2. The assessee is a firm and engaged in the business of trading of liquor. The assessee filed its return of income for the assessment year 2008-09 on 26.9.2008 declaring total income of Rs. 5,650/-. The Assessing Officer completed the assessment under section 143(3) on 27.12.2010 at a total income of Rs. 49,97,819/- after making three additions as under:-

3. The assessee challenged the order of the Assessing Officer before the CIT(A) and the CIT(A) deleted the additions / disallowance made by the Assessing Officer under section 40A(3) of the Income Tax Act and consequently the income of the assessee stood determined at Rs. 5,72,974/- as against the total income assessed by the Assessing Officer at Rs. 49,97,819/-. The Revenue challenged the order of the CIT(A) by filing the appeal before this Tribunal in ITA No. 401/Alld/2014. The assessee also filed C.O. No. 40/Alld/2014 raising objection against the two additions sustained by the CIT(A). The Tribunal while passing the impugned order allowed the Revenue's appeal and dismissed the Cross Objection filed by the assessee.

4. Now, by way of this Misc. Application, the assessee has alleged the mistake in the impugned order of the Tribunal on account of not considering order of the Coordinate Bench of this Tribunal dated 11.12.2015 in the case of Ram Niwas vs.

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Income Tax Officer in ITA No. 322/Alld/2014. The assessee has alleged the mistake in the impugned order as referred in para 4.1 to 5 of the misc. application as under:-

4.1 Thus, the said order dated 11.12.2015 passed by the Co-ordinate Bench in the case of Ram Niwas supra and the pleadings made with reference thereto, which constituted vital pleas remained in adverted to in the order dated 22.9.2017 (subject matter of this petition). Omission to consider the vital plea as aforesaid constitutes a mistake rectifiable under section 254(2) of the Act, in view of the binding authority of Hon'ble Allahabad High Court in the case of Laxmi Electronic Corporation Ltd. V. CIT reported in (1991) 188 ITR 398 wherein their Lordships have observed and held as under:-

"…It is a well-settled proposition that an act of court (which, in the context, means and includes a Tribunal of the nature of the Income Tax Appellate Tribunal) should not prejudice a party. In such a case, it would not be just to drive the party to a reference under Section 256. It must be left to the Tribunal to reopen the appeal if it finds that it has omitted to deal with an important ground urged by the party. We are not persuaded to agree that the expression "record" in the phrase "mistake apparent from the record" in section 254(2) means only the judgment. The record means the record before the Tribunal. Failure to deal with a preliminary objection of the nature concerned herein certainly amounts to a mistake apparent from the record…"

4.2 It is further submitted that in consequence of such an omission, a grave prejudice and injustice has been caused to the assessee/respondent and that too for no fault at its end. It is also now a settled law that the Tribunal is sufficiently empowered to remove the cause of prejudice and injustice. In case any authority is needed, the same is amply found in the following case laws:-

(a) Honda Siel Power Products Ltd. V CIT (2007) 295 ITR 466 (SC) wherein their Lordships have observed and held as under:-

"Rule of precedent" is an important aspect of legal certainty in rule of law. That principle is not obliterated by section 254(2) of the Income Tax Act, 1961. When prejudice results from an order attributable to the Tribunal's mistake, error or omission, then it is the duty of the Tribunal to set it right. Atonement to the wronged party by the court or the Tribunal for the wrong committed by it has nothing to do with the concept of inherent power to review. In the present case, the Tribunal was justified in exercising its powers under Section 254(2) when it was pointed out to the Tribunal that the judgment of the co-ordinate Bench was placed before the Tribunal when the

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original order came to be passed but it had committed a mistake in not considering the a material which was already on record. The Tribunal has acknowledged its mistake, it has accordingly rectified its order. In our view, the High court was not justified in interfering with the said order. We are not going by the doctrine or concept of inherent power. We are simply proceeding on the basis that if prejudice had resulted to the party, which prejudice is attributable to the Tribunal's mistake, error or omission and which error is a manifest error then the Tribunal would be justified in rectifying its mistake, which had been done in the present case."

(b) ACIT v. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 207 (SC) wherein their Lordships have observed and that held as under:-

"The core issue, therefore, is whether non-consideration of a decision of jurisdictional court (in this case a decision of the High Court of Gujarat) or of the Supreme Court can be said to be a "mistake apparent from the record"?

In our opinion, both - the Tribunal and the High Court - were right in holding that such a mistake can be said to be a "mistake apparent from the record" which could be rectified under Section 254(2)."

5. In view of the principle of law as discussed in para 4.1 & 4.2 above, it is respectfully submitted that there is no impediment in the Hon'ble ITAT considering the judgment of Co-ordinate Bench in the case of Ram Niwas (supra) and decide the Revenue's appeal and cross objection of the assessee accordingly so that cause of prejudice and injustice is removed."

5. On the other hand, learned DR has submitted that the Tribunal while passing the impugned order has duly considered the decisions relied upon by the assessee and therefore, when the Tribunal has given a findings on merits after considering the decisions relied upon by the assessee, then there is no mistake apparent on record to be rectified under section 254(2) of the Income Tax Act. Hence, the learned DR has submitted that the Misc. Application filed by the assessee is not maintainable and liable to be dismissed.

6. We have considered the averments made by the assessee in the Misc. Application as reproduced in the foregoing part of this order as well as the submissions of the learned DR. The assessee has alleged a mistake in the impugned order of the Tribunal on account of not considering the order of Coordinate Bench

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in the case of Ram Niwas vs. ITO (supra). In support of its contention and plea that there is a mistake in the impugned order which can be rectified under section 254(2), the assessee has relied upon the decision of the jurisdictional High Court in the case of Electronic Corporation Ltd vs. CIT reported in (1991) 188 ITR 398. We find that there is no quarrel on the point that if the Tribunal has omitted to deal with an important ground urged by the party, it would amount a mistake apparent from record to be rectified under section 254(2) of the Income Tax Act. The next decision relied upon by the assessee is in the case of Honda Siel Power Products Ltd. vs. CIT (2007) 295 ITR 466 (SC), wherein the Hon'ble Supreme Court has held that the Rule of precedent is an important aspect of legal certainty in law and if there is a mistake attributable to the Tribunal for not considering the material which was already on record which has resulted prejudice to the party, the same shall be rectified as per the provisions of section 254(2) of the Act. A similar view has been taken by the Hon'ble Supreme Court in the case of ACIT vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 207 (SC) (supra) that non consideration of the decision of Hon'ble High Court or Hon'ble Apex Court can be said to be a mistake apparent from record which could be rectified under section 254(2) of the Income Tax Act. Therefore, there is no quarrel on these settled principles that if there is mistake apparent from record by reason not considering a binding precedent or a crucial fact or aspect of the matter or omission of deciding a ground or issue raised in the appeal, the same shall fall in the ambit of a mistake apparent from the record to be rectified under section 254(2) of the Income Tax Act.

7. In the case in hand, the assessee has alleged in the Misc. Application that there is a mistake in the impugned order of the Tribunal in not considering the

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order of the Coordinate Bench in the case of Ram Niwas vs. ITO (supra). We find that the Tribunal has recorded this fact in para 5 of the impugned order as under:-

"5. The Ld. AR submitted that the assessee's case is entirely covered by the decision of the I.T.A.T., Allahabad bench in case of Ram Niwas Vs. ITO being ITA No. 322/Alld/2013 order dated 11/12/2015. The Ld. AR submitted that the Hon'ble Supreme Court in case of Baswaraj & ors Vs. Special Land Acquisition Officer, Civil Appeal No. 6974/2013 judgment dated 22^ndAugust 2013, held that if an illegality and irregularity has been added in favour of an individual or a group of individuals or wring order has been passed by a judicial forum others cannot invoke the jurisdiction of the Hon'ble High Court or Hon'ble Supreme Court for repeating or multiplying the same irregularity or illegality or for passing a similarly wrong order. The Ld. AR also relied upon the judgment of the Hon'ble Allahabad High Court in case of CIT vs. Banwari Lal Banshidhar 1998 229 ITR 229 wherein it is held that no disallowance could have been made in view of the provisions of Section 40A(3) read with Rule 6DDJ as no deduction was claim by the assessee in respect of the purchases. In the present case also, the assessee has not claimed any deduction in respect of purchases. "

8. We further note that the Tribunal has also recorded the submissions of the learned DR wherein a judgment of Hon'ble jurisdictional High Court in the case of CIT vs. Sapna Traders was relied upon by the learned DR. The Tribunal after considering the relevant facts, material available on record and contentions of the parties has decided this issue in para 7 and 8 as under:-

"7. We have heard both the parties and perused the material on record. The CIT(A) while deleting the addition on account of disallowance under section 40A(3) has not taken into account the fact that the assessee has not produced the proof as to how the Sarai is bound to be paid in cash. There was no receipt given by the assessee to the Assessing Officer to that extent. The Sarai is not a Government. This aspect was not considered by the CIT(A). The section 40A(3) of the Act which is applicable in assessee's case for A.Y. 2008-09 as under:

"(3)(a) Where the assessee incurs any expenditure in respect of which payment is made in a sum exceeding twenty thousand rupees otherwise than by an account payee cheque a sum exceeding twenty thousand rupees otherwise than by an account payee cheque drawn on a bank or account payee bank draft, no deduction shall be allowed in respect of such expenditure

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(b) Where an allowance has been made in the assessment for any year in respect of any liability incurred by the assessee for any expenditure and subsequently during any previous year (hereinafter referred to as subsequent year) the assessee makes payment in respect thereof, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, the payment so made shall be deemed to be the profits and gains of business or profession and accordingly chargeable to income-tax as income of the subsequent year if the amount of payment exceeds twenty thousand rupees:

"'Provided that no disallowance shall be made and no payment shall be deemed to be the profits and gains of business or profession under this sub-section where any payment in a sum exceeding twenty thousand rupees is made otherwise than by an account payee cheque drawn on a bank or account payee bank draft, in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors."

This was applicable till 31.03.2008 i.e. for A.Y. 2008-09. As per the present facts of the case, the payments were made more than Rs.20,000/- in cash and the assessee has not given any documentary proof to that effect before any of authorities. Thus, the Ld. AR's contention that the assessee's case falls in the ambit of Section 40A(3) of the Act does not survive. The case laws referred to be the Ld. AR will not be applicable in the present case as the Sarai is not a Government which is a major distinguishing factor in the present case than from the case laws referred by the learned AR. Especially the Hon'ble Allahabad High Court decision in case of Banwari Lal Banshidhar (supra) is on Rule 6DD(j) of Income Tax Rules, 1962 and will not be applicable in the present case as the same is no longer in the statue. The payment made to Sarai does not amount to payment made to the Government. The Ld. DR has rightly pointed that the payment was more than Rs.20,000/- and not below to Rs.20,000/- and the assessee could not produce such receipts and as such he failed to establish that each payment was made below Rs.20,000/-. Therefore, the Assessing Officer has rightly disallowed amount of Rs. 44,24,845/- u/s 40A(3) of the Act. Hence, the deletion of said addition is set aside and the order of the Assessing Officer is upheld on this issue.

8. As relates to cross objection Ground no. 6 and 7, the CIT(A) has given elaborate finding. The CIT(A) has rightly held that the assessee could not substantiate the information and details received from Saraya distillery as per which no payment was outstanding to it by the assessee and as such the liability shown was not at all explained by the assessee. Therefore, the order of the CIT(A) is upheld to that extent. Thus ground no. 6 and 7 of the cross objection are dismissed. As relates to other grounds of the cross objections the same are in support of the CIT(A)'s order which was already decided against the assessee for the reason given hereinabove. The same are dismissed." [Emphasis Supplied by us]

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9. It is pertinent to note that the assessee has filed only one Misc. Application whereas the impugned order is a composite order disposing of the appeal of the Revenue and Cross Objection of the assessee. Therefore, having regard to the mistake alleged by the assessee in the Misc. Application which pertains to the issue of disallowance made by the Assessing Officer under section 40A(3) and subject matter of the appeal filed by the Department, we consider this Misc. Application against the order of the Tribunal in respect to the appeal of the Department. It is clear from the impugned order of the Tribunal that it has given a finding on the merits of the issue and duly considered the decisions relied upon by the assessee. It is specifically mentioned in the impugned order that the case law referred to by the learned AR will not be applicable in the present case due to a distinguishing factor in the present case from the case law referred by the learned AR. When the Division Bench of the Tribunal has consciously considered the decisions relied upon by the assessee then it cannot be said that the said decision was not considered by the Tribunal while passing the impugned order. The apparent mistake from record can be as a result of omission to consider a vital plea or a decision relied upon by the party or the omission to decide any issue but a decision taken by the Tribunal on the merits after considering the plea / arguments of the parties as well as the decision relied upon by them then the case would not fall in the category of a mistake apparent from record. It may be a mistake of decision but certainly would not be a mistake apparent from record when the Tribunal has taken a decision on merits after considering the arguments as well as the decision relied upon by the learned AR of the assessee. The said decision of the Tribunal is based on the facts and analyzing of the provisions of law as well as evidence / material available on record cannot be reviewed or revised in the proceedings under section 254(2), the power of the Tribunal u/s 254(2) is very limited and

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circumscribed to rectify the mistakes apparent from record and not to review or revise the order passed on merits. Accordingly, we do not find any merit in the Misc. Application of the assessee and the same deserves dismissal.

10. In the result, Misc. Application filed by the assessee is dismissed. Order pronounced on 25.07.2022 at Allahabad, U.P. in accordance with Rule 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/-

[RAMIT KOCHAR] [VIJAY PAL RAO]

ACCOUNTANT MEMBER JUDICIAL MEMBER

DATED: 25/07/2022 Varanasi/Allahabad Sh

Copy forwarded to:

1. Appellant- Vijay Kumar Vikas Kumar

2. Respondent-ITO, Ward-2(1) Gorakhpur

3. CIT(A),Varanasi

4. CIT

5. DR

By order Sr. P.S.

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