M/S GOEL. DIE CAST LTD. vs. COMMISSIONER OF INCOME TAX

This appeal has been preferred by the assessee under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against order dated 29.1.2010 of the Income Tax Appellate Tribunal, New Delhi in I.T.A. No.1247/DEL/2009 proposing to raise following substantial questions of law:- “(i) Whether on the facts and in the circumstances of the case, the Tribunal acted illegally and perversely in reversing the Order passed by the CIT(A) under Section 154 of the Income Tax Act, 1961 which was in conformity with the judgment rendered by the Hon’ble P. Ltd. (2008) 216 CTR 195 as well as the Tribunal’s own Order in the case of the appellant for the assessment year 2003-04? (ii) Whether on the facts and in the circumstances of the case, the Tribunal was legally correct in reversing the Order of the CIT(A) passed under Section 154 of the Income Tax Act, 1961 thereby sustaining the addition on account of the amount of share capital being income from undisclosed sources of the appellant contrary to the stand of the appellant which stand having been accepted by the Department/Revenue for the assessment year 2003-04 in view of the Order of the Tribunal for the said assessment year having attained finality? (iii) Whether the impugned Order passed by the Tribunal reversing the Order of CIT(A) is not sustainable in view of the applicability of principle of judicial consistency and judicial discipline? (iv) Whether the impugned Order passed by the Tribunal reversing the Order of CIT(A) thereby having the effect of sustaining the addition under Section 68 of the Income Tax Act, 1961 is based on irrelevant findings, illegal, perverse and a result of wholly erroneous approach not permitted by law?”

During the course of assessment, the Assessing Officer made addition to the declared income of the assessee, holding that the amount representing share capital was undisclosed income of the assessee. The said finding was affirmed by the CIT(A), against which, the assessee filed appeal before the Tribunal. During the pendency of the appeal, the assessee filed an application for rectification before the CIT(A) on the basis of observations in the judgment of the Hon’ble Supreme Court CIT v. Lovely Exports (P) Ltd. [2008] 216 CTR 195. The said application was allowed by the CIT(A), but the Tribunal accepted the plea of the revenue that there was no case for rectification. The finding recorded by the Tribunal is as under:- “.......We also found that in the original appellate order of the CIT(A) has confirmed the addition not only on the basis of creditworthiness but also on the basis of identity as well as genuineness of the transaction, however, in the order passed u/s 154, the CIT(A) has just observed that in view of the decision in the case of Lovely Exports (supra), the addition and enhancement made in the hands of the assessee on account of lack of creditworthiness of share applicants, cannot be made. Whereas in the original appellate order addition was confirmed not only on the basis of creditworthiness but also on the basis of identity and genuineness of the transactions of the share applicants. There was no change in the facts insofar as identity and genuineness of the transaction which was held to be not proved by the CIT(A) during the course of original appellate proceedings. In the order u/s 154, the CIT(A) has not spoken about the identity of share applicants and the genuiness of the transaction. Since the identity itself has not been established, there is no reason to apply the proposition of law laid down in the case of Lovely Exports (supra). Under Section 154, only mistake apparent on record can be rectified and the considered decision taken on facts cannot be reversed unless wrong recording of facts are found subsequently. Change in the conclusion amounts to review of the order passed earlier and which is not empowered u/s 154 of the Act.”

We have heard learned counsel for the parties.

In view of the finding of fact recorded by the Tribunal, reproduced above, which is not shown to be perverse, no substantial question of law arises and this appeal cannot be entertained against the impugned order and is disposed of accordingly.

It is, however, made clear that this order will not affect the remedy of the assessee in appeal against the order of the CIT (A) dated 28.11.2007, which was earlier dismissed only on the ground that during pendency thereof, the assessee had succeeded in the rectification proceedings. While dismissing the appeal, the Tribunal itself had observed in its order dated 16.2.2009 that if appeal of the revenue succeeds against order of rectification, the assessee would be at liberty to revive its appeal. Learned counsel for the assessee points out that in pursuance of the said liberty, the assessee has already filed Misc. Application No.122 of 2010. If that is so, the Tribunal may consider the said application in accordance with the liberty already granted. (ADARSH KUMAR GOEL) JUDGE November 10, 2010 ( AJAY KUMAR MITTAL ) ashwani JUDGE 4