Sec. 254(2) of Income-tax Act, 1961— Appellate Tribunal -Rectification of mistake - A ground which is raised and not given up when remains undecided in the judgment of the Tribunal, gives rise to an error on the face of record, which is rectifiable.

Facts: AO passed the order of assessment which contained both the TP adjustment. Petitioner filed an appeal before Tribunal disputing the adjustments. The petitioner’s grounds were in relation to the amount of Rs. 4,88,96,708 on account of payment of corporate fees. The petitioner had also filed an application for admitting additional evidence before the Tribunal. The Tribunal disposed of the appeal on 18th Oct., 2017. The Tribunal allowed the petitioner’s application for production of additional evidence. However, with respect to the petitioner’s substantial challenge to the addition of Rs. 4,88,96,708, there was no finding by the Tribunal. In relation to the addition of Rs. 4,88,96,708, which was the other head of TP adjustments, the Tribunal deleted the same. The petitioner filed an application for rectification before Tribunal. Tribunal rejected such application on the ground that the petitioner’s plea falls under the realm of reconsideration of the Tribunal’s order, which, within the jurisdiction of rectification, cannot be done.

Held, that however, this was a fit case where the Tribunal ought to have exercised the rectification powers. We may recall that, before the Tribunal the assessee had raised specific ground to challenge the addition of Rs. 4,88,96,708. In fact, this was the substantial part of the petitioner’s challenge in the appeal before the Tribunal. In support of such ground, the petitioner had also sought permission to produce additional evidence. Such permission was granted. Additional evidence was allowed to be brought on record. Thereafter the choice before the Tribunal was either to ask the AO to take such additional evidence into account and re-decide the issue or to do itself. Unfortunately, the Tribunal did neither. In other words, the Tribunal disposed of the petitioner’s appeal without giving any answer to the petitioner’s challenge to the addition of Rs. 4,88,96,708 made by the AO. The power of rectification of the Tribunal flowing from s. 254(2), howsoever, restricted, would definitely be available in a situation like the present one. When the appellant before the Tribunal raises a ground, presses the ground in service, it is the duty of the Tribunal to dispose of such ground and give its opinion thereon. A ground which is raised and not given up when remains undecided in the judgment of the Tribunal, gives rise to an error on the face of record, which is rectifiable. Under such circumstances, the impugned order of the Tribunal is set aside. The petitioner’s request for rectification of the original judgment of the Tribunal dt. 18th Oct., 2017 is granted. Petition is disposed of accordingly. - ROLLY-ROYCE MARINE INDIA (P) LTD. V/s ITAT - [2020] 313 CTR 606 (BOM)