Section 254(2) Applies Only Rectification Of Mistake, Can't Be Utilised For Recall And Review Order: ITAT

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has held that the provision of Section 254(2) of the Income Tax Act is intended to only rectify the mistake apparent from the records, and the power of Section 254(2) of the Income Tax Act cannot be utilized to recall and review the order on its merit.

The bench of Raghunath Kamble (Judicial Member) and Narendra Prasad Sinha (Accountant Member) has observed that the order passed by the ITAT recalling its earlier order, which was passed in exercise of powers under Section 254(2) of the Act, is beyond the scope and ambit of the powers of the Appellate Tribunal conferred under Section 254(2) of the Income Tax Act.

The assessee filed the application to modify the order passed by the tribunal. The assessee explained that there was a mistake in the order.

In view of the above mistakes, the assessee prayed that the order passed by the Tribunal may be recalled and another opportunity be granted to the assessee to present its case before the Tribunal after re-fixing the appeal.

The department contended that there was no mistake apparent from the record in the order of the ITAT and that the miscellaneous application was misdirected. The AO had elaborately discussed in the assessment order that the share as dealt in by the assessee was penny stock and that CBDT Circular No. 5/2024 was squarely applicable to the facts. Therefore, the ITAT had rightly rejected the objection of the assessee on the issue of the low tax effect. The department submitted that there was no mistake in the order of the tribunal.

The tribunal, while dismissing the application, noted that the finding as given by the tribunal was not only on the basis of the portion of the order to which the assessee has raised objection. The finding as recorded by the Tribunal is not disputed as incorrect, and no mistake in the findings has been pointed out. By raising an objection in respect of this finding, the assessee has precisely requested to recall the order and to allow another opportunity to be heard.

The tribunal held that the ITAT is not required to revisit its order and dwell on its merits, as power under Section 254(2A) is limited to correcting or rectifying mistakes apparent on record.

Counsel For Appellant: Sunil Talati

Counsel For Respondent: Ramesh Kumar

Case Title: ITO Versus Neetaben Snehalkumar Patel

Case No.: Miscellaneous Application No. 105/Ahd/2024

Click Here To Read The Order