Bhavani Gems , vs Assessee

सव ी डी. म मोहन, उपा य एवं राजे , लेखा सद य Before S/Sh. D. Manmohan, Vice-President & Rajendra,Accountant Member MA No.455/Mum/2013 (Arising out of ITA No.6459/Mum/2011)-Assessment Year 2008-09 M/s Bhavani Gems, DCIT 16(3), 101, Prasad Chambers, Vs Mumbai.

M.P. Marg, Opera House, Mumbai-400004 PAN:AAAFB2302G (अपीलाथ / Appellant) ( यथ / Respondent) नधा रती ओर से / Assessee by : Shri Reepal G. Traishawala राज व क ओर से/ Revenue by : Shri Vivek A. Parampurna सुनवाई क तार ख/ Date of Hearing : 13-03-2015 घोषणा क तार ख / Date of Pronouncement : 13-05-2015 आदे श Per Rajendra,AM ले खा सद य राजे के अनु सार:

Vide its application dated the assessee has stated that there were mistake apparent from the record in the order passed by the Tribunal on 22.11.2013,that same were to be rectified as per the provisions of section 254 of the Act.It was further stated that the assessee had filed appeal against the order of the First Appellate Authority(FAA),that the only issue raised in the appeal was whether the activity of processing rough diamonds into cut and polished diamonds was manufacturing activity and thereby allowing additional depreciation claimed u/s.32 of the Act, that the Authorised Representative(AR) of the assessee while arguing the case before the Tribunal relied upon the matter of Sheetal Diamonds Ltd.,that he had distinguished the decision of Supreme Court delivered in case Gems India Manufacturing Company(249 ITR 307),that the AR had also relied upon the order of Parnes Diamond Export P. Ltd. of the Tribunal,that the Tribunal preferred to follow the decision of Supreme Court of Gems India Manufacturing Co.(Supra)and dismissed the appeal of the assessee,that the three Member Bench of the Hon'ble Supreme Court in later decision in Heaven Diamonds Private Limited v. CIT, Civil Appeal No.9936 of 2011 in its order dated 18/11/2011 has set aside the earlier order in the case of Gems India Manufacturing Co.,that the decision of Gems India Manufacturing Co.was not a good law,that the decision of the Hon'ble Supreme Court in Heaven Diamonds P. Ltd.(supra)would have retrospective effect,that order passed by the Tribunal should be recalled by amending the order of the Tribunal.The assessee relied upon the case of Saurashtra Kutch Stock Exchange Ltd.(305 ITR 227) and Padam Prakash-HUF(131 ITD 121).

2.During the course of hearing before us,the AR reiterated the submissions that are part of the application filed by the assessee.He contended that in the case of Gems India procedure was not available with the Hon'ble Court,that if the Tribunal would dismiss the MA no useful purpose would be served,that the Hon'ble High Court would remit back the matter to the file of the AO. Departmental Representative(DR)stated that the assessee wanted review of the order of the Tribunal and it was not permissible as per the provisions of the section 254(2)of the Act.

3.We have heard the rival submissions and perused the material before us.We find that in the case under consideration the assessee-firm had claimed additional depreciation for new plant and machinery,that the AO had rejected the claim of the assessee holding that the assessee was not 2 MA/455//Mum/2013-BG,ITA/6459/M/11

manufacturing an article or thing,that while deciding the appeal the FAA confirmed the order of the AO following the decision of Gem India Manufacturing Co.(supra),that while deciding the appeal the Tribunal considered the all the arguments raised before it,that it had deliberated upon the case relied upon by the assessee,that matter of London Star Diamond Co.(213ITR517)was referred to by the Tribunal while discussing the issue,that facts and the decision of Gem India Manufacturing Co.(supra) were deliberated upon extensively by the Tribunal,that the Tribunal had distinguished the case of Arihant Tiles and Marble Pvt.Ltd.(320ITR 79),that finally it was held that the assessee was not entitled to claim depreciation @35%.

Before proceeding further,we would like to discuss the scope and limitation of the section 254(2) of the Act.The provisions of said section have been incorporated in the statute for rectifying the mistakes that are apparent from the record.We are of the opinion,while filing an application for rectifying the mistakes in the order of the Tribunal,it is not permissible for an assessee/AO to contend that the appellate order was vitiated on the ground that the Tribunal failed to discuss all the contentions raised by counsel before it and to give reasons for coming to the conclusion which it did. If the AO/assessee finds an order defective on this ground, the remedy lay elsewhere.It is one of the accepted principles of the taxation jurisprudence that the scope of section 254(2) of the Act is very limited and specific.If a mistake is so glaring that on the face of it same has to be amended,then only the provisions of section 254(2)can be invoked.It is said that the section is limited to mistake apparent from record like arithmetical errors,typographical mistakes,non- adjudication of ground of appeal etc.Hon'ble Delhi High Court has,in the matter of Geofin Investment (P.)Ltd.,described the concept of mistake apparent from record as under:

"The power is circumscribed and limited. There should be a mistake which is apparent before the power can be exercised. This is a mandatory pre-condition. The Tribunal in its order referred to the controversy in question relating to the disallowance made on account of short-term capital loss and long-term capital loss. The entire issue was examined on the merits including the judgments relied upon by the assessee. After examining the matter in detail, it allowed the appeal filed by the Revenue.'(348ITR118).

In the case of Bhagwati Developers (P.) Ltd.(261 ITR 658),Hon'ble Calcutta High Court has held as under :

"Under section 254(2), the Appellate Tribunal is clothed with the power to amend with a view to rectify any mistake apparent from the record either on its own motion or on an application by the assessee or the Assessing Officer concerned. The law by now is well-settled. Section 254(2) does not confer a power on the Tribunal to review its earlier order. A mistake apparent from the record must be an obvious and patent mistake and not something which could be established by a long drawn process of reasoning on points on which there may be conceivably two opinions."

We find that the case of the assessee does not fall within the parameters decided in the above referred two cases.

The assessee had claimed that it had submitted the procedure of the manufacturing of diamond before the lower authorities to compare the its case with the matter of Heaven Diamonds Private Limited.We are not aware as to when and before which authority such submissions were made.If submissions made by it were not considered by them,it was clearly a mistake that could have been rectified as per the provision of Section 154 of the Act.The assessee has not brought to our notice the application filed by it before the AO/FAA wherein it had provided the procedure of diamond cutting.Therefore to say that procedure of diamond cutting was available with the lower authorities is not bearing out of the facts before us.It is said that the Income-tax Appellate Tribunal is a creature of the statute and it is not been vested with the review jurisdiction by the statute creating it.The Tribunal does not have any power to review its own judgments or orders. What assessee desires, in the case under consideration, is review of the order passed on in the grab of rectification application filed by it.It is not possible under the provisions of Sec. 254 (2) of the Act.As per the Hon'ble jurisdictional High Court, the power of rectification available to the Tribunal cannot be exercised on failure of the Tribunal to consider an argument advanced by 3 MA/455//Mum/2013-BG,ITA/6459/M/11

either party for arriving at a conclusion because it is an error of judgment and not an error apparent on the record.(203ITR497and323 ITR 577).Here,we would like to reproduce the relevant part of the judgment of Ramesh Electricals(203ITR497)and same reads as under:

"Under section 254(2) of the Income-tax Act, 1961, the Appellate Tribunal may, "with a view to rectifying any mistake apparent from the record", amend any order passed by it under sub-section (1) within the time prescribed therein. It is an accepted position that the Appellate Tribunal does not have any power to review its own orders under the provisions of the Act. The only power which the Tribunal possesses is to rectify any mistake in its own order which is apparent from the record.

This is merely a power of amending its order. The power of rectification under section 254(2) can be exercised only when the mistake which is sought to be rectified is an obvious and patent mistake which is apparent from the record, and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinions. Failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment. The Tribunal cannot, in the exercise of its power of rectification, look into some other circumstances which would support or not support its conclusion." The remedy available to the assessee was to approach the Hon'ble jurisdictional High Court.What would be decision of the Hon'ble Court is not known to us.So,we do not want to comment upon the argument that the Hon'ble High Court would remit back the matter to the AO,if the MA filed by the assessee is not allowed.We are of the opinion that there is no mistake in the order dated 22.11.2013 of the Tribunal that could be rectified as per the provisions of section 254(2).There is no arithmetical or typographical mistake in the order.Even if we accept the argument of the assessee-firm that there is a mistake in the order the mistake is of that nature which could be established only by arguments and a long drawn process of reasoning.In those circumstances it will be out of the preview of the provisions of section 254(2).Lastly,if the assessee is of the opinion that there was error of judgment,the remedy is not filing an application u/s.254(2)of the Act in light of the decision of Ramesh Electircals(supra).In short,there is no mistake in the order passed by the Tribunal that could be rectified by us.

As a result, Miscellaneous Application filed by the assessee stands dismissed. प रणामतः नधा रती वारा दा खल कया गया व वध आवदे न प अ वीकृत कया जाता है .

Order pronounced in the open court on 13th,May,2015. आदे श क घोषणा खल ु े यायालय म दनांक 13 May ,2015 को क गई । th

Sd/- Sd- (डी. म मोहन /D.Manmohan) (राजे /Rajendra) उपा य /VICE-PRESIDENT लेखा सद य /ACCOUNTANT MEMBER मब ंु ई/Mumbai, दनांक/Date: 13.05.2015. SK आदे श क त ल प अ े षत/Copy of the Order forwarded to : 1. Assessee /अपीलाथ 2. Respondent / यथ

3. The concerned CIT(A)/संब ध अपील य आयकर आयु त,4.The concerned CIT /संब ध आयकर आयु त

5. DR "B" Bench, ITAT, Mumbai / वभागीय त न ध बी खंडपीठ,आ.अ. याया.मब ुं ई

6. Guard File/गाड फाईल स या पत त //True Copy// 4 MA/455//Mum/2013-BG,ITA/6459/M/11

आदे शानस ु ार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपील य अ धकरण, मब ुं ई /ITAT, Mumbai.