THE COMMISSIONER OF INCOME TAX(TDS) vs. M/S JAYPEEM GRANITES (P) LTD

[ 34891 IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDE FRIDAY, THE SIXTH DAY OF MARCH TWO THOUSAND AND TWENTY SIX PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY D THE HONOURABLE SRI JUSTICE SUDDALA CHALAPATHI RAO SItl g lncome Tax Tribunal Appeal Under Section 260 A of the lncome Tax Act, 1961 against the Order dated 03'08'2012 passed in MA.NO.125lHydt2O12inlTA.No.372t1ydl2O'l1,fortheassessment years2005-2006onthefileofthelncomeTaxAppellateTribunal, Hyderabad Bench'A', HYderabad. The Commissioner Of lncome Tax (TDS), Hyderabad' AND M/s Jaypeem Granites (P) Ltd' 8-2-603/13/3, Road No'10' Banjara Hills' Hyderabad Counsel for the Appellant: Sri. Raja Shekar Rao Salvaji ( Senior SC For lncome Tax ) Gounsel for the Respondent: Sri. M S Srinivasa lyengar T The Court made the following: ORDER

1 INTHEHIGHcoURTFoRTHESTATEoFTELANGANAAT HYDERABAD THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THEHoN,BLEsRIJUSTICESUDDALACHALAPATHIRAo ITTA.No.421 of 2O13 Dt.06.o3.2026 Between: The commissioner of Income Tax(',IDS), Hyderabad .... ApPellant arud M/" JaSPeem Granites (P) Ltd' JUDGMENT: PCT ...ResPondents the Hon'ble Sri Justt ce Sud'do;la Chalapathi Rao) 1 The instant appeal has been filed by the appellant/Revenue challenging the order passed by the Tribunal, Bench 'A', HYderabad (for MA.No.L25l|{YDl2o|2inITA.No.372lBydl2010,dt.o3.o8.2oL2. 2. The brief facts of the case are that, the assessee is engaged in the business of manufacturing and exporting granite products consisting of handicrafts, artistic stone products, tiles' slabs' monuments, etc. while so, a sr-rrvey under section 133A of the Income Tax Act, 1961 (for short the Act') was conducted by the \ Income Tax APPellate short the ITAT') in

2 Assessing Officer at t}le assesseeb premises on l9.Og.2OOg and during the said survey, the Assessing olficer found that the assessee had given advances to its sister concern, M/s Odlings (Memorial) Pvt. Ltd. (OMPL), in which shareholders of the assessee held more than 2O%o substantial interest. The Assessing Officer further noticed that the advances given by the assessee to OMpL were Rs. 1,35,60,236/_ for the assessment year 2O05_06 and Rs'1,35,99,9s9/- for the_-assessment year 2006_0z and that Sri Harvesh Marwaha and Smt Asmita Gunti Marwaha were common shareholders in both companies and that Sri Harvesh Marwaha, who is the share holder of M/s Jaypeem Granites pvt Ltd., held more than 20% shareholding on OMPL, while his shareholding in the assessee-company is more trraJr lOo/o. 3' The Assessing ollicer .therefore concluded that the advances given by the assessee-company to oMpL constitute .deemed dividend' within the meaning of Section 2(22)(e) requiring deduction of tax at source under Section 194. Accordingly, a show-cause notice, dt.1o.og.2oo9, was issued to the assessee, to which assessee submitted its reply, dt.OZ.OI.2OO9 objecting to tl-re proposal to treat the assessee as assessee_in_default under Sections 2OL(t)/2Ot(tA) of the Act. / I

3 4- After considering the objections praced by the assessee, the Assessing officer observed that the ledger extracts showed only cheques issued to oMpL and did not clearry indicate that the payments were made towards processing charges and there was no correlation between the advances given and the invoices raised for purchases or processing charges, to treat the payments as trade advances, and herd that such regular advances construed 'deemed dividend' within the meaning of Section 2(221(e) of the Act 5. As regards main issue of deduction of tax at source under Section 194 of the Act, since the assessee had not deducted tax at source @ 22'447o under Section I94, the Assessing Officer treated the assessee as an assessee-in-default and raised demand of tax under section 2ol(rr for Rs.3o,42,g2o/- for the assessment year 2005-06 and Rs.2\.2o,or9/- for the assessment year 2006-0z, along with interest under section 2or(1A) for both the assessment years 6. The said assessment orders were challenged by the assessee before the commissioner of lncome Tax (Appeals) (for short 'CIT(A)J and t]'e CIT(A) partly allou,ed the appeals. chafleing the said orders, the Revenue filed appeals before the learned ITAT in

4 ITA.No.372lHYD/2010 (AY 2005-06) and ITA.No.373l ffYD/2OlO(AY 2006-071, and the assessee also filed appeals in ITA.Nos. 1 28 and r29 / Hyd / 2OlO. 7. The learned ITAT heard all four appeals together and after appreciation of the facts on record, by a common order has allowed the appeals filed by the assessee in ITA.Nos.l28 and 129 /Hydl2OlO, and the appeals filed by the Revenue in ITA.Nos.372 and 373/ FIYD/2O10 were also allowed for statistical purposes and they were remanded to the CIT(A) for fresh consideration. 8. After the learned ITAT passed common order in all four appeals, as a mistake occurred inadvertently in the said common order, by allowing the appeals of the assessee as well as the appeals filed by the revenue on the very same issues raised by both the parties, the assessee has filed miscellaneous applications for rectification of the orders passed in Revenue appeals uide MA.No.125lHyd /2012 ln ITA.No.372lHyd/20lO and MA.No.126lHyd/20t2 1n ITA.No.373/Hyd/2OlO under Section 254(2i of the Act seeking rectification of the order of the learned ITAT, as both sets of appeals, one set filed by the assessee and I /

5 other frled by the Revenue, cannot be allowed simultaneously against the very same principle raised by both sides' g. In the said miscellaneous applications, it was contended by the assessee that in para 5 of the impugtred order, which dealt with the grounds raised by the assessee in its appeals ITA'No'128 and 129/Hyd'l2OlO for the assessment years 2O05-06 and 2006- O7 and in para 14 of the cotnmon order, which contains the grounds raised by the revenrre in its appeals ITA'Nos'372 and 373/Hyd/2O10 for the same years' are common' Further' the Grounds 2 and 3 of revenue's appeals and grounds 3 to 6 of assessee's appeals, related to the same issue' 10. While the learned ITAT has granted relief to the assessee in respect of the grounds of the assessee in para 12 of its order' had simultaneously, in respect of the very sarne grounds raised by the revenue at grounds No.2 & 3, set aside the order of CIT(A) and remanded the matter to the Iile of clT(A) for want of speaking order, and for statistical purposes allowed the said appeals of Revenue also. 11. It is contended by the assessee in the said miscellaneous applications tl at the learned ITAT's order contained conflicting Iindings on identical issues raised by both sides' which was a

6 mistake apparent on record and sought for correction of the said mistake in the Revenue appeals. 12. The learned ITAT after hearing both sides and perusing its earlier common order passed in all four appeals, dt.Og.06.2ol2, found that para 12 of the order was not in harmony with para 16 of the very same order, as the findings are conflicting to each other, moreso, when the both the assessee and the Revenue had raised the same issues and conclud.d th.t there was indeed an error apparent on the face of the record and accordingly, the learned ITAT rectified the mistake and herd that the appeals filed by the assessee uide ITA.Nos. 12g and L29/Hyd/2O10 were allowed and the appeals frled by the revenue rzde ITA.Nos .322 and 37 3 / Hyd / 2Ol O were dismissed. 13. The said common order passed by the learned ITAT insofar as MA.No. 12s/H/2012, dt.og.o6.2o12 arone was challenged by the Revenue in the instant appeal. 14. The instant appeal has been admitted to consider the following substantial question of law: "WhetLer on the facts and. in tle ciratm.stanes of tle ca.se, the Appellate Tibunal is anect in reuersing its earlier order disaltowing the Inome Tax Department,s /r

7 appeal in an application fired bg ttte assessee under Section 254(2) of tlw Iname Tax Act and. di.smissing tlrc Department's Appeal?" 15. Heard Sri Raja shekar Rao sarvaji, learned senior Standing counsel for lncome Tax for appellant/revenue and sri srinivasa Iyengar, learned counser for respondent/assessee. 16. karned senior standing counsel for the appellant, Sri Rqia shekar Rao salvaji, contends that the impugned order passed by the learned ITAT, dt.08.06.2oL2, amounts to review of its earlier orders, which in fact, is against to the settled principle of law that the learned ITAT has no jurisdiction to review or substantially modify its earlier orders and that the entire factual gamut of the impugned order speaks that the learned ITAT set aside its earlier order passed in the appeals filed by the appe[ant/Revenue in ITA.No.372 and 323 of 2010, whereby the said appeals were allowed by the learned ITAT, but however, by the impugned order passed in the miscelianeous applications, it is contended that the learned ITAT has re-appreciated the evidence and reversed its earlier view, by dismissing the revenue,s appeals. The learned Senior Standing Counsel therefore emphasizes that this exercise amounts to a review of the earlier order, which is beyond the powers of the learned ITAT under section 2s4(2lof the Act.

8 17. The learned counsel for the appellant/Revenue placed reliance on the judgment of the Hon'ble Bombay High Court in Appellate Tribunal Mumbqi & Ors.t, wherein it was categorically held that under Section 254 of the Act, though the Tribunal has got ample power to rectify its mistakes, it cannot re- appreciate the evidence and give a finding. 18. Further reliance was placed on the decision of the Honble Allahabad High Court in the case of Commissioner of Income Tax Vs Ved Pro,kosh Agarwa.l2, vi,herein it was held as under: "It is settled that errors apparent on the record can be rectified under Section 251. The case law on this isused has been discussed by the Division Bench of this Court in the case of Biswo,nath Pro,sad & Sons u. Commlssioner of Income Tqxg". L9. By placing reliance on the aforesaid judgments, the learned Senior Standing Counsel for the appellant/Revenue contends that the order passed in the underlying application amounts to reviewing its earlier order, which is impermissible in law and therefore, the impugned order is liable to be set aside. I (2019) 4tt ITR447 z (zoo9l 317 rTR 330 s (2oos) 277 tTR 26s (Alt) Sony Pictures Netutorks India Put Ltd a. Income Tax f {

9 20. Per contra, the learned counsel for the respondent/assessee contended that there was a clear error apparent in the original common order passed by the learned ITAT, when the four appeals were heard together and decided, since the core issue involved in all the appeals filed by both the Revenue and the assessee was sarne, and the learned ITAT, after examining the facts, had allowed the appeals filed by the assessee. However, at the same time, it has allowed the appeals filed by the Revenue and remanded the Revenue's appeals for statistical purposes, thereby it amounts to contradictory views on the same issues and the sarne is an error apparent on record, which was rectified by the learned ITAT under Section 254 of the Act. 21. It is further submitted by the learned counsel that because of the inconsistent findings on identical issues in the common order, the assessee filed the miscellaneous applications against the orders passed in the appeals fiIed by the revenue. The learned ITAT, after examining the record, noticed that contradictory conclusions had been recorded in different paragraphs of the same order. Therefore, the mistake apparent on the face of the record was corrected and the learned ITAT rectified the order by

10 allowing the assessee's appeals and dismissing the Revenue,s appeals 22. In support of the said submissions, learned counsel for the respondent/assessee placed reliance on the judgment of the Honble supreme court in T.s. Bq.larq.m a. votkaft, Brothers, Bombag! a'rd also the judgment of the Hon,bte Bombay High court in commissioner of Income Tqx u. Rq.mesh Etectrl.c and. Tradlng co., wherein the Honble Supreme court as well as the Division Bench of the Bombay High court have categoricalty held that if there are errors apparent on the face of the record, can be rectified by the learned ITAT under Section 2s4 of the Act. 23. Learned counsel further submitted that in the light of the aforesaid precedents and as seen from the impugned order passed by the learneci ITAT it is apparent that the learned ITAT had taken conflicting views in the operative portion of the original ord.er on the very same issue and so as to rectify this apparent mistake, the learned ITAT exercised its power under section 2s4(2) of the Act and while doing so, it did not undertake a fresh appreciation of evidence but merely removed the inconsistency in its own order, and thus, the learned ITAT has rightly corrected the order and. has 4 (r97r) 2 scc s26 s (1993) 2O3 rTR 497 1992 SCC Online Bom 599 r (

11 allowed the appeals of the respondent/assessee and dismissed the appeals filed by the appellant/Revenue, and thus, prayed to dismiss the present appeal. 24. We have given earnest consideration to the submissions made by the learned counsel appearing on both sides and perused the record. 25. Notably, the only question that arises for consideration before this Court is whether, by passing the impugned order in the miscellaneous applications, the learned ITAT has exercised its power of rectification within the scope of Section 254(21 of the Act or whether it has effectively reviewed its earlier common order, which is impermissible in law. 26. It is well settled that under Section 254(21 of the Act, the learned ITAT has got power to rectify any mistakes apparent on the face of the record. The scope of exercise of this power has been explained by the Hon'ble Supreme Court in ?.S.Balaram's case(supra) wherein it was held that: "A mistake apparent on tlrc record rrutst be an obuious and patent mistalce and" not something which can be establish.ed ba a long drautn process of rea.soning on points on whictt there maA coneiuablg be two opinions. As seen earlier, the High Court of Bombag opined that the oiginal assessmdnts were iru accordance I

t2 with law, tLaugh in our opinion the High court was not justified. in going into that question.', 27 ' similarly , in Ramesh Erectric and. Trading co.,s case, the Hon'ble Bombay High Court observed as und.er: "Tle power of rectification und.er Section 254(2) can be exercised onlg when tIrc mistake which is sought to be rectified rs an obuious and. patent mistake which is apparent from ttle record, and. not a mistake which requires to be estabrisrrcd. by arguments and. a rong d.rawn process of reasoning on poirtts on which there maA conceiuablg be two opinions." the Tibunal cannot reappreciate euidence or reconsid"er its ftnd.ings on meits under tle guise of rectification. 28' Further, the judgments relied upon by the Revenue, including sony pictures Networks Indio. put. Ltd..f ,s case(s upra) and ved Pro.ko,sh Agarwats case(sup ral,(which foilowed. the dectsion in Bisut,,n,,th prq.sad. & sons, case(supra)1, reiterate the sarne principle that the Tribunal cannot undertake a review or reappraisal of evidence white exercising power und.er section 2s4(2l,. 29- Thus, the legar position is crear and not in dispute that the learned ITAT has no power of review, but it can certainry correct a mistake which is apparent and self-evident from the record. /

13 30. In the instant case, when the assessee and Revenue preferred two appeals (in all four) against the very same common ord.er passed by the CIT(A), evidently, the learned ITAT allowed the assessee's appeals on merits after assigning reasons. At the same time, while dealing with the Revenue's appeals on the very salne issues, the learned ITAT allowed the said appeals for statistical purposes and remanded the matters. 31. Once the issues have already been decided in favour of the assessee with clear reasoning, there was no justification for remitting the very salne issues for reconsideration in the Revenue's appeals. This approach of the learned ITAT has resulted in an inherent contradiction in the order, which resulted. in ttre assessee filing miscellaneou.s applications against the orders in the revenue appeals seeking rectification. 32. The learned ITAT by the impugned order held tl.at its earlier common order passed in four appeals, contained contradictory findings on the same issues, as it had allowed the appeals filed by tlee assessee and simultaneously remanded the Revenue's appeals on the very salne issues for further consideration, and thus, rectified the apparent error by hotding that the appeals fiIed by the

14 assessee are all0wed and the appeals of the revenue are dismissed. 33' A plain reading of the common order passed by the rearned ITAT in four appeals, preferred by both the assessee and revenue, show that two different conclusions had been record.ed on ide.tical issues and it is thus, an apparent contradiction within the same order and it does not require a fresh examination of evidence or reevaluation of the merits. 34' Further, when both parties fire appeals against the sarne order, the appeflate authority must decide the issues, either by dismissing the ap1>eals or allowing one of them or partly arowing them or remanding the matter. It is not possibre to ailow appears preferred by both parties on the same issues arising out of the sarne order. 35- In view of the above factuar matrix of the case, we are of the considered view that the rearned ITAT by the impugned order has only rectified the error apparent on the face of its earrier order by only rectifying the finar conciusion consistent rvith the reasoning, which does not amount to rec fresh view on the merits. onsidering the evidence or taking a f f'

15 o \ 36. Thus, the assertion of the learned senior standing counsel for the appellants/Revenue that the learned ITAT has re_ appreciated the matter is untenable and does not hold water, calling interference of this Court with the well-considered orders passed by the learned ITAT, and the sarne is rejected. 37. It is'also relevant to note that the impugned order is a common order passed in two miscellaneous applications MA-Nos- 125 and L26 of 2ot2 arising out of ITA Nos.3z2 and 323 of 2o1o. However, the Revenue has chosen to challenge the ord.er relating to MA.No.125 of 2oL2 in ITA.No.372 of 2o1o for the assessment year 2005-06, and the unchallenged order passed. in the other miscellaneous application relating to the subsequent assessment year has attained Iinality. Such selective challenge is impermissible, which weakens its contention that the leJned ITAT acted beyond its jurisdiction. on this ground also, the appeal filed by the Revenue is liable to be dismissed. 38. Therefore, in our considered view, the impugned ord.er passed by the learned ITAT rectifying the mistakes apparent on face of the order, is just and proper, and wefi within t]re powers of trre learned ITAT under Section 2s4t2l of .the Act. Thus, the appeal lacks merit and is liable to be dismissed. Accordingly, the \ : i

t6 substantial question of law is answered against the appellant/Revenue and. in f,avour of the respondent/assessee. 39 In view of the above findings, the appear is dismissed. No order as to costs As a sequel thereto, rniscerlaneous petitions, if any, pending shall stand closed To 1. The lncome Hyderabad. /ffRUE COPY// Tax Appellate Tribunal, H SD'- A.V.S.PRASAD EPPTY REGISTRAR SECTION OFFICER Bench 'A', 2- One CC to Sri. Raja Shekar Rao Salvaji, (Senior Standing Counsel For Income Tax [OpUC] 3- one cc to sRl. M s sr:inivasa ryengar, Advocate [opuc] 4. Two CD Copies Pr/PSL#, f (

HIGH COURT DATED: OG10312026 TTA.No.421 ot 2013 DISMISSING THE ITTA H,E STli 't E ( 3 oE AFfl 2026 i;'Tii:i:'l t ).,;. r-:: ;). ...i:',:. ii.. t) o 6 x