ITAT must reconsider recall where appellate evidence was filed but allegedly overlooked, subject to Rule 29 compliance.

For AY 2010–11, an assessment order dated 25 March 2013 was passed against the Petitioner. The CIT(A) partly allowed the Petitioner’s appeal on 4 January 2016, following which both the Revenue and the Petitioner filed appeals before the ITAT—ITA No. 2579/Mum/2016 and ITA No. 3044/Mum/2016, respectively.

The Petitioner filed Paper Books I-A and I-B and subsequently claimed to have filed Paper Books II and II-A during oral arguments, with Paper Book II-A accompanied by an affidavit dated 4 October 2018 invoking Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963.

The ITAT disposed of both appeals by a common order dated 19 December 2018. The Petitioner thereafter filed Miscellaneous Applications Nos. 275/Mum/2019 and 276/Mum/2019 under Section 254(2) of the Income Tax Act, 1961, seeking recall of that order, inter alia, on the ground that Paper Books II and II-A and the accompanying affidavit had not been considered.

By order dated 20 February 2023, the ITAT dismissed Miscellaneous Application No. 275/Mum/2019 and partly allowed Miscellaneous Application No. 276/Mum/2019 only in relation to an additional ground that had not been adjudicated.

Whether the ITAT erred in doubting or failing to consider whether Paper Book II-A and the accompanying affidavit had been filed before it and formed part of the record?

Whether the issue concerning the admissibility and relevance of Paper Book II-A under Rule 29 of the ITAT Rules warranted reconsideration in the Petitioner’s Section 254(2) Miscellaneous Application?

Whether the ITAT’s findings concerning Paper Book II, and the other grounds rejected in relation to Miscellaneous Application No. 275/Mum/2019 and Miscellaneous Application No. 276/Mum/2019, required interference under the High Court’s writ jurisdiction?

Section 254(2) of the Income Tax Act, 1961 permits the ITAT to rectify a mistake apparent from the record.

Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 governs the production of additional evidence before the ITAT and requires the party seeking to rely on such evidence to obtain the Tribunal’s permission.

The High Court, while exercising writ jurisdiction, may interfere where the Tribunal proceeds on an erroneous factual premise or fails to consider material forming part of the record, but it does not ordinarily re-adjudicate the merits.

The High Court found prima facie evidence that Paper Book II-A and the accompanying affidavit had been filed before the ITAT: the paper book’s covering page bore the ITAT’s rubber stamp and signature, its index referred to the affidavit, and the affidavit itself sought permission under Rule 29.

The Court also noted that the documents were available in the ITAT’s record when the Miscellaneous Applications were heard, making the ITAT’s expressed doubt as to whether they had ever been filed prima facie unsustainable.

However, the Court did not conclusively determine whether the affidavit accompanying Paper Book II-A satisfied Rule 29. It therefore remitted the matter to the ITAT for that determination and, if answered affirmatively, for consideration of the relevance of the documents to the Petitioner’s appeal.

In contrast, the Court declined to interfere regarding Paper Book II because the Petitioner conceded that it had been filed without the requisite Rule 29 application.

The Court also preserved the ITAT’s findings on the remaining grounds and did not disturb its order concerning Miscellaneous Application No. 276/Mum/2019.

The High Court set aside the impugned ITAT order only insofar as it concerned Miscellaneous Application No. 275/Mum/2019 and remitted that application for fresh consideration.

The ITAT was directed first to determine whether Paper Book II-A was duly filed in compliance with Rule 29, taking into account that it was accompanied by the affidavit; if so, it was then to determine whether the documents were relevant to the Petitioner’s appeal and pass consequential orders if they had been wrongly omitted from consideration.

The Court did not interfere with the treatment of Paper Book II, the other grounds rejected by the ITAT, or Miscellaneous Application No. 276/Mum/2019. The petition was disposed of without costs.