Facts of the Case

  • The petitioner filed an appeal before the ITAT raising multiple grounds, including:
    • Disallowance of advances written off (₹52,53,000) under Section 36(2).
    • Non-grant of additional MAT credit (₹1,36,75,898).
  • During proceedings, the petitioner withdrew the appeal as the transfer pricing dispute for AY 2011-12 was resolved via an Advance Pricing Agreement (APA).
  • However, Ground Nos. 6 and 7 remained unadjudicated, as they were not brought to the Tribunal’s notice at the time of withdrawal.
  • A Miscellaneous Application under Section 254(2) was filed seeking adjudication of these grounds, which was dismissed by the Tribunal.
  • The petitioner approached the Delhi High Court challenging this dismissal.

Issues Involved

  1. Whether the ITAT has the power under Section 254(2) to rectify its order when certain grounds remain unadjudicated due to withdrawal of appeal.
  2. Whether such non-adjudication constitutes a “mistake apparent from the record”.
  3. Whether rectification power extends to mistakes arising from counsel’s inadvertence.

Petitioner’s Arguments

  • The Tribunal failed to exercise jurisdiction vested under Section 254(2).
  • Non-adjudication of Ground Nos. 6 and 7 constitutes a mistake apparent on record.
  • Reliance was placed on judicial precedents including:
    • Lachman Dass Bhatia Hingwala (P.) Ltd. v. ACIT
    • ACIT v. Saurashtra Kutch Stock Exchange Ltd.
  • It was argued that:
    • Rectification power is broad and includes correcting errors arising from omission or oversight.
    • Even if the mistake occurred due to counsel, rectification should be permitted in the interest of justice.

Respondent’s Arguments

  • The respondent sought time initially to examine the legal position.
  • However, it was not disputed that:
    • The additional grounds were not adjudicated.
    • The Tribunal possesses rectification powers under Section 254(2).
  • No counter-affidavit was filed to oppose the petition.

Court’s Findings / Judgment

  • The power under Section 254(2) is not limited to correcting errors committed by the Tribunal itself.
  • It extends to mistakes arising due to counsel’s inadvertence.
  • Non-adjudication of issues due to withdrawal of appeal constitutes a mistake apparent on record.
  • Once such an error is brought to notice, the Tribunal is duty-bound to rectify it.

Rectification jurisdiction is rooted in ensuring justice and is not constrained by procedural technicalities.

  • The Court set aside the ITAT order dated 23.09.2020.
  • Directed the Tribunal to adjudicate Ground Nos. 6 and 7 on merits after hearing both parties.

Important Clarifications by Court

  • Rectification power includes:
    • Errors of law or fact
    • Mistakes caused by parties or counsel
  • Non-consideration of material grounds is a valid ground for rectification.
  • Withdrawal of appeal does not extinguish the right to adjudication of unresolved issues if omission is inadvertent.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:3334-DB/RAS22102021CW113302021_144557.pdf

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