Dy. CIT v. ANI Integrated Services Ltd.

Case snapshot

Sections / provisions: 254(2); 36(1)(va); 43B

Questions before the Court / Tribunal

• Rectification based on subsequent Checkmate Services judgment: The reported Tribunal order dismisses Revenue's section 254(2) application seeking to revisit an earlier PF/ESIC contribution decision on the basis of the later Supreme Court judgment in Checkmate Services, treating the concluded order as outside the narrow rectification power.

Material facts and background

The brief facts are that assessee has filed its return of

income for A.Y.2019-20 u/s. 139(1) on 02/10/2019. The CPC while

Rs.1,74,09,948/- on account of delay in deposits of employee’s contribution towards provident fund and ESIC, beyond the due date of the respective Acts. Against the disallowance made by the CPC u/s. 143(1), assessee had preferred appeal before the ld. CIT(A) on the following ground:"The appellant had received employees' contribution to Provident Fund (PF and ESI) and from the total contribution received a part of funds i.e. Rs. 1,74,09,948/-was deposited

M A No .1 6 7/ M UM / 2 0 2 3 M/ s . A N I In te g r ate d Se rv ice s L td .,

by the appellant after the due date of the respective act but before the due date of filling of return as per section 139(1) of the Income Tax Act, 1961. The appellant did not fail to pay the employees PF and ESI so deducted by it. It was a mere delay of depositing the PF and ESI payments. The CPC also failed to appreciate the fact of the judgments passed by the various appellate authorities viz. High Courts and Supreme Court in favour of the appellants allowing such payments even if paid after the due date of respective acts but before the due date of filing income tax return as specified under section 139(1) of the Income Tax Act 1961. We therefore, request your good self to allow these employee contributions of PF and ESIC paid by the appellant.‖ 5.1

Before the ld. CIT (A) following facts were brought on

record:―In the case of ANI Integrated Services, Ltd., the employees of the Company are located at various sites across India & the World. Hence, for salary processing an extensive procedure is followed by the Company for proper disbursement of the Salary. There is a 3 step process followed by the Company whereby after receiving the Salary Working from the site along with the documentary evidence (after the month end), the HR department verifies the working after which it is forwarded to the Finance Department for their verification as well. This process is time consuming because of decentralised data collection which causes in a delay in payment of not only the Employees Contribution towards PF/ESIC but also the salary and hence the salary processing gets completed after the due date mentioned in the respective Act. Sometimes, additional time is required due to Bank/National Holidays. It is to be noted that, as per the working submitted to the A.O though the payment is made after the due date, the delay in most cases is not greater than a few days. Further, the employee's contribution in most of these cases are deposited well before the due date of filing of return under the...

Appellant / assessee submissions

The judgment copy does not separately set out this component in a distinct section; refer to the full order and the reasoning section below.

Revenue / respondent submissions

The judgment copy does not separately set out this component in a distinct section; refer to the full order and the reasoning section below.

Court / Tribunal analysis and reasoning

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 18-112016 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...

53. 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...

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. 20.

Commissioner of Surtax reported in (1999) 237 ITR 834 which was already available on the date of the order. Thus, nonconsideration 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...

Operative decision and relief

Jurisdictional High Court is not brought to the notice or attention of the Tribunal, then the Tribunal can recall the order while exercising the powers u/s.254(2). 22.

of CIT vs. Reliance Telecom Ltd. (supra) the Hon’ble Supreme Court have clearly held that the powers u/s. 254(2) of the Income Tax are akin to Order XLVII Rule 1 CPC, then it cannot be held that scope of power u/s.254(2) is beyond and much larger than scope of review as given in the Order XLVII Rule 1 of CPC. In fact, the scope of Section 254(2) is much limited and the scope of review is much wider. Accordingly, in view of the law laid down by the Hon’ble Constitutional Bench of the Hon’ble Supreme Court and several other judgments of Hon’ble Supreme Court cited supra, we hold that order of the Tribunal cannot be recalled based on the subsequent judgment of the Hon’ble Supreme Court when the order of the Tribunal had attained finality between the parties. Consequently, the Miscellaneous Application filed by the department is dismissed.

23. In the result, Miscellaneous Application of the Revenue is dismissed. Order pronounced on

Sd/Sd/(BR BASKARAN) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 29/05/2024 KARUNA, sr.ps Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER, (Asstt. Registrar) ITAT, Mumbai

Authorities and precedents appearing in the judgment

• CIT v. Ghatge Patil Transport Ltd
• Mumbai v. Hindustan Organics Chemicals Ltd
• Commissioner of Income Tax v. Hindustan Organics
• In the case of Pr. Commissioner of Income Tax -2 v. Pranav
• CIT vs. Reliance Telecom Ltd
• Beghar Foundation vs. Justice K.S. Puttaswamy
• Court again in the case of CIT vs. Gracemac Corporation
• ASG that in CIT (International Taxation) v. Microsoft
• Excise (J And K) vs. Saraswati Agro Chemicals Pvt. Ltd in
• NCT of Delhi vs. M/s. K.L. Rathi Steels Limited and Others
• Moran Mar Basselios Catholics v. Most Rev. Mar
• The earliest decision is Shanti Devi v. State of Haryana29

This list is machine-assisted from the judgment text and is not a substitute for checking the full citation chain in the PDF.

Ratio and legal principle

The decision turns on Rectification based on subsequent Checkmate Services judgment. The operative result is classified as Operative order controls. Read the rule only with the statutory version, factual findings and precedent chain recorded in the full judgment.

Why this judgment matters

The case is relevant to taxpayers, advisers and litigators dealing with Rectification based on subsequent Checkmate Services judgment. Its practical value lies in the interaction between the statutory text, the evidentiary record and the procedural route followed in this case.

Practitioner action points

• Maintain a date-and-payment matrix for transfer, agreement, possession, investment and construction; capital-gains exemptions commonly turn on this chronology.
• For litigation, attach the full judgment/order to the working paper and cite the paragraph/page supporting the proposition rather than relying on a headnote alone.

Full judgment and source trail

Read / download the clean local judgment copy

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