Subsequent Judgment Overruling Tribunal’s Legal View Not a 'Mistake Apparent from Record': ITAT Rejects Recall Plea [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s miscellaneous application seeking recall of its earlier order, citing that a subsequent Supreme Court judgment reversing the legal position does not constitute a “mistake apparent from record” under Section 254(2) of the Income Tax Act, 1961.

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The matter arose from ITA No. 559/Del/2019 concerning G4S Facility Services (India) Ltd. for the Assessment Year 2015–16. The original appeal filed by the Revenue was dismissed by ITAT on 30.08.2022 on the ground that delayed deposit of employees' contributions to Provident Fund (PF) and Employees' State Insurance (ESI) if paid before the due date under Section 43B was allowable. The tribunal relied on several favorable High Court decisions when passing the order.

The Revenue later filed a miscellaneous application arguing that the ITAT’s earlier decision was erroneous in light of the Supreme Court’s subsequent ruling in Checkmate Services Pvt. Ltd. v. CIT (2022), which held that employee contributions to PF/ESI deposited after the due dates under the respective Acts are not allowable under Section 36(1)(va), regardless of Section 43B compliance.

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In response, the assessee argued that the tribunal had followed the prevailing High Court interpretations at the time and that the scope of Section 254(2) is limited to rectifying only those mistakes that are “apparent from record,” not those arising from later legal developments. They relied on the Mumbai ITAT ruling in DCIT v. ANI Integrated Services Ltd., which held that such situations do not permit review under Section 254(2) of the Income Tax Act, 1961.

The two-member bench comprising M. Balaganesh (Accountant Member) and Anubhav Sharma (Judicial Member) considered the submissions and observed that it is a well-settled principle of tax law that “each assessment year is separate and independent”. The tribunal observed that the earlier decision was taken consciously relying on favorable legal interpretations available at that time.

The tribunal held that the Supreme Court’s later judgment in the Checkmate case, although authoritative, does not make the prior tribunal decision erroneous or mistaken under Section 254(2), as it was based on a possible legal view. It further cited the Supreme Court's ruling in CIT v. Reliance Telecom Ltd. (2022) which clarified that a reversal of law by a subsequent judgment is not a ground for recalling or reviewing an earlier decision.

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The tribunal rejected the revenue’s miscellaneous application and declined to recall its earlier order, explaining that the change in legal interpretation post-facto did not amount to a “mistake apparent from record.”

To Read the full text of the Order CLICK HERE

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