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Facts
For AYs 2018-19 to 2020-21, the CPC disallowed the assessee's claims for PF and ESI contributions. The CIT(A) initially allowed these claims but later rectified its orders under Section 154, reversing the allowance to comply with the Supreme Court's decision in Checkmate Services (P.) Ltd. Vs. CIT regarding the disallowance of late deposits of employee contributions.
Held
The tribunal ruled that a subsequent Supreme Court judgment, when clear and directly on point, constitutes a "mistake apparent from the record" for rectification under Section 154, provided it is within the statutory time limits. The CIT(A)'s rectification based on the Checkmate Services judgment was upheld as valid.
Key Issues
Whether the CIT(A) can rectify its order under Section 154 to apply a subsequent Supreme Court judgment, and if such a judgment constitutes a "mistake apparent from record."
Sections Cited
143(1), 154, 250, 36(1)(va), 116, 200A, 206CB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: SHRI GEORGE MATHAN & SHRI SANJAY AWASTHI
O R D E R Per George Mathan, JM : These are the appeals filed by the assessee against the separate orders dated 18.08.2022 & 04.08.2022 of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, passed in DIN & Order No.ITBA/NFAC/S/250/2022-23/1044789194(1), ITBA/NFAC/S/250/2022- 23/1044474580(1) & ITBA/NFAC/S/250/2022-23/1044474827(1), for the assessment years 2018-2019, 201-9-2020 & 2020-2021, respectively.
Shri Ankit Jalan, ld. AR appeared on behalf of the assessee. Shri Pradip Kumar Biswas, ld. Sr. DR appeared on behalf of the revenue.
It was submitted by the ld. AR that originally for the assessment years 2018-2019, 2019-2020 & 2020-2021, the assessee had filed its return of income on 27.10.2018, 31.10.2019 & 15.02.2021, respectively. The returns filed by the assessee came to be processed and the intimation u/s.143(1) of the Act came to be issued in all the cases on 18.09.2019, 16.10.2020 & 30.12.2021, respectively. It was the submission that in the intimations u/s.143(1) of the Act, the CPC had disallowed assessee’s claim under PF & ESI paid in respect of employees’ contribution. It was the submission that the assessee had filed appeals before the ld. CIT(A), who had originally vide orders dated 18.08.2022 for A.Y.2018-2019, dated 04.08.2022 for A.Ys.2019-2020 & 2020-2021, directed the AO to allow the EPF and ESI payments made before the due date of filing of the return of income after necessary verifications. It was the submission that the AO made an application u/s.154 of the Act before the ld. CIT(A), NFAC and the ld. CIT(A), NFAC vide order dated 28.01.2025 for all the three assessment years rectified his earlier orders and following the decision of the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd. Vs. CIT, passed in Civil Appeal No.2238/2016, dated 12.10.2022, now reported in [2022] 143 taxmann.com 178/[2022] 448 ITR 518 (SC), reversed his earlier order and confirmed the additions/disallowances made in the intimation u/s.143(1) of the Act on account of late deposit of PF/ESIC contribution u/s.36(1)(va) of the Act. It was the submission that when the order of the ld. CIT(A) was originally passed, being on 18.08.2022 & 04.08.2022 for all the three assessment years under consideration, the decision of the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd. (supra) was not available. The decision in the case of Hon’ble Apex Court in the case of Checkmate Services (P.) Ltd. (supra) was dated 12.10.2022. It was the submission that as the said decision of the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd.(supra) was a subsequent decision subsequent to the order of the ld. CIT(A), suffers from any mistake apparent from the record. It was the prayer that the order of the ld. CIT(A) passed on 28.01.2025 u/s.154 r.w.s.250 of the Act for all the three years under consideration, is liable to be set side and that original order passed u/s.250 of the Act is liable to be restored.
In reply, ld. Sr. DR vehemently supported the order of the ld. CIT(A).
We have considered the rival submissions. A perusal of the facts in the present case shows that the only issue that is primarily argued is as to whether the act of ld. CIT(A) in rectifying his order u/s.154 of the Act to follow a subsequent decision of the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd., referred to supra, could be considered as a “mistake apparent from the record”. For this, it would be worthwhile to extract the provisions of Section 154 of the Act. Section 154(1) of the Act reads as follows :- Rectification of mistake. 154. (1) With a view to rectifying any mistake apparent from the record an income- tax authority referred to in section 116 may,— (a) amend any order passed by it under the provisions of this Act ; (b) amend any intimation or deemed intimation under sub- section (1) of section 143; (c) amend any intimation under sub-section (1) of section 200A; (d) amend any intimation under sub-section (1) of section 206CB.
The main words in the said section is “mistake apparent from the record”. The “mistake apparent from the record” is different from an “error apparent on the face of record”. The “mistake apparent from the face of record” must be obvious and patent. It must not be such which can be established by a long run process of interpretation. A mistake discovered in an order on the basis of a subsequent judgment of Hon’ble Supreme Court may be a mistake apparent on the record but the subsequent decision in such cases be directly on the point. Once the Hon’ble Supreme Court has laid down the law in respect of a particular provision, it is deemed that such is the interpretation in respect of such provision right from the time such provision had been introduced in the Act. A judgment of Hon’ble Apex Court is binding on all courts in the whole country under Article 141 of the Constitution of India. It must also be appreciated that there are limitations provided in the Act. If the decision of the Hon’ble Apex Court is rendered beyond the limitation provided for rectification, then obviously such rectification is not permissible. In the present case, however, the rectification has been made within the time provided and the rectification application is specifying the mistake apparent from the record on the basis of a clear precise decision of the Hon’ble Supreme Court directly on the point of the allowability of PF and ESI. Admittedly, the AO has filed a rectification application against the order of the ld.CIT(A) within the time provided. A perusal of the order of the ld.CIT(A) also shows that the ld. CIT(A) has considered the decision of the Hon’ble Gujarat High Court in the case of CIT Vs. Subodhchandra S. Patel, reported in 138 taxmann.com 185 (Guj)/[2004] 265 ITR 445(GUJ) has held that non-consideration of the judgment of the jurisdictional High Court or the Apex Court would always constitute a mistake apparent from the record, regardless of the judgment being rendered prior to or subsequent to the order proposed to be rectified. It would also be worthwhile to mention here that this view of ours find support from the decision of the Hon’ble Punjab & Haryana High Court in the case of Aruna Luthra, reported in [(2001) 252 ITR 76 (P&H) (FB)], wherein it has clearly been held that rectification u/s.154 can be carried out on the basis of the judgment of the Hon’ble Jurisdictional High Court and the Hon’ble Supreme Court rendered subsequently so as to rectify a mistake apparent from the record. As also, the decision of the Hon’ble Supreme Court in the case of Mepco Industries Ltd., reported in 319 ITR 208 (SC), wherein it has been held that a subsequent judgment of the Hon’ble Supreme Court laying down a principle of law will be applicable across the board and the rectification can be done on that basis. Here, in the present case, clearly the mistake did exist in the order of the ld. CIT(A) passed on 18.08.2022 & 04.08.2022 in the assessment years 2018-2019, 2019-2020 & 2020-2021, respectively and the ld. CIT(A) vide its order dated 28.01.2025 for all the three years, has categorically rectified the patent mistake which was obvious and whose discovery is not dependent on elaborate arguments. This being so, we are of the view that there is no error in the order of the ld. CIT(A), which calls for any interference. Consequently, the orders of the ld. CIT(A) passed u/s.154 r.w.s.250 for all the three years under consideration, stands upheld.