Explaining Admission made to Taxman

 

The Supreme Court in Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 held that an admission is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect. Any statement recorded under Section 133A would have evidentiary value only if supported with materials and form the basis for assessment.

Appeal in some cases by the Department

As per  C.K. Gangadharan v. CIT [2008] 304 ITR 61/172 Taxman 87, merely because in some cases the revenue has not preferred appeal that does not operate as a bar for the revenue to prefer an appeal in another case where there is just cause for doing so or it is in public interest to do so or for a pronouncement by the higher court when divergent views are expressed by the Tribunals or the High Courts..

Res judicata

Despite non applicability of res judicata, consistency should be maintained [2010] 37 SOT 369 (AHD.)

Tax Effect for Appeal

Where tax effect in revenue's appeal was less than monetary limits specified by CBDT, the revenue is  to show that it involved a substantial question of law which would arise repeatedly in similar cases. [2012] 18 taxmann.com 178 (MP.)

Challenge to Settlement Commission

In Jyotendrasinhji v. S.I. Tripathi [1993] 201 ITR 611 /68 Taxman 59 (SC) the Supreme Court emphasised that the only ground upon which an order passed by the Settlement Commission can be interfered with is that the order of the Commission is contrary to the provisions of the Act and that such contravention has prejudiced the appellant. This would be apart from grounds of bias, fraud or malice which would constitute a separate category. The Supreme Court held as follows:

"16. ...The scope of enquiry, whether by High Court under Article 226 or by this Court under Article 136 is also the same - whether the order of the Commission is contrary to any of the provisions of the Act and if so, has it prejudiced the petitioner/appellant. Apart from ground of bias, fraud and malice which, of course, constitute a separate and independent category. Reference in this behalf may be had to the decision of this Court in Sri Ram Durga Prasad v. Settlement Commission ,176 ITR 169 : (AIR 1989 SC 1038), which too was an appeal against the orders of the Settlement Commission. Sabyasachi Mukharji, J., speaking for the Bench comprising himself and S.R. Pandian, J. observed that in such a case this Court is "concerned with the legality of procedure followed and not with the validity of the order." The learned Judge added "judicial review is concerned not with the decision but with the decision-making process." Reliance was placed upon the decision of the House of Lords in Chief Constable of the N.W. Police v. Evans [1982] 1 WLR 1155. Thus, the appellate power under Article 136 was equated to power of judicial review, where the appeal is directed against the orders of the Settlement Commission. For all the above reasons, we are of the opinion that the only ground upon which this Court can interfere in these appeals is that order of the Commission is contrary to the provisions of the Act and that such contravention has prejudiced the appellant..."

20. The same principle has since been reiterated in a more recent judgment rendered in relation to the powers of the Settlement Commission constituted under the Central Excise Act in Union of India v. Ind-Swift Laboratories Ltd. [2011] 4 SCC 635 by the Supreme Court:

"22. An order passed by the Settlement Commission could be interfered with only if the said order is found to be contrary to any provisions of the Act. So far as the findings of fact recorded by the Commission or question of facts are concerned, the same is not open for examination either by the High Court or by the Supreme Court..."

21. In an earlier judgment of a Division Bench of the Karnataka High Court in N. Krishnan v. Settlement Commission [1989] 47 Taxman 294/ 180 ITR 585 (Kar.) it was held that a decision of the Settlement Commission may be interfered with only, (i) if there is a grave procedural defect such as a violation of the mandatory procedural requirements of the provisions of Chapter XIX-A and/or violation of the principle of natural justice; and (ii) there is no nexus between the reasons given and the decision taken by the Settlement Commission. In other words, the Court under Article 226 would not interfere with an error of fact alleged to have been committed by the Settlement Commission.

Section 254 of the Income Tax Act - power to rectify mistakes, errors

In Asstt. CIT v. Saurashtra Kutch Stock Exchange Ltd. [2008] 305 ITR 227 / 173 Taxman 322, the Supreme Court, while dealing with a case arising under section 254 of the Act, considered the scope of the words and phrase "mistake apparent on the face of the record". The Supreme Court also considered the scope of section 254(2) of the Act. It was held therein that the power conferred under section 254(2) of the Act is not the power of review but is a power conferred, "to rectify any mistake apparent on record". It was also observed that, while doing so, the Tribunal may set aside the earlier order and rehear the matter, and that the phrase "to rectify any mistake apparent on record" is wider in its content than the expression "mistake or error apparent on the face of record" occurring in Order XLVII, rule 1 of the Code of Civil Procedure, 1908 (CPC).

 

 

(a) Under section 254(2) the Tribunal has merely the power to amend its order. While exercising the said power it cannot recall its order. The expression 'amendment' must be assigned its true meaning. While an order of amendment is passed, the order remains but when an order is recalled it stands obliterated. It is well-settled that what cannot be done directly cannot be done indirectly. The review of its own order by the Tribunal is forbidden in law; it cannot be permitted to achieve the same object by exercising its power under sub-section (2) of section 254 as has been held in Lachhman Das Bhatia v. ACIT, [2011] 196 Taxman 563 (Delhi) (FB).

 

(b)  Expression 'mistake apparent on the record', it is well-settled, means a mistake either clerical or grammatical or arithmetical or of like nature, which can be detected without there being any necessity to re-argue the matter or to re-appraise the facts as appearing from the records  as has been held by the Hon'ble Calcutta High Court in CIT v. Suman Tea & Plywood Industries (P.) Ltd., [1997] 226 ITR 34/94 Taxman 305 (Cal.).

 

Strict Construction of Taxing Statutes

A taxing statute, as is well-known, must be construed strictly. In Sneh
Enterprises v. Commissioner of Customs [2006] 7 SCC 714, it was held :

"While dealing with a taxing provision, the principle of 'Strict Interpre-
tation should be applied. The Court shall not interpret the statutory
provision in such a manner which would create an additional fiscal burden on
a person. It would never be done by invoking the provisions of another Act,
which are not attracted. It is also trite that while two interpretations are
possible, the Court ordinarily would interpret the provisions in favour of a
taxpayer and against the Revenue."