Bombay High Court Partly Sets Aside ITAT Order; Finds Additional Evidence Was on Tribunal Record and Remands Rectification Application for Fresh Consideration Under Rule 29
Bombay High Court Finds ITAT Wrongly Doubted Filing of Additional Evidence; Remands Matter to Decide Compliance With Rule 29 and Relevance of Documents
Facts
The Bombay High Court considered a writ petition filed by Crest Paper Mills Ltd. challenging a common order dated 20 February 2023 passed by the Income Tax Appellate Tribunal (“ITAT”) on two miscellaneous applications under Section 254(2) of the Income Tax Act, 1961. The applications sought recall of an earlier common ITAT order dated 19 December 2018.
The underlying dispute related to Assessment Year 2010–11. An assessment order was passed on 25 March 2013. The CIT(A) partly allowed the assessee’s appeal on 4 January 2016, following which both the Revenue and Crest Paper Mills approached the ITAT through separate appeals.
The assessee had undisputedly filed Paper Book Nos. I-A and I-B in June 2018. It claimed that during oral arguments in October 2018, it additionally filed Paper Book Nos. II and II-A, with Paper Book II-A accompanied by an affidavit of its Director, R.R. Singh, dated 4 October 2018.
According to the assessee, when the ITAT decided both appeals on 19 December 2018, it inadvertently failed to consider Paper Book Nos. II and II-A despite their having been relied upon during arguments. It therefore filed two rectification applications under Section 254(2).
The ITAT dismissed Miscellaneous Application No. 275/Mum/2019 and partly allowed No. 276/Mum/2019 only to the limited extent of an additional ground that had remained undecided. The remaining grievances were rejected.
Issues
The principal issue was whether the ITAT had proceeded on an erroneous factual premise in doubting whether Paper Book No. II-A and the accompanying affidavit had ever been filed before it.
A connected issue was whether the affidavit accompanying Paper Book II-A could constitute sufficient compliance with Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963, despite the absence of a separate Rule 29 petition.
The Court also had to determine the proper scope of relief under Article 226 without itself deciding whether the additional documents were admissible or material to the tax appeal.
Petitioner’s Arguments
Crest Paper Mills contended that the ITAT’s order proceeded on an incorrect premise that Paper Book Nos. II and II-A had not been filed because they were not accompanied by a separate Rule 29 application.
The assessee produced the paper books before the High Court. Their covering pages bore the ITAT’s rubber stamp and a signature. Although the Director’s affidavit itself did not bear the stamp, the index to Paper Book II-A recorded that the documents had been submitted as enclosures to that affidavit. Importantly, the affidavit expressly sought permission under Rule 29.
The assessee also relied upon a September 2023 affidavit of an associate from its chartered accountants, who stated that during inspection of the ITAT’s original records on 29 August 2023, all four paper books, including II and II-A, were found in the Tribunal’s records.
The petitioner conceded that there was no separate Rule 29 petition accompanying Paper Book II-A but argued that the Director’s affidavit contained the necessary averments and expressly sought Rule 29 permission.
During hearing, the petitioner narrowed its challenge. It gave up its grievance concerning Paper Book II and agreed that the ITAT itself could determine on remand whether Paper Book II-A had been properly filed in compliance with Rule 29.
Respondent’s Arguments
The Revenue opposed the petition.
Its principal contention was straightforward: if the additional paper books had genuinely been filed before the ITAT, there was no reason why the Tribunal would not have considered them when deciding the original appeals in December 2018.
Accordingly, the Revenue submitted that there was no infirmity warranting interference under the High Court’s extraordinary writ jurisdiction.
Analysis of the Law
The controversy turned primarily upon Section 254(2) of the Income Tax Act and Rule 29 of the ITAT Rules.
Section 254(2) permits rectification of mistakes apparent from the Tribunal’s record. Crest Paper Mills’ case was essentially that the Tribunal’s failure to consider material which had actually been placed on its record constituted such an error.
Rule 29 governs production of additional evidence before the ITAT. The legal difficulty was that while Paper Book II-A was accompanied by an affidavit expressly seeking permission under Rule 29, no separate petition under Rule 29 had been filed.
The High Court deliberately refrained from finally determining whether the affidavit itself amounted to sufficient compliance. It considered that issue appropriately one for the ITAT to determine upon remand.
Precedent Analysis
The judgment does not turn upon an extensive analysis of earlier precedents. Instead, it adopts a record-based and procedural approach.
The decisive factual circumstance was that the material before the High Court prima facie established that Paper Book II-A and its accompanying affidavit had actually reached the ITAT’s record.
Accordingly, the case was not treated as one in which the High Court itself should determine admissibility of additional evidence. The appropriate course was to restore the limited question to the statutory appellate tribunal.
Court’s Reasoning
The High Court found itself prima facie satisfied that the affidavit and Paper Book No. II-A had been filed before the ITAT and were on the Tribunal’s file.
This conclusion was reinforced by the ITAT’s own record. The High Court noted that the affidavit and Paper Book II-A appeared to have been available in the Tribunal’s records when the miscellaneous applications were considered. Consequently, the ITAT’s observations expressing doubt about whether those documents had ever been filed could not prima facie be sustained.
The position regarding Paper Book II was different. The assessee itself admitted that it had been filed without the requisite Rule 29 petition or a comparable supporting affidavit. The High Court therefore declined to record a similar finding concerning Paper Book II and accepted that the ITAT was justified in treating it as not duly filed.
The Court therefore adopted a limited remand rather than recalling the entire ITAT proceedings.
Conclusion
The Bombay High Court partly set aside the ITAT’s order dated 20 February 2023 and remitted Miscellaneous Application No. 275/Mum/2019 for fresh consideration.
The ITAT was directed first to determine whether Paper Book II-A was duly filed in compliance with Rule 29, considering that it had been accompanied by the Director’s affidavit.
If the answer is yes, the ITAT must then determine whether the documents contained in Paper Book II-A were relevant to deciding the assessee’s appeal.
If the documents are found relevant, the ITAT would have to allow the miscellaneous application to the extent that those documents had not been considered while disposing of the earlier appeal and thereafter pass consequential orders.
Importantly, the High Court did not disturb the ITAT’s findings on the other grounds, nor did it interfere with the portions of the impugned order concerning Miscellaneous Application No. 276/Mum/2019.
Case Details
Case: Crest Paper Mills Ltd. v. Deputy Commissioner of Income Tax 9(2)(2), Mumbai & Ors.
Court: Bombay High Court, Ordinary Original Civil Jurisdiction
Case Number: Writ Petition No. 2727 of 2023
Citation: 2026:BHC-OS:20025-DB
Bench: Justice B. P. Colabawalla and Justice Farhan P. Dubash
Reserved: 3 September 2026
Pronounced: 10 September 2026
Result: Petition disposed of with partial relief; ITAT order partly set aside and Miscellaneous Application No. 275/Mum/2019 remanded for limited fresh consideration concerning Paper Book II-A.
