By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Bhadresh Doshi Chartered Accountants
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Section 254 – Decision of the Tribunal which is contrary to the subsequent decision of the Supreme Court gives rise to a mistake apparent which is required to be rectified.
Facts :
In the case of the assessee, the assessment of undisclosed income was completed and the amount of tax payable was computed @ 67.2% i.e. applying the rate of 60% plus surcharge thereon @ 12% as per proviso to section 113.
In the course of appellate proceedings before CIT(A), the assessee took an additional ground and contended that the proviso to section 113 was introduced by the Finance Act, 2002. Till 31st May, 2002 section 113 did not have a proviso levying surcharge on income-tax. The assessee contended that the proviso is prospective and does not apply to his case where search was carried on 16.11.1999. Accordingly, the assessee is not liable to pay surcharge levied by proviso to section 113. Reliance was placed on the Special Bench decision in the case of Merit Enterprises vs. DCIT 101 ITD 1 (Hyd)(SB). The CIT(A) decided the case against the assessee by following the decision of Supreme Court in the case of CIT vs. Suresh N. Gupta 297 ITR 322 (SC) wherein it held that the proviso was clarificatory and curative in nature. The assessee did mention that in the case of CIT vs. Vatika Township (P) Ltd. 314 ITR 338 (SC) the issue had been referred by the Division Bench to the Larger Bench of the Supreme Court.
Before the Tribunal, while arguing the Cross Objection filed by the assessee, it was pointed out that the issue has been referred to the Larger Bench of the Supreme Court. However, the Tribunal following the decision of the Supreme Court in the case of CIT vs. Suresh N. Gupta (supra) decided the issue against the assessee.
Subsequently, the Larger Bench of the Supreme Court in the case of CIT vs. Vatika Township (P.) Ltd. 49 taxman. com 249(SC) reversed the decision of the Division Bench of the Supreme Court in the case of CIT vs. Suresh N. Gupta and held that the proviso was prospective and not clarificatory. The assessee filed Miscellaneous Application requesting the Tribunal to correct the view taken while deciding the Cross Objection by relying on a Supreme Court decision decided after the Cross Objection was decided.
Held:
The Tribunal noted that the order of the Supreme Court in the case of Vatika Township (P.) Ltd. (supra) was pronounced after the decision of the Tribunal. However, it observed that the order of the Supreme Court laid down the law of the land as it existed since the inception of the enactment. It noted that the Supreme Court has in the case of Saurashtra Kutch Stock Exchange 305 ITR 227 (SC) held that even a subsequent decision of the Supreme Court is binding on the Tribunal and if the decision of the Tribunal is contrary to the subsequent decision of the Supreme Court such decision of the Tribunal gives rise to a mistake apparent which needs to be rectified.
The Tribunal allowed the application filed by the assessee.
