VAKS MULTIPLE SERVICE PRIVATE LIMITED,FARIDABAD vs. ACIT, FARIDABAD

Aggrieved by the order dated 17/03/2025 passed by the Ld. CIT(A), the Assessee preferred the present Appeal.

6. Per contra, the ld. Department's Representative submitted that the Ld. CIT(A) has rightly invoked the jurisdiction to rectify his order as the order of the Ld. CIT(A) 24/06/2022 was contrary to the Judgment ofthe Hon’ble Supreme Court of India in the case of Checkmate Services Pvt. Ltd. Vs. PCIT-1 in Civil Appeal No. 2833 of 2016 dated 12.10.2022. The Ld. Department's Representative relying on the order of the Ld. CIT(A) sought for dismissal of the Appeal.

7. We have heard both the parties and perused the material available on record. In the present case, the return of the Assessee has been processed u/s. 143(1)(a), the CPC by disallowing of Rs. 33,02,357/- on account of delay in payment of employees share of ESI and PF. Aggrieved by the same, the assessee filed an appeal before National Faceless Appeal Centre (NFAC). The CIT (NFAC) vide order dated 24/06/2022 deleted the said disallowance of Rs.33,02,357/- made u/s 36(l)(va) of the I.T. Act by relying the decision of Hon’ble Delhi tribunal in the case of Raj Kumar &Ors. However, based on the application for rectification filed by the A.O. before the Ld. CIT(A), the Ld. CIT(A) vide order impugned herein allowed the rectification application by confirming the addition/disallowance of Rs. 33,02,357/- made by the Assessing Officer on account of late deposit of PF/ESIC contributions under Section 36(1)(va) of the Income Tax Act, 1961.

8. It is evident that the Ld. CIT(A) vide its order dated 24/06/2022, deleted the disallowance of Rs.33,02,357/- made u/s 36(l)(va) of the I.T. Act by relying the decision of Hon’ble Delhi tribunal in the case of Raj Kumar &Ors. It is pertinent to note that the issue regarding allow-ability of late payment of ESI and PF has been decided in favour of the Revenue by the Hon'ble Supreme Court in the case of Checkmate Services (supra) on 12/10/2022. Thus, as on the date of deciding the issue by the Ld. CIT(A) i.e. 24/06/2022, the benefit of the above Judgment of the Hon'ble Supreme Court in the case of Checkmate Services (supra) was not available. Therefore, the issue of late payment of ESI & PF has been decided in favour of the Assessee by the Ld. CIT(A) vide its order dated 24/06/2022. Thus, the order of the Ld. CIT(A) cannot be construed as error apparent from record and the same cannot be rectified based on the subsequent Judgment rendered by the Hon'ble Supreme Court.

“11. Thus, the scope is of rectifying the mistake which is apparent from the record on the date of passing the order. On the scope of section 254(2) of the Act, it would be relevant to refer to the judgment of the Hon’ble Supreme Court in the case of CIT vs. Reliance Telecom Ltd, reported in (2022) 440 ITR 1 (SC) wherein Hon’ble Court has defined the scope of powers u/s.254(2). The Hon’ble Supreme Court held that the powers u/s.254(2) of the Act are akin to Order XLVII Rule 1 CPC and while considering the application u/s.254(2) of the Act, the Appellate Tribunal is not required to re-visit its earlier order and to go into details on merits. The powers u/s. 254(2) are that they are only to rectify or correct any mistake apparent from the record. The relevant Observation of the Court reads as under:- ―3.2 Having gone through both the orders passed by the ITAT, we are of the opinion that the order passed by the ITAT dated 18-11- 2016 recalling its earlier order dated 6-9-2013 is beyond the scope and ambit of the powers under section 254(2) of the Act. While allowing the application under section 254(2) of the Act and recalling its earlier order dated 6-9-2013, it appears that the ITAT has re-heard the entire appeal on merits as if the ITAT was deciding the appeal against the order passed by the C.I.T. In exercise of powers under section 254(2) of the Act, the Appellate Tribunal may amend any order passed by it under sub-section (1) of section 254 of the Act with a view to rectifying any mistake apparent from the record only. Therefore, the powers under section 254(2) of the Act are akin to Order XLVII Rule 1 CPC. While considering the application under section 254(2) of the Act, the Appellate Tribunal is not required to re-visit its earlier order and to go into detail on merits. The powers under section 254(2) of the Act are only to rectify/correct any mistake apparent from the record.

At this point it is relevant to quote the provisions of Order XLVII Rule 1 CPC.

(2) A party who is not appealing from a decree or order may apply for a review of judgment notwithstanding the pendency of an appeal by some other party except where the ground of such appeal is common to the applicant and the appellant, or when, being respondent, he can present to the Appellate Court the case on which he applies for the review. [Explanation. The fact that the decision on a question of law on which the judgment of the Court is based has been reversed or modified by the subsequent decision of a superior Court in any other case, shall not be a ground for the review of such judgment.]

14 The Constitution Bench of the Hon’ble Supreme Court in the case of Beghar Foundation vs. Justice K.S. Puttaswamy reported in (2021) 123 taxmann.com 344 (SC) wherein the Hon’ble Supreme Court made following observations:- ―4. The present review petitions have been filed against the final judgment and order dated 26-9-2018. We have perused the review petitions as well as the grounds in support thereof. In our opinion, no case for review of judgment and order dated 26-9-2018 is made out. We hasten to add that change in the law or subsequent decision/judgment of a coordinate or larger Bench by itself cannot be regarded as a ground for review. The review petitions are accordingly dismissed.

15 (i) Nemodebetbisvexari pro una et eademcausa (No man should be vexed twice for the same cause); (ii) Interest reipublicaeut sit finis litium (It is in the interest of the State that there should be an end to a litigation); and (iii) Res judicata pro veritateoccipitur (A judicial decision must be accepted as correct).‖ (Emphasis added)

16 (i) Nemodebetbisvexari pro una et eademcausa (No man should be vexed twice for the same cause); (ii)Interestreipublicaeut sit finis litium (It is in the interest of the State that there should be an end to a litigation); and (iii)Res judicata pro veritateoccipitur (A judicial decision must be accepted as correct). These maxims would indicate that there must be an end to litigation otherwise the rights of persons would be in an endless confusion and fluid and justice would suffer. That is why the explanation to Order XLVII Rule 1 which is a wholesome provision has been inserted to the Code of Civil Procedure. It states that once there is a subsequent judgment overruling an earlier judgment on a point of law, the earlier judgment cannot be reopened or reviewed on the basis of a subsequent judgment.‖ (Emphasis added) 19. In a latest judgment, division Bench of three judges vide judgment and order dated 17/05/2024 in the case of Govt. of NCT of Delhi vs. M/s. K.L. Rathi Steels Limited and Others in Miscellaneous Application No.414 of 2023 in Civil Appeal No.11857/2016 alongwith various other Miscellaneous Applications had elaborated this entire law and review based on subsequent judgment of the Hon’ble Supreme Court and interpreting Rule 1 of order XLVII of CPC specifically the scope of Explanation in Rule 1 as incorporated above.

(i) discovery of new and important matter or evidence; or (ii) mistake or error apparent on the face of the record; or (iii) any other sufficient reason.

40. Insofar as (i) (supra) is concerned, the review petitioner has to show that such evidence (a) was actually available on the date the court made the order/decree, (b) with reasonable care and diligence, it could not be brought by him before the court at the time of the order/decree, (c) it was relevant and material for a decision, and (d) by reason of its absence, a miscarriage of justice has been caused in the sense that had it been produced and considered by the court, the ultimate decision would have been otherwise. Regarding (ii) (supra), the review petitioner has to satisfy the court that the mistake or error committed by it is self-evident and such mistake or error can be pointed out without any long- drawn process of reasoning; and, if such mistake or error is not corrected and is permitted to stand, the same will lead to a failure of justice. There cannot be a fit-in all definition of ―mistake or error apparent on the face of the record‖ and it has been considered prudent by the courts to determine whether any mistake or error does exist considering the facts of each individual case coming before it.

42. With regard to (iii) (supra), we can do no better than refer to the traditional view in Chhajju Ram (supra), a decision of a Bench of seven Law Lords of the Judicial Committee of the Privy Council. It was held there that the words ―any other sufficient reason‖ means ―a reason sufficient on grounds at least analogous to those specified immediately previously‖, meaning thereby (i) and (ii) (supra). Notably, Chhajju Ram (supra) has been consistently followed by this Court in a number of decisions starting with Moran Mar Basselios Catholics v. Most Rev. Mar Poulose Athanasius.

43. There are recent decisions of this Court which have viewed ‗mistake‘ as an independent ground to seek a review. Whether or not such decisions express the correct view need not detain us since the review here is basically prayed in view of the subsequent event.

44. As noted above, the Explanation in Rule 1 Order XLVII was inserted in 1976. It reads: ―Explanation.— The fact that the decision on a question of law on which the judgment of the Court is based has been reversed or modified by the subsequent decision of a superior court in any other case, shall not be a ground for the review of such judgment.‖ xxxxxxxxxxxxxxxxxxxxxxxx I. PRECEDENTS CONSIDERING THE EXPLANATION 48. There are a few decisions of this Court where the Explanation to Rule 1 of Order XLVII, CPC has since been considered.

51. In Nand Kishore Ahirwar v. HaridasParsedia, a Bench of three Hon‘ble Judges, while dismissing the review petitions before it, made pertinent observations reaching out to the very core of the said Explanation. This Court observed that simply because there has been a Constitution Bench decision, passed in the aftermath of the judgment impugned, would be no ground for a review of the said judgment. It also went on to observe that a reference to a Constitution Bench would stand on a still weaker footing.

52. The question arising for decision in State of West Bengal v. Kamal Sengupta32 was whether a tribunal established under section 4 of the Administrative Tribunals Act, 1985 can review its decision on the basis of a subsequent order/decision/judgment rendered by a coordinate or larger Bench or any superior court or on the basis of subsequent event/development. It was contended on behalf of the State that any subsequent decision on an identical or similar point by a coordinate or larger Bench or even change of law cannot be made the basis for recording a finding that the order sought to be reviewed suffers from an error apparent on the face of the record. After considering a host of decisions with a finetooth comb, the Court went on to cull out the principles of review in paragraph 35 of the decision which is extracted hereunder: ―35. The principles which can be culled out from the above noted judgments are: (i) The power of the Tribunal to review its order/decision under Section 22(3)(f) of the Act is akin/analogous to the power of a civil court under Section 114 read with Order 47 Rule 1 CPC. (ii) The Tribunal can review its decision on either of the grounds enumerated in Order 47 Rule 1 and not otherwise. (iii) The expression ‗any other sufficient reason‘ appearing in Order 47 Rule 1 has to be interpreted in the light of other specified grounds. (iv) An error which is not self-evident and which can be discovered by a long process of reasoning, cannot be treated as an error apparent on the face of record justifying exercise of power under Section 22(3)(f). (v) An erroneous order/decision cannot be corrected in the guise of exercise of power of review. (vi) A decision/order cannot be reviewed under Section 22(3)(f) on the basis of subsequent decision/judgment of a coordinate or larger Bench of the tribunal or of a superior court. (vii) While considering an application for review, the tribunal must confine its adjudication with reference to material which was available at the time of initial decision. The happening of some subsequent event or development cannot be taken note of for declaring the initial order/decision as vitiated by an error apparent. (viii) Mere discovery of new or important matter or evidence is not sufficient ground for review. The party seeking review has also to show that such matter or evidence was not within its knowledge and even after the exercise of due diligence, the same could not be produced before the court/tribunal earlier.‖ (emphasis supplied). This Court, in Subramanian Swamy v. State of Tamil Nadu33, has read the Explanation as follows: ―52. *** The Explanation to Order XLVII, Rule 1 of Code of Civil Procedure 1908 provides that if the decision on a question of law on which the judgment of the court is based, is reversed or modified by the subsequent decision of a superior court in any other case, it shall not be a ground for the review of such judgment. Thus, even an erroneous decision cannot be a ground for the court to undertake review, as the first and foremost requirement of entertaining a review petition is that the order, review of which is sought, suffers from any error apparent on the face of the order and in absence of any such error, finality attached to the judgment/order cannot be disturbed.

54. The final one is a decision of the Constitution Bench in Beghar Foundation v. K.S. Puttaswamy34. The majority was of the following view: ―2. The present review petitions have been filed against the final judgment and order dated 26- 9-2018. We have perused the review petitions as well as the grounds in support thereof. In our opinion, no case for review of judgment and order dated 26-9- 2018 is made out. We hasten to add that change in the law or subsequent decision/judgment of a coordinate or larger Bench by itself cannot be regarded as a ground for review. The review petitions are accordingly dismissed. Xxxxxxxxxxxxxxxxxxxxxxxxxxx Xxxxxxxxxxxxxxxxxxxxxxxxxxxx 89. The relevant principles deducible from the precedents on the Explanation to Rule 1 that we have considered, for the purpose of deciding the present reference, are as follows: a) in case of discovery of a new or important matter or evidence, such matter or evidence has to be one which existed at the time when the decree or order under review was passed or made; and b) Order XLVII would not authorize the review of a decree or order which was right when it was made on the ground of some subsequent event. What follows is that Order XLVII of the CPC does not authorize a review of a decree, which was right, on the happening of some subsequent event. With the introduction of the Explanation, there seems to be little room for any serious debate on the point under consideration. Parliament, in its wisdom, has accepted what the Law Commission recommended. Resultantly, what the statute prohibits, cannot be permitted by the Court. If permitted, the Court would be acting contrary to law. What the Parliament has done, the Court cannot undo unless the law enacted by the Parliament is declared ultra vires. The vires of the Explanation not being under challenge during more than four decades of its existence, it is not for the Court to ignore the Explanation. Xxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxx 104. We, thus, hold that no review is available upon a change or reversal of a proposition of law by a superior court or by a larger Bench of this Court overruling its earlier exposition of law whereon the judgment/order under review was based. We also hold that notwithstanding the fact that Pune Municipal Corporation (supra) has since been wiped out of existence, the said decision being the law of the land when the Civil Appeals/Special Leave Petitions were finally decided, the subsequent overruling of such decision and even its recall, for that matter, would not afford a ground for review within the parameters of Order XLVII of the CPC. (Emphasis added) The aforesaid judgment of the Hon’ble Supreme Court had elaborately dealt the issue of power to rectify error and power to review and after referring to catena of decisions of the Hon’ble Supreme Court categorically held that, if the judgment has been passed by the Court following another judgment and subsequently by later judgment, the decision has been overruled or reversed, cannot have the effect of reopening or reviewing the former judgment based on following overruled judgment nor can the same be reviewed. The aforesaid judgment clearly clinches the issue that the subsequent judgment of the Hon’ble Supreme Court in the case of Checkmate Services P Ltd. Vs CIT reported in 143 Taxmann.com 178, the earlier judgment passed by the Tribunal based on the binding precedents cannot be recalled or reviewed. Once this is the law of the land, then we are unable to appreciate the contention of the Revenue that the judgment of the Tribunal should be recalled which has been passed following catena of judgment of the Hon’ble Jurisdictional High Court and other High Courts prevalent at that time in light of the subsequent judgment of the Hon’ble Supreme Court this would be against the principle of law laid down by the Hon’ble Supreme Court in the aforesaid cases specially once this law has been upheld by the Hon’ble Supreme Court in various judgments which we are bound to follow.

In the aforesaid case the issue was that the Tribunal has passed an order on 27/10/2000 upholding the decision of CIT that assessee was not entitled for exemption u/s.11. Thereafter, the Miscellaneous Application was filed u/s. 254(2) to rectify the error committed by the Tribunal in the decision rendered by any appeal as it has not followed the judgment of the Hon’ble Jurisdictional High Court in the case of HiralalBhagwati vs. CIT reported in [2000] 246 ITR 188; SuhridGeigy Ltd vs. Commissioner of Surtax reported in (1999) 237 ITR 834 which was already available on the date of the order. Thus, non- consideration of binding decision of the Jurisdictional High Court which was not followed by the Tribunal, rather it was not brought to the notice of the Tribunal therefore, Miscellaneous Application was filed and Tribunal had then recalled the order. Against this recalling of the order, Revenue had filed the writ petition which was dismissed by the Hon’ble High Court. Thus, before the Hon’ble Supreme Court one of the question was, whether the ITAT was right in exercising the powers under subsection (2) of Section 254 on the ground that there was a mistake apparent from record committed by the Tribunal while deciding the appeal and whether it could have recalled the earlier order of the Tribunal on that ground. Thus, the core issue was, whether non-consideration of a decision of the Jurisdictional High Court or of the Hon’ble Supreme Court which was already existing at that time when the judgment was rendered by the Tribunal can be stated to be mistake apparent from the record. The Hon’ble Supreme Court upheld that the Tribunal was right in holding that it was a mistake which can be said to be mistake apparent from the record which could be rectified u/s.254(2). There was no such principle which has been laid down that if after passing of the order of the Tribunal which has attained finality between the parties and in subsequent judgment is rendered by the superior Court, the same should also be recalled within the scope of Section 254(2). Though the Hon’ble Supreme Court had referred to a decision of Gujarat High Court in the case of SuhridGeigy Ltd vs. Commissioner of Surtax reported in (1999) 237 ITR 834 that if the point is covered by the decision of the Hon’ble Jurisdictional High Court rendered prior or even subsequent to the order of rectification, it could be a mistake apparent from the record u/s. 254(2) and could be corrected by the Tribunal. However, the Hon’ble Supreme Court has referred this judgment and only held that if a judgment is being rendered by any High Court or Supreme Court that means the law was always being the same and if a subsequent decision alters the earlier one, the later decision does not make a new law. This observation of the Court does not lead to any inference to draw that any rectification order u/s. 254(2) can be based on subsequent judgment which comes later on. On the contrary, all the aforesaid judgments of Hon’ble Supreme Court which we have quoted above extenso have clearly held that there would be no review or recall of the order based on the subsequent judgment. Finally, the Hon’ble Supreme Court in the case of Saurashtra Kutch Stock Exchange Ltd. on the fact of the case has concluded as under:- ―In the present case, according to the assessee, the Tribunal decided the 47 matter on October 27, 2000. HiralalBhagwati was MA No.167/MUM/2023 M/s. ANI Integrated Services Ltd., 26 decided a few months prior to that decision, but it was not brought to the attention of the Tribunal In our opinion, in the circumstances, the Tribunal has not committed any error of law or of jurisdiction in exercising power under sub-section (2) of section 254 of the Act and in rectifying the "mistake apparent from the record" Since no error was committed by the Tribunal in rectifying the mistake, the High Court was not wrong in confirming the said order Both the orders, therefore, in our opinion, are strictly in consonance with law and no interference is called for.‖

Mumbai Vs. ANI Integrated Services Ltd., in MA No.167/MUM/2023 we are of the opinion that as on the date of passing of the order by the Ld. CIT(A) i.e.24/06/2022, the ratio laid down by the Hon'ble Supreme Court in the case of Checkmate (supra) was not available with the Ld. CIT(A) and the decision has been taken by the Ld. CIT(A) based on the prevailing ratio laid down by the Hon'ble High Court and the Tribunal. Thus, in our considered opinion the Ld. CIT(A) committed error in passing order impugned dated 17/03/2025 by rectifying its order dated 24/06/2022. Accordingly, we set aside the order impugned dated 17/03/2025 passed by the Ld. CIT(A) .

Order pronounced in the open court on 17th September, 2024