ITAT has no power to recall its order even if submissions were filed on merits: Supreme Court

Case Details: CIT v. Reliance Telecom Ltd. - [2021] 133 taxmann.com 41 (SC)

Judiciary and Counsel Details

• • M.R. Shah and B.V. Nagarathna, JJ.

Facts of the Case

The assessee entered into a Supply Contract with Ericsson A.B. It filed an application under section 195(2) before the Assessing Officer (AO), to make payment to the non-resident company for the purchase of software without TDS. It was contended by the assessee that it was for the purchase of software and since Ericsson A.B. had no permanent establishment in India and terms of the DTAA, the amount paid is not taxable in India.

The AO passed an order rejecting the assessee’s application under section 195(2). Assessee, after deducting the tax, appealed before the CIT(A). CIT(A) held in favour of assessee. On further appeal, ITAT upheld the view taken by AO and reversed the order of CIT(A). Against the ITAT order, the assessee filed a miscellaneous application for rectification under section 254(2).

The ITAT allowed the miscellaneous application filed under section 254(2) and recalled its original order. Feeling aggrieved and dissatisfied with the order passed by the ITAT, revenue preferred appeal before the High Court, which was dismissed. Thus, revenue filed the appeal before the Supreme Court.

Supreme Court Held

The Supreme Court held that the order passed by the ITAT recalling its earlier order is beyond the scope and ambit of the powers under section 254(2). In exercise of powers under section 254(2), the ITAT may amend any order passed by it to rectify any mistake apparent from the record only. The Tribunal cannot revisit its earlier order and go into detail on merits.

The powers under section 254(2) are only to correct and/or rectify the mistake apparent from the record. Merely because the assessee might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors Section 254(2).
In the instant case, a detailed order was already passed by the ITAT, which was held in favour of the revenue. Therefore, the said order could not have been recalled by ITAT in the exercise of powers under section 254(2). If the assessee believed that the order passed by the ITAT was erroneous, either on facts or in law, the only remedy available was to prefer the appeal before the High Court.