I won my section 36(1)(va) appeal in the Tribunal before Checkmate. The department has now filed a miscellaneous application to recall the order. Can it do that?
This bench held it can. Non-consideration of a Supreme Court decision is a mistake apparent from the record within section 254(2), and because a judicial decision operates retrospectively — the judge discovers the law rather than makes it — a decision handed down after the Tribunal's order can equally found a recall. Both favourable orders were recalled for a fresh hearing.
Decided by the ITAT (B.R. Baskaran, Accountant Member and Sandeep Singh Karhail, Judicial Member (Mumbai "H" Bench)) on 2023-04-13, reported as M.A. Nos. 9 and 10/Mum./2023 in ITA Nos. 1910 and 1785/Mum./2021; Assessment Years 2019-20 and 2018-19; heard 24 March 2023. It bears on section 254(2), section 254(1), section 36(1)(va), section 2(24), section 143(1) of the Income Tax Act 1961, in Appeals and Deductions & Disallowances matters.
This is the mechanism by which a great many pre-October 2022 wins on employees' contributions are being unwound, and it matters more than the merits, because the merits are now settled against the assessee. The order rests on Saurashtra Kutch Stock Exchange, but note carefully what that case actually decided: there the jurisdictional High Court decision already existed at the date of the Tribunal's order and was simply not brought to its notice. This bench took the further step of holding that a decision delivered afterwards is also within section 254(2). That step is contested. A differently constituted Mumbai bench in DCIT v ANI Integrated Services Ltd on 29 May 2024 refused a recall on materially the same facts, relying on CIT v Reliance Telecom Ltd (SC) and on the Explanation to Order XLVII Rule 1 CPC, which says in terms that the reversal of the legal position by a later decision of a superior court is not a ground for review. B.R. Baskaran AM sat on both. If you are resisting a recall application, you are not arguing an unarguable point.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
Read aloud by your device. Press again to stop.
By two orders dated 27 April 2022 a coordinate bench had allowed the assessee's appeals for AY 2018-19 and AY 2019-20, holding that a prima facie adjustment under section 143(1) could not be made in respect of employees' contributions to provident fund and ESIC deposited after the due date under the welfare enactments but before the due date for filing the return. On 12 October 2022 the Supreme Court decided Checkmate Services Pvt. Ltd. v CIT [2022] 448 ITR 518, holding such payments not deductible under section 36(1)(va). The Revenue then applied under section 254(2) for recall of both orders for a fresh hearing on the merits. The assessee's counsel opposed the recall.
The miscellaneous applications were allowed and both orders dated 27 April 2022 were recalled for a fresh hearing of the appeals on merits, with liberty to both parties to raise any plea on merits at that hearing, and the Registry was directed to fix the appeals before the regular bench after notice.
The bench took from ACIT v Saurashtra Kutch Stock Exchange [2008] 305 ITR 227 (SC) two propositions: that non-consideration of a decision of the jurisdictional High Court or of the Supreme Court is a mistake apparent from the record capable of rectification under section 254(2), and that a judicial decision acts retrospectively, judges not making law but discovering it, so that a later decision does not create a new rule but declares the correct one, which is then applied retrospectively (paras 5, quoting paras 42 to 44 of that judgment). The bench acknowledged that in Saurashtra Kutch the High Court decision already existed and had merely not been placed before the Tribunal (para 6). It then framed and answered affirmatively the further question whether a subsequent Supreme Court decision, binding under Article 141, can found a rectification, relying additionally on the Delhi High Court in Lakshmi Sugar Mills Co. Ltd. v CIT [2012] 22 taxmann.com 300 (Del.), where the Tribunal's order had rested on a Supreme Court decision later overruled by a Larger Bench (para 7).
Accordingly, the separate orders dated 27/04/2022, passed in assessee's appeals being ITA no.1910 & 1785/ Mum./2021, are recalled for a fresh hearing of the appeals on merits.
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppThis bench held it can. Non-consideration of a Supreme Court decision is a mistake apparent from the record within section 254(2), and because a judicial decision operates retrospectively — the judge discovers the law rather than makes it — a decision handed down after the Tribunal's order can equally found a recall. Both favourable orders were recalled for a fresh hearing. This was decided by the ITAT (B.R. Baskaran, Accountant Member and Sandeep Singh Karhail, Judicial Member (Mumbai "H" Bench)) and bears on section 254(2), section 254(1), section 36(1)(va), section 2(24), section 143(1) of the Income Tax Act 1961. It is reported as M.A. Nos. 9 and 10/Mum./2023 in ITA Nos. 1910 and 1785/Mum./2021; Assessment Years 2019-20 and 2018-19; heard 24 March 2023. This is the mechanism by which a great many pre-October 2022 wins on employees' contributions are being unwound, and it matters more than the merits, because the merits are now settled against the assessee. The order rests on Saurashtra Kutch Stock Exchange, but note carefully what that case actually decided: there the jurisdictional High Court decision already existed at the date of the Tribunal's order and was simply not brought to its notice. This bench took the further step of holding that a decision delivered afterwards is also within section 254(2). That step is contested. A differently constituted Mumbai bench in DCIT v ANI Integrated Services Ltd on 29 May 2024 refused a recall on materially the same facts, relying on CIT v Reliance Telecom Ltd (SC) and on the Explanation to Order XLVII Rule 1 CPC, which says in terms that the reversal of the legal position by a later decision of a superior court is not a ground for review. B.R. Baskaran AM sat on both. If you are resisting a recall application, you are not arguing an unarguable point. If it applies to you, the first step is this: Check the six-month limit in section 254(2) first. It runs from the end of the month in which the order was passed, and a recall application filed outside it is barred whatever the merits.
By two orders dated 27 April 2022 a coordinate bench had allowed the assessee's appeals for AY 2018-19 and AY 2019-20, holding that a prima facie adjustment under section 143(1) could not be made in respect of employees' contributions to provident fund and ESIC deposited after the due date under the welfare enactments but before the due date for filing the return. On 12 October 2022 the Supreme Court decided Checkmate Services Pvt. Ltd. v CIT [2022] 448 ITR 518, holding such payments not deductible under section 36(1)(va). The Revenue then applied under section 254(2) for recall of both orders for a fresh hearing on the merits. The assessee's counsel opposed the recall. The matter was decided on 2023-04-13 by the ITAT (B.R. Baskaran, Accountant Member and Sandeep Singh Karhail, Judicial Member (Mumbai "H" Bench)). On those facts the ITAT held as follows. The miscellaneous applications were allowed and both orders dated 27 April 2022 were recalled for a fresh hearing of the appeals on merits, with liberty to both parties to raise any plea on merits at that hearing, and the Registry was directed to fix the appeals before the regular bench after notice.
The bench took from ACIT v Saurashtra Kutch Stock Exchange [2008] 305 ITR 227 (SC) two propositions: that non-consideration of a decision of the jurisdictional High Court or of the Supreme Court is a mistake apparent from the record capable of rectification under section 254(2), and that a judicial decision acts retrospectively, judges not making law but discovering it, so that a later decision does not create a new rule but declares the correct one, which is then applied retrospectively (paras 5, quoting paras 42 to 44 of that judgment). The bench acknowledged that in Saurashtra Kutch the High Court decision already existed and had merely not been placed before the Tribunal (para 6). It then framed and answered affirmatively the further question whether a subsequent Supreme Court decision, binding under Article 141, can found a rectification, relying additionally on the Delhi High Court in Lakshmi Sugar Mills Co. Ltd. v CIT [2012] 22 taxmann.com 300 (Del.), where the Tribunal's order had rested on a Supreme Court decision later overruled by a Larger Bench (para 7). In the words reproduced by the source cited on this page: "Accordingly, the separate orders dated 27/04/2022, passed in assessee's appeals being ITA no.1910 & 1785/ Mum./2021, are recalled for a fresh hearing of the appeals on merits." The decision followed or applied ACIT v Saurashtra Kutch Stock Exchange Ltd. [2008] 305 ITR 227 (SC) — followed; Lakshmi Sugar Mills Co. Ltd. v CIT [2012] 22 taxmann.com 300 (Del.) — followed; Checkmate Services Pvt. Ltd. v CIT [2022] 448 ITR 518 (SC) — the occasion for the recall.
It was decided by the ITAT on 2023-04-13 and is reported as M.A. Nos. 9 and 10/Mum./2023 in ITA Nos. 1910 and 1785/Mum./2021; Assessment Years 2019-20 and 2018-19; heard 24 March 2023. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 254(2), section 254(1), section 36(1)(va), section 2(24), section 143(1), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The miscellaneous applications were allowed and both orders dated 27 April 2022 were recalled for a fresh hearing of the appeals on merits, with liberty to both parties to raise any plea on merits at that hearing, and the Registry was directed to fix the appeals before the regular bench after notice. It arises in Appeals and Deductions & Disallowances matters, on section 254(2), section 254(1), section 36(1)(va), section 2(24), section 143(1) of the Income Tax Act 1961, and was decided by B.R. Baskaran, Accountant Member and Sandeep Singh Karhail, Judicial Member (Mumbai "H" Bench). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Ask whether the appeal had in fact attained finality — no appeal filed to the High Court, no lis pending. That is the distinction on which ANI Integrated Services turned, and it is your strongest ground. Put the Explanation to Order XLVII Rule 1 CPC and CIT v Reliance Telecom Ltd (2022) 440 ITR 1 (SC) before the bench, together with the Constitution Bench in Beghar Foundation, and meet Saurashtra Kutch head on by pointing out that the decision there pre-dated the Tribunal's order. If the recall is allowed, do not treat the appeal as lost: the recall is only for a fresh hearing on merits and both parties are at liberty to raise any plea, so preserve grace-period, holiday and limitation arguments for that hearing. Record on the file whether your matter is at the CPC intimation stage or a scrutiny assessment — the recalled Kalpesh orders were about the scope of section 143(1)(a), and that scope point is separate from the merits.
Validity check could not be completed. Validity check could not be completed, and the position is contested inside the same Tribunal. On 29 May 2024 a Mumbai bench in DCIT v ANI Integrated Services Ltd (M.A. No.167/Mum/2023) refused a recall on materially the same facts, holding that a subsequent decision of a superior court cannot found a recall once the order has attained finality, relying on the Explanation to Order XLVII Rule 1 CPC, on CIT v Reliance Telecom Ltd (2022) 440 ITR 1 (SC) and on the Constitution Bench in Beghar Foundation. B.R. Baskaran, Accountant Member, sat on both benches. The label "high courts differ" is not available for a conflict inside one Tribunal. I did not find any High Court decision resolving the conflict, and did not search exhaustively for one. The recalled appeals were re-heard and dismissed on 20 June 2023. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The Tribunal's own order names the applicant in the cause title as "Income Tax Officer Ward-14(2)(1), Mumbai" as the original respondent, while the indiankanoon title renders it as DCIT CPC, Bangalore. The order records the appearance for the Revenue as "Ms. Manoj Kumar Sinha", evidently a slip in the honorific. I read the whole order verbatim including the disposal. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The miscellaneous applications were allowed and both orders dated 27 April 2022 were recalled for a fresh hearing of the appeals on merits, with liberty to both parties to raise any plea on merits at that hearing, and the Registry was directed to fix the appeals before the regular bench after notice.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
My return was only processed under 143(1). Does that stop the department reopening it later?
You deposited employees' PF late but before filing the return. Is the deduction saved?
The Tribunal recalled its whole order on my miscellaneous application. Will that recall survive?
My refund is being held back because scrutiny is pending. Can the officer simply sit on it?