the firm. The ITAT, while passing the impugned order; also ignored the findings recorded in paragraphs-72 and 73 of the order originally passed, that there is no dispute that at no stage any details muchless supported by documents were furnished by the firm to the assessee company or by the assessee company to the revenue authorities except giving bifurcation in five heads. The ITAT allowed the application of the assessee company under Section 254(2) of the Act, merely on the ground that certain charts and statements of expenditure were filed in the supplementary paper book and that the availability of these documents before the Tribunal at the time of hearing of the appeal has not been disputed by learned Senior D.R. Such a conclusion reached by the ITAT was framed entirely as a new opinion on facts with regard to the admissibility of expenses claimed by the assessee company.

14- In view of the facts and circumstances, noted above, we are of the view that by the impugned order, the ITAT has re-appreciated the facts and evidences denovo so as to reach to a different conclusion and that too without referring to the terms of the MOU or any evidence against the concurrent findings of the authorities that at no stage any details muchless the details supported by documents were furnished by the firm to the assessee company or by the assessee company to the revenue authorities.

15- In our view, the impugned order passed by the ITAT recalling the original order dated 30.6.1998 was completely outside the scope of Section 254(2) of the Act. Section 254(2) of the Act is reproduced below :

"254. (2) The Appellate Tribunal may, at any time within four years from the date of the order, 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.]

[(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) ] [or sub-section (2A)] 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 and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order :

Provided further that where such appeal is not so disposed of within the said period of stay as specified in the order of say, the Appellate Tribunal may, on an application made in this behalf by the assessee and on being satisfied that the delay in disposing of the appeal is not attributable to the assessee, extend the period of stay, or pass an order of stay for a further period or periods as it thinks fit ; so, however, that the aggregate of the period originally allowed and the period or periods so extended or allowed shall not, in any case, 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, 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.]"

16- Section 254(2) of the Act can be invoked by the ITAT only to rectify any mistake apparent from the record so as to amend any order passed by it under sub section (1) of Section 254 of the Act.

17- From the discussions and the findings of fact recorded in the order of the ITAT dated 30.6.1998, it is evident that the ITAT has considered all the contentions raised by the respondent-assessee. It also considered the evidences on record including the MOU. The application under Section 254(2) of the Act, was filed by the respondent-assessee on two grounds, namely, that the Tribunal has lost sight of its earlier findings recorded in para-34 and omission to apply its own finding given in the earlier part of the order and that a supplementary paper book containing a copy of the assessment order and also the statement of expenditure apportioned to the applicant (respondent-assessee ) were filed which have not been referred. The ITAT accepted these two grounds to recall its order dated 30.6.1998 completely ignoring the fact that it had discussed in detail in the original order, the terms of the MOU which clearly provides for reimbursement of expenses by the respondent assessee to the firm on actual basis supported by valid documents in case of direct allocable expenses and bills to be raised by the firm for the expenses incurred on behalf of the company. The findings of the ITAT in the order originally passed was that at no stage any details muchless supported by documents were furnished by the firm to the assessee company or by the assessee company to the revenue authorities. These findings not only remained undisturbed in the impugned order, but also there is no reference of any evidence in the impugned order in terms of the MOU. Thus, the very basis of passing the impugned order is erroneous.

18- In our view, the recall of the original order dated 30.6.1998 by the ITAT on the grounds mentioned in the impugned order is wholly outside the purview of Section 254(2) of the Act, which provides for "rectification of any mistake apparent from the record." The ITAT has, infact, reviewed its original order dated 30.6.1998. It is a well settled principle of law that the power of review can be exercised by a statutory authority only, if the statute confers such power on it.

19- Learned counsel for the respondent has failed to point out any provisions under the Act, which confer power of review on the ITAT.

20- In the case of Patel Narshi Thakershi and others v. Pradyumansinghji Arjunsinghji , AIR 1970 SC 1273, Hon'ble Supreme Court in para-4 held as under :

"It is well settled that the power to review is not an inherent power. It must be conferred by law either specifically or by necessary implication. No provision in the Act was brought to our notice from which it could be gathered that the Government had power to review its own order. If the Government had no power to review its own order, it is obvious that its delegate could not have reviewed its order."

21- In the case of Dr. Smt. Kuntesh Gupta vs. Management of Hindu Kanya Mahavidyalaya, Sitapur ( U.P.) and others AIR 1987 SC 2186, Hon'ble Supreme Court in para-11 held as under :

"It is now well established that a quasi judicial authority cannot review its own order, unless the power of review is expressly conferred on it by the statute under which it derives its jurisdiction."

22- In the case of A.T. Sharma v. V.A.P. Sharma, AIR 1979 SC 1047, Hon'ble Supreme Court in para-5 held as under :

"The power of review may be exercised on the discovery of new and important matter or evidence which, after the exercise of due diligence was not within the knowledge of the person seeking the review or could not be produced by him at the time when the order was made; it may be exercised where some mistake or error apparent on the face of the record is found; it may also be exercised on any analogous ground. But, it may not be exercised on the ground that the decision was erroneous on merits. That would be the province of a Court of appeal. A power of review is not be confused with appellate power which may enable an Appellate Court to correct all manner of errors committed by the subordinate Court."

23- In the case of Lily Thomas, etc. etc. v. Union of India and others, JT 2000(5) SC 617, Hon'ble Supreme Court in para 51 reiterated the principle laid down in Patel Narshi Thakershi and others (supra ) and held that possibility of two views on the same subject is no ground to review the earlier judgment passed by a Bench of the same strength."

24- In the case of M/s Northern India Caterers (India) v. Lt. Governor of Delhi [AIR 1980 SC 674 ] in para -8, Hon'ble Supreme Court held that it is beyond dispute that a review proceeding cannot be equated with the original hearing of the case, and the finality of the judgment delivered by the Court will not be reconsidered except 'where a glaring omission or patent mistake or like grave error has crept in earlier by judicial fallibility."

25- Similar view was expressed by Hon'ble Supreme Court in the case of Chandrakanta v. Sheikh Habib (1975) 3 SC 933. In the case of Meera Bhanja (Smt.) v. Nirmala Kumari Choudhury, 1995 (1) SCC 170 in para 8 Hon'ble Supreme Court held as under :

" It is well settled that the review proceedings are not by way of an appeal and have to be strictly confined to the scope and ambit of Order 47, Rule 1 CPC. In connection with the limitation of the powers of the court under Order 47, Rule 1, while dealing with similar jurisdiction available to the High Court while seeking to review the orders under Article 226 of the Constitution of India, this Court, in the case of Aribam Tuleshwar Sharma v. Aribam Pishak Sharma, speaking through Chinnappa Reddy,J, has made the following pertinent observations :

"It is true as observed by this Court in Shivdeo Singh v. State of Punjab, there is nothing in Article 226 of the Constitution to preclude the High Court from exercising the power of review which inheres in every Court of plenary jurisdiction to prevent miscarriage of justice or to correct grave and palpable errors committed by its. But, there are definitive limits to the exercise of the power of review. The power of review may be exercised on the discovery of new and important matter or evidence which, after the exercise of due diligence was not within the knowledge of the person seeking the review or could not be produced by him at the time when the order was made, it may be exercised where some mistake or error apparent on the face of the record is found, it may also be exercised on any analogous ground. But, it may not be exercised on the ground that the decision was erroneous on merits. That would be the province of a court of appeal. A power of review is not to be confused with appellate power which may enable an appellate court to correct all manner of errors committed by the subordinate court."

26- In the case of Satyanarayan Laxminarayan Hegde and others v. Mallikarjun Bhavanappa Tirumale, AIR 1960 SC 137, Hon'ble Supreme Court observed that

"An error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions can hardly be said to be an error apparent on the face of the record."

27- Similar view was taken by Hon'ble Supreme Court in the case of Parison Devi and others Vs. Sumitri Devi, (1997) 8 SCC 715.

28- In the case of Commissioner of Central Excise Belapur, Mumbai v. RDC Concrete (India ) P. Ltd. 2011 (270) ELT- 625 in para 16, 17 and 22, Hon'ble Supreme Court considered the scope of rectification of mistake and held as under :

"16. Upon perusal of both the orders viz. Earlier order dated 4th November, 2008 and order dated 23rd November, 2009 passed in pursuance of the rectification application, we are of the view that the CESTAT exceeded its power given to it under the provisions of Section 35C(2) of the Act. This Court has already laid down law in the case of T.S. Balram v. M/s. Volkart Brothers, 82 ITR 50 to the effect that a "mistake apparent from the record" cannot be something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. It has been also held that a decision on a debatable point of law cannot be a mistake apparent from the record. If one looks at the subsequent order passed by the CESTAT in pursuance of the rectification application, it is very clear that the CESTAT re-appreciated the evidence and came to a different conclusion than the earlier one.

17. Similarly, in pursuance of the rectifying application, the CESTAT came to the conclusion that an officer of the department, who was working as Assistant Director (Cost) and who was also a Member of an Institute of Cost and works Accountants was not competent as a Cost Accountant to ascertain value of the goods. It is strange as to why the CESTAT came to the conclusion that the Cost Accountant, whose services were availed by the department should not have been engaged because he was an employee of the department and he was not in practice. The aforesaid facts clearly show that the CESTAT took a different view in pursuance of the rectification application. The submissions which were made before the CESTAT by the respondent-assessee while arguing the rectification application were also advanced before the CESTAT when the appeal was heard at an earlier stage. The arguments not accepted at an earlier point of time were accepted by the CESTAT after hearing the rectification application. It is strange as to how a particular decision taken by the CESTAT after considering all the relevant facts and submissions made on behalf of the parties was changed by the CESTAT. There was no mistake apparent on record when the CESTAT did not accept a submission of the respondent-assessee to the effect that the officer appointed to value the goods manufactured by assessee should not have been engaged as a cost accountant.

22. For the aforesaid reasons, we are of the view that the CESTAT exceeded its powers and it tried to re-appreciate the evidence and it reconsidered its legal view taken earlier in pursuance of a rectification application. In our opinion, the CESTAT could not have done so while exercising its powers under section 35C(2) of the Act, and, therefore, the impugned order passed in pursuance of the rectification application is bad in law and, therefore, the said order is hereby quashed and set aside. The appeal is allowed with no order as to costs."

29- In the case of Biswanath Prasad and sons v. Commissioner of Income Tax,[ 2005] 277 ITR 265 (Alld.) a Division Bench of this Court held that there is no power of review under the Income Tax Act 1961, but it only confers power of rectification.

30- In a recent judgment this Court in ITA No.147 of 2001, decided on 12.11.2013 in Kuntesh Gupta (Smt.) (Dr.) v. Management of Hindu Kanya Mahavidyalaya Sitapur, AIR 1987 SC 2186, Patel Narshi Thakershi and others v. Pradyumansinghji Arjunsinghji , AIR 1970 SC 1273 in which the scope of the power of review of the courts were discussed and the judgment of this Court in CIT v. Mool Chand Shyam Lal, 273 ITR 160 (All) and D and H Secheron Electrodes Pvt. Ltd. v. CIT, (1983) 142 ITR 528 (MP) held that the Tribunal does not have power to review its judgment under Section 254(2) of the Act, which authorises the Tribunal to only correct its mistakes.

31- In view of the above discussions, we are of the view that ITAT has committed grave error of law to recall the order dated 30.6.1998 by the impugned order dated 14.2.2000 passed under section 254 (2) of the Act.

32- In the result, the appeal succeeds and is allowed. The impugned order dated 14.2.2000 passed by the Income Tax Appellate Tribunal Bench, Allahabad on Misc. Application No.01/(Alld.) of 1999 in ITA No.374 (Alld.) of 1996 relating to the Assessment Year 1992-93 is hereby set aside. The question of law is answered in negative, i.e., in favour of the revenue and against the assessee. There shall be no order as to costs.

Dt. November 29, 2013

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