The Income Tax Appellate Tribunal (ITAT), Bangalore Bench while recalling the Tribunal’s order ruled that the Case of erroneous application of law will fall outside the scope of section 254(2) of the Income Tax Act.
The assessee, M/s. Tecnotree Convergence Ltd. has filed two miscellaneous applications submitting that there are mistakes apparent from records passed by the Tribunal relating to assessment years 2008-09 and 2009-10 respectively.
The mistake pointed out by the assessee is that the Tribunal has incorrectly understood the facts relating to unrealized export proceeds within the prescribed time limit and also considered the facts relating to AY 2009-10 for deciding the issue in AY 2008-09.
He also submitted that the issue is fully covered by the order passed by the Tribunal in the earlier years and also the decision rendered by Karnataka High Court, the Tribunal has held that those decisions are not applicable only for the reason of incorrect appreciation of facts/consideration of facts of the succeeding year, which were also incorrectly appreciated.
The Tribunal has considered the facts relating to AY 2009-10 for deciding the issue urged in AY 2008-09. It was also submitted that there is no observation in the orders of the tax authorities about non-realization of export proceeds altogether, as observed by the Tribunal, i.e., it is nobody’s case that the assessee did not realize export proceeds at all.
According to the assessee, observations of CIT(A) also meant that the assessee did not realize the amount mentioned above within the prescribed time.
The coram of Beena Pillai and B.R. Baskaran noticed that it is a case of incorrect understanding of facts and in the light of the decision of the Karnataka High Court in the case of Mcdowell & Co. Ltd held that the case of erroneous application of law/provisions will fall outside the scope of sec.254(2) of the Act. Hence the plea raised by the assessee in both the years would fall outside the scope of section 254(2) of the Act.
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