Section 254(2) of Income Tax cannot be used for Recall and Review Order by Tribunal: ITAT [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) has held that the provision of Section 254(2) of the Income Tax Act, 1961 cannot be used for a recall and review order by the tribunal. It was viewed that the above-said provision intended to only rectify the mistake apparent from the records.

Neetaben Snehalkumar Patel, the assessee applied to modify the order passed by the tribunal. The assessee explained that there was a mistake in the order. The assessee prayed that the order passed by the Tribunal may be recalled and another opportunity be granted to the assessee to present its case before the Tribunal after re-fixing the appeal.

The department contended that there was no mistake apparent from the record in the order of the ITAT and that the miscellaneous application was misdirected. The AO had elaborately discussed in the assessment order that the share dealt in by the assessee was penny stock and that CBDT Circular No. 5/2024 was squarely applicable to the facts. Therefore, the ITAT had rightly rejected the assessee’s objection to the low tax effect. The department submitted that there was no mistake in the tribunal’s order.

The two-member bench of Raghunath Kamble ( Judicial Member ) and Narendra Prasad Sinha ( Accountant Member ) has observed that the order passed by the ITAT recalling its earlier order, which was passed in the exercise of powers under Section 254(2) of the Act, is beyond the scope and ambit of the powers of the Appellate Tribunal conferred under Section 254(2) of the Income Tax Act.

While dismissing the application, the Tribunal noted that the finding as given by the tribunal was not only based on the portion of the order to which the assessee objected. The finding as recorded by the Tribunal is not disputed as incorrect, and no mistake in the findings has been pointed out.

The tribunal held that the ITAT is not required to revisit its order and dwell on its merits, as the power under Section 254(2A) is limited to correcting or rectifying mistakes apparent on record.

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