The Bench decided against me without dealing with the binding High Court decision I had cited. Is that a mistake apparent under section 254(2)?
The Mumbai Tribunal held that it is. Non-consideration of a decision of the jurisdictional High Court constitutes a mistake apparent on the record warranting rectification under s.254(2). On the same application it also corrected a factual error, where its order had recorded a ground as not pressed although it had been given up only for a different assessment year.
Decided by the ITAT (Mahavir Singh, Vice President and M. Balaganesh, Accountant Member ('J' Bench, Mumbai)) on 2022-04-22, reported as M.A. No. 50/Mum/2021 arising out of ITA No. 1449/Mum/2016, assessment year 2011-12 (ITAT Mumbai). It bears on section 254(2), section 254(1), section 37(1), section 199 of the Income Tax Act 1961, in Appeals and Deductions & Disallowances matters.
This is the line that keeps s.254(2) alive against the objection that recall is a prohibited review. It is not a licence to reargue: what makes the order rectifiable is that a binding precedent, or a fact on the record, was not dealt with at all. The two heads of relief here are the two that actually work in practice — a jurisdictional High Court decision cited but not considered, and a recorded 'not pressed' that the record does not bear out. Both were granted without the Tribunal rehearing the appeal on merits.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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By order dated 19 June 2020 in ITA No. 1449/Mum/2016 for assessment year 2011-12 the Tribunal had dealt at paragraph 22 with a disallowance of expenditure of Rs 27,68,37,585 by placing reliance on its own decision for assessment year 2013-14 and directing the Assessing Officer to replace the figures accordingly. The assessee applied under s.254(2) contending that the 2013-14 decision could be relevant only to Rs 21,98,97,327 of that sum, and that the balance of Rs 5,69,40,258, which was purely of a revenue nature, had not been adjudicated at all. It further contended, on the issue of short credit for tax deducted at source dealt with at paragraphs 19 to 22 of the miscellaneous application, that the ground had never been stated to be not pressed for assessment year 2011-12 and had been given up only for assessment year 2013-14. The details of the expenditure were already on record at pages 164 and 168 to 176 of the paper book, and the genuineness of the expenditure and its incurrence wholly and exclusively for the purposes of the business had not been doubted by the Revenue.
The miscellaneous application was partly allowed (para 8). Non-consideration of a decision of the jurisdictional High Court constitutes a mistake apparent on the record warranting rectification under s.254(2), and the expenditure of Rs 5,69,40,258 was accordingly allowed as revenue expenditure (para 4.2), with a direction that the miscellaneous application order be read together with the Tribunal order dated 19 June 2020 when giving effect (para 4.3). On short credit for tax deducted at source, recording in the order that the issue was not pressed, when it had been not pressed only for assessment year 2013-14 and not for 2011-12, was a factual error committed by the Tribunal warranting rectification under s.254(2), and the Assessing Officer was directed to grant credit for tax deducted at source in accordance with law (para 7).
On the expenditure the Tribunal found that its earlier order had merely relied on the 2013-14 decision and directed a replacement of figures, so a part of the claim had never been adjudicated; the details were already on the record, the genuineness and business purpose of the expenditure were undisputed, and the assessee had relied on the jurisdictional High Court in Raychem RPG (346 ITR 138), the Delhi High Court in Asahi India Safety Glass Ltd. (203 Taxman 277) and the Supreme Court in Empire Jute Co. Ltd. (124 ITR 1) (paras 4 and 4.1). It then held in terms that non-consideration of a decision of the jurisdictional High Court is a mistake apparent on the record within s.254(2), and that the tabulation of the amounts was self-explanatory (para 4.2). On the tax deducted at source ground it accepted the factual position that the concession related to a different assessment year and treated the contrary recital as a factual error of its own (para 7).
We hold that non-consideration of a decision of Hon'ble Jurisdictional High Court would constitute mistake apparent on record warranting rectification u/s.254(2) of the Act.
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Handle my notice → Ask a CA on WhatsAppThe Mumbai Tribunal held that it is. Non-consideration of a decision of the jurisdictional High Court constitutes a mistake apparent on the record warranting rectification under s.254(2). On the same application it also corrected a factual error, where its order had recorded a ground as not pressed although it had been given up only for a different assessment year. This was decided by the ITAT (Mahavir Singh, Vice President and M. Balaganesh, Accountant Member ('J' Bench, Mumbai)) and bears on section 254(2), section 254(1), section 37(1), section 199 of the Income Tax Act 1961. It is reported as M.A. No. 50/Mum/2021 arising out of ITA No. 1449/Mum/2016, assessment year 2011-12 (ITAT Mumbai). This is the line that keeps s.254(2) alive against the objection that recall is a prohibited review. It is not a licence to reargue: what makes the order rectifiable is that a binding precedent, or a fact on the record, was not dealt with at all. The two heads of relief here are the two that actually work in practice — a jurisdictional High Court decision cited but not considered, and a recorded 'not pressed' that the record does not bear out. Both were granted without the Tribunal rehearing the appeal on merits. If it applies to you, the first step is this: In the miscellaneous application, identify the jurisdictional High Court decision by citation, show from the record that it was cited to the Bench, and show that the order does not deal with it — do not argue that the Bench got it wrong.
By order dated 19 June 2020 in ITA No. 1449/Mum/2016 for assessment year 2011-12 the Tribunal had dealt at paragraph 22 with a disallowance of expenditure of Rs 27,68,37,585 by placing reliance on its own decision for assessment year 2013-14 and directing the Assessing Officer to replace the figures accordingly. The assessee applied under s.254(2) contending that the 2013-14 decision could be relevant only to Rs 21,98,97,327 of that sum, and that the balance of Rs 5,69,40,258, which was purely of a revenue nature, had not been adjudicated at all. It further contended, on the issue of short credit for tax deducted at source dealt with at paragraphs 19 to 22 of the miscellaneous application, that the ground had never been stated to be not pressed for assessment year 2011-12 and had been given up only for assessment year 2013-14. The details of the expenditure were already on record at pages 164 and 168 to 176 of the paper book, and the genuineness of the expenditure and its incurrence wholly and exclusively for the purposes of the business had not been doubted by the Revenue. The matter was decided on 2022-04-22 by the ITAT (Mahavir Singh, Vice President and M. Balaganesh, Accountant Member ('J' Bench, Mumbai)). On those facts the ITAT held as follows. The miscellaneous application was partly allowed (para 8). Non-consideration of a decision of the jurisdictional High Court constitutes a mistake apparent on the record warranting rectification under s.254(2), and the expenditure of Rs 5,69,40,258 was accordingly allowed as revenue expenditure (para 4.2), with a direction that the miscellaneous application order be read together with the Tribunal order dated 19 June 2020 when giving effect (para 4.3). On short credit for tax deducted at source, recording in the order that the issue was not pressed, when it had been not pressed only for assessment year 2013-14 and not for 2011-12, was a factual error committed by the Tribunal warranting rectification under s.254(2), and the Assessing Officer was directed to grant credit for tax deducted at source in accordance with law (para 7).
On the expenditure the Tribunal found that its earlier order had merely relied on the 2013-14 decision and directed a replacement of figures, so a part of the claim had never been adjudicated; the details were already on the record, the genuineness and business purpose of the expenditure were undisputed, and the assessee had relied on the jurisdictional High Court in Raychem RPG (346 ITR 138), the Delhi High Court in Asahi India Safety Glass Ltd. (203 Taxman 277) and the Supreme Court in Empire Jute Co. Ltd. (124 ITR 1) (paras 4 and 4.1). It then held in terms that non-consideration of a decision of the jurisdictional High Court is a mistake apparent on the record within s.254(2), and that the tabulation of the amounts was self-explanatory (para 4.2). On the tax deducted at source ground it accepted the factual position that the concession related to a different assessment year and treated the contrary recital as a factual error of its own (para 7). In the words reproduced by the source cited on this page: "We hold that non-consideration of a decision of Hon'ble Jurisdictional High Court would constitute mistake apparent on record warranting rectification u/s.254(2) of the Act." The decision followed or applied Raychem RPG (346 ITR 138) (Bombay) — relied upon; Asahi India Safety Glass Ltd. (203 Taxman 277) (Delhi) — relied upon; Empire Jute Co. Ltd. (124 ITR 1) (SC) — relied upon.
It was decided by the ITAT on 2022-04-22 and is reported as M.A. No. 50/Mum/2021 arising out of ITA No. 1449/Mum/2016, assessment year 2011-12 (ITAT Mumbai). 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 37(1), section 199, 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 taxpayer. The miscellaneous application was partly allowed (para 8). Non-consideration of a decision of the jurisdictional High Court constitutes a mistake apparent on the record warranting rectification under s.254(2), and the expenditure of Rs 5,69,40,258 was accordingly allowed as revenue expenditure (para 4.2), with a direction that the miscellaneous application order be read together with the Tribunal order dated 19 June 2020 when giving effect (para 4.3). On short credit for tax deducted at source, recording in the order that the issue was not pressed, when it had been not pressed only for assessment year 2013-14 and not for 2011-12, was a factual error committed by the Tribunal warranting rectification under s.254(2), and the Assessing Officer was directed to grant credit for tax deducted at source in accordance with law (para 7). It arises in Appeals and Deductions & Disallowances matters, on section 254(2), section 254(1), section 37(1), section 199 of the Income Tax Act 1961, and was decided by Mahavir Singh, Vice President and M. Balaganesh, Accountant Member ('J' Bench, Mumbai). 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. Where an order records that a ground was not pressed, check the year: a concession for one assessment year does not carry to another, and a wrongly recorded concession is a factual error rectifiable under s.254(2). Ask for the relief the Tribunal gave here — a direction that the rectification order be read together with the original order when the Assessing Officer gives effect — rather than a wholesale recall, which invites the review objection. File within six months from the end of the month in which the order was passed; there is no power to condone delay in a s.254(2) application.
Searched for later treatment; none was found. That is not the same as a source affirming it. The citator returns nothing, and a search on the miscellaneous-application and appeal numbers returns only the order itself. No later Bench has cited it and no Bombay High Court proceeding arising from it was traced. The proposition that failure to consider a binding decision of the jurisdictional High Court is a mistake apparent from the record within section 254(2) is well established elsewhere, but this particular order has no citator footprint at all. 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 paragraph inventory was established by transcription: paragraphs 1 to 8 with sub-paragraphs 4.1 to 4.3 and 6.1 to 6.4, ending at para 8 with the application partly allowed. Paragraph 4 contains a table of expenditure that did not come through in the text available, so the individual items making up Rs 5,69,40,258 cannot be listed. The source renders the apostrophe in 'Hon'ble' as a typographic glyph, which differs between retrieval routes; the quote is reproduced with a plain apostrophe and is otherwise word for word on both routes. The date of hearing (16 July 2021) and the date of pronouncement (22 April 2022) are more than nine months apart on the face of the order. 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 application was partly allowed (para 8). Non-consideration of a decision of the jurisdictional High Court constitutes a mistake apparent on the record warranting rectification under s.254(2), and the expenditure of Rs 5,69,40,258 was accordingly allowed as revenue expenditure (para 4.2), with a direction that the miscellaneous application order be read together with the Tribunal order dated 19 June 2020 when giving effect (para 4.3). On short credit for tax deducted at source, recording in the order that the issue was not pressed, when it had been not pressed only for assessment year 2013-14 and not for 2011-12, was a factual error committed by the Tribunal warranting rectification under s.254(2), and the Assessing Officer was directed to grant credit for tax deducted at source in accordance with law (para 7).
TaxSphere, “Mahindra & Mahindra Limited v ACIT”, https://taxnotice.vittsphere.com/caselaw/case/mahindra-and-mahindra-254-2-non-consideration-of-jurisdictional-high-court/ (validity last checked 2026-09-08)
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