In a significant ruling the Delhi High Court observed that the Income Tax Appellate Tribunal ( ITAT )has power to recall its order under Section 254 of the Income Tax Act, 1961 to correct manifest error apparent on record.
The Commissioner of Income Tax raised two issues for consideration on whether on the facts and circumstances of the case and in law, the Income Tax Appellate Tribunal [ “ITAT” ] has not erred in reviewing its decision, while deciding Miscellaneous Applications filed under Section 254(2) of the Income Tax Act and whether the ITAT has review power under Section 254(2) of the Income Tax Act in view of decision of the Supreme Court in the case of CIT vs Reliance Telecom Ltd.
The impugned order has been passed by the ITAT on a Miscellaneous Application moved by the respondent-assessee subsequent to the appeal itself having been disposed of on 29 September 2020.
A Division Bench of Justices Yashwant Varma and Purushaindra Kumar Kaurav observed that “As would be ex facie evident from a reading of the original order, the ITAT had clearly rendered incompatible and inconsistent findings. In fact we are constrained to observe that paras 12 and 21 were clearly contradictory. It was thus not only imperative but also expedient in the interest of justice for the ITAT to recall its order of 29 September 2020 and correct a manifest error apparent on the record. If that route had not been adopted, it would have left the Transfer Pricing Officer [ “TPO” ] as well as the Assessing Officer with an unresolvable quandary.”
“The ITAT has presently kept the issue of comparability vis-a-vis PSL open for its own consideration, and insofar as Sasken ( ruling ) is concerned the matter has been remitted to the file of the TPO. In that view of the matter no prejudice as such stands caused to the appellant” the Tribunal noted” the Court noted.
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