DEVCHHAYA INDUSTRIES vs. THE ASST. COMMISSIONER OF INCOME TAX CIRCLE -8,PUNE AND ORS.

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WP/57/2019HC BombayHCBM01009811201814 February 2019Author: HON'BLE SHRI JUSTICE M.S. SANKLECHA,HON'BLE SHRI JUSTICE AKIL KURESHI3 pages

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What did the High Court hold?

The High Court held that the ITAT's order dated August 10, 2017, was flawed because it failed to address Ground No. 5 of the petitioner's rectification application. This ground concerned the rejection of additional evidence by the Commissioner of Income Tax (Appeals) without justification. The Court noted that this omission was evident from the impugned order and was not disputed by the revenue. Therefore, the Court directed the ITAT to decide the issue raised in Ground No. 5 of the petitioner's rectification application, dated November 30, 2016, and pass an order thereon after adhering to the principles of natural justice. No other grievance was considered.

What were the facts?

The petitioner, Devchhaya Industries, challenged an order dated August 10, 2017, passed by the Income Tax Appellate Tribunal (ITAT). This order dismissed the petitioner's application for rectification under Section 254(2) of the Income Tax Act, 1961. The rectification was sought for an earlier ITAT order dated May 25, 2016, which pertained to Assessment Year 2009-10. The petitioner's sole grievance was that the ITAT, in its August 10, 2017 order, failed to address their specific ground (Ground No. 5) concerning the rejection of additional evidence by the Commissioner of Income Tax (Appeals) without justification. The revenue did not dispute this omission. The petitioner contended that this additional evidence was crucial to the matter.

What were the issues?

1. Whether the ITAT erred in dismissing the petitioner's application for rectification under Section 254(2) of the Income Tax Act, 1961, by failing to address Ground No. 5 of the application, which pertained to the rejection of additional evidence by the CIT(A)? (Question of mixed law and fact) Assessee's Contention: The petitioner argued that the ITAT's order dated August 10, 2017, was flawed because it did not deal with their grievance that additional evidence, which was vital to the case, was rejected by the CIT(A) without proper justification. They emphasized that this omission constituted a flaw in the decision-making process. Revenue's Contention: The revenue did not dispute the fact that the ITAT failed to address Ground No. 5 in its rectification order.

Which sections of the Income-tax Act were involved?

Section 254(2),Section 254(1)

AI-generated summary — verify with the full judgment below

Priya Soparkar 1 24 wp 5719cs IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.57 OF 2019

Devchhaya Industries … Petitioner V/s. The Asst. Commissioner of Incometax Circle8, Pune. … Respondent Mr.Mihir Naniwadekar with Mr.Rohan Deshpande i/by Ms.Alisha Pinto for the Petitioner. Mr.Sham Walve for the Respondent. CORAM : AKIL KURESHI AND M.S.SANKLECHA, JJ. DATE : FEBRUARY 14, 2019. P.C.:

This petition under Article 226 challenges the order dated 10th August, 2017 passed by the Income Tax Appellate Tribunal (“the Tribunal” for short). The impugned order dated 10th August, 2017 dismissed the petitioner's application for rectification under section 254(2) of the Income Tax Act, 1961 (“the Act” for short) seeking rectification of the order dated 25th May, 2016 passed under Section 254(1) of the Act. The order dated 25th May, 2016

Priya Soparkar 2 24 wp 5719cs was in respect of Assessment Year 200910. 2. The grievance of the petitioner to the impugned order dated 10th August, 2017 is limited to the fact that the ground urged in its application for rectification that the order dated 25th May, 2016 did not deal with its grievance of additional evidences produced before the Commissioner of Income Tax (Appeals) being rejected without any justification, was not dealt with in the impugned order dated 10th August, 2017. This even after having recorded the above grievance of the petitioner in its impugned order dated 10th August, 2017 as the grievance urged in ground No.5 in the application. No other grievance is being urged by the petitioner before us. It is the case of the petitioner that the additional evidence which was sought to be produced before the Commissioner of Income Tax (Appeals) goes to the root of the matter and the consideration of the additional evidence would have vital impact on result of the appeal for the Assessment Year 200910. 3. The above grievance of the petitioner of nonconsideration

Priya Soparkar 3 24 wp 5719cs of the ground of rectification is evident from reading of the impugned order dated 10th August, 2017. This is even not disputed by the Revenue. Thus, there is flaw in the decision making process leading to the impugned order dated 10th august, 2017. 4. In the above view, it is clear that the Tribunal ought to have dealt with the above issue (urged as ground No.5) in the Miscellaneous Application for rectification and taken a view on it. Therefore, we direct the Tribunal to decide above issue urged as ground No.5 by the petitioner in its rectification application dated 30th November, 2016 and pass an order on the same after following the principles of natural justice.

Petition allowed in above terms. No order as to costs.

(M.S.SANKLECHA,J.) (AKIL KURESHI,J.) ….

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