Facts of the Case

The petitioner, Hindustan Sports Club Limited, challenged the order dated 29.07.2025 passed by the Income Tax Appellate Tribunal dismissing Miscellaneous Application No. 02/Del/2021 filed under Section 254(2) of the Income-tax Act, 1961. The Miscellaneous Application sought recall of the Tribunal’s final order dated 31.10.2019 passed in ITA No. 5487/Del/2013 relating to Assessment Year 2005-06.

The principal contention raised was that the assessment order dated 24.12.2007 was passed prior to the date fixed for hearing, i.e., 26.12.2007, allegedly resulting in violation of principles of natural justice. The Tribunal rejected the Miscellaneous Application holding that no mistake apparent on record existed and that it had no power to review its own decision under Section 254(2).

Issues Involved

Whether the Tribunal can recall or review its final order on merits by invoking Section 254(2) of the Income-tax Act, whether alleged violation of natural justice constituted a mistake apparent on record, and whether interference by the High Court was warranted after multiple rounds of adjudication.

Petitioner’s Arguments

The petitioner argued that the Tribunal failed to adjudicate a fundamental ground relating to violation of principles of natural justice as the assessment order preceded the scheduled hearing date. Reliance was placed on the Supreme Court’s suo motu orders extending limitation during the COVID-19 pandemic to justify the filing of the Miscellaneous Application beyond the prescribed period. It was submitted that the Tribunal ought to have recalled its order to remedy the alleged procedural illegality.

Respondents’ Arguments

The Revenue opposed the petition contending that the scope of Section 254(2) is extremely limited and does not permit review or re-appreciation of facts. It was argued that the Tribunal had already passed a detailed order on merits after granting full opportunity of hearing and that the petitioner had participated in the proceedings. The Revenue submitted that no mistake apparent on record was demonstrated.

Court Order / Findings

The Delhi High Court examined the extensive litigation history and noted that the matter had undergone multiple rounds of adjudication before the Assessing Officer, the CIT(A), and the ITAT. The Court observed that the Tribunal, in its detailed order, had recorded repeated non-compliance by the petitioner during assessment proceedings and had also considered all submissions on merits while passing the order dated 31.10.2019.

The Court held that Section 254(2) confers only a limited power of rectification and cannot be used as a tool to review or reopen concluded findings on merits. The alleged grievance of the petitioner did not constitute a mistake apparent on record. The Court further noted that the petitioner had not challenged the Tribunal’s order dated 31.10.2019 on merits and was attempting to prolong litigation by invoking rectification proceedings.

Important Clarification

The Court clarified that rectification under Section 254(2) is confined strictly to correcting obvious and patent errors apparent from the record. It cannot be invoked to re-argue the case, seek rehearing, or challenge the correctness of a reasoned order passed on merits after due opportunity.

Final Outcome

The writ petition was dismissed. The Delhi High Court upheld the order dated 29.07.2025 passed by the Income Tax Appellate Tribunal dismissing the Miscellaneous Application under Section 254(2) and held that no interference was warranted after prolonged and repeated litigation. Pending applications were also dismissed.

Link to download order- https://www.mytaxexpert.co.in/uploads/1769682255_HINDUSTANSPORTSCLUBLIMITEDVsINCOMETAXOFFICERWARD113DELHIANR..pdf

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