Miscellaneous Application for Rectification Under Section 254 Dismissed as No Error Found in Tribunal Stay Order

By | August 6, 2026
0 Comment

Miscellaneous Application for Rectification Under Section 254 Dismissed as No Error Found in Tribunal Stay Order

Issue

  • Whether a Miscellaneous Application under Section 254(2) for rectification can be entertained to direct a refund or impose costs when the assessee points out no mistake apparent from the record in the Tribunal’s original stay order.

Facts

  • The assessee filed a Miscellaneous Application under Section 254 seeking rectification of a stay order passed by the Income Tax Appellate Tribunal (ITAT) for AY 2023-24.

  • The assessee asserted that the Assessing Officer recovered ₹205.90 crores towards tax demand despite being informed of the Tribunal’s stay on recovery.

  • The assessee contended that the Revenue took no steps to restore status quo ante or make restitution regarding the recovered amount.

  • In its application, the assessee prayed for directions for an immediate refund of the sums recovered during the stay period and the imposition of exemplary costs on the Revenue.

  • During the proceedings, the Revenue assured the Tribunal that they were already in the process of granting the refund to the assessee.

  • The assessee did not point out any error or mistake apparent from the record in the original stay order passed by the Tribunal.

Decision

  • Absence of Mistake Apparent from Record: The scope of Section 254(2) is strictly limited to rectifying mistakes apparent from the record in an order passed by the Tribunal.

  • Dismissal of Application: Since the assessee failed to point out any error or defect in the underlying stay order itself, the Miscellaneous Application filed for rectification was dismissed.

  • Outcome: Decided in favor of the Revenue.

Key Takeaways

  • Scope of Rectification Powers: Section 254(2) can only be invoked to correct an error or mistake apparent from the record in the Tribunal’s order, not to seek fresh directions or remedies for post-order administrative non-compliance.

  • Appropriate Legal Remedy: Grievances regarding the Revenue’s non-compliance or enforcement actions during a stay period must be pursued through appropriate compliance proceedings, writ petitions, or enforcement applications rather than a rectification application.

IN THE ITAT BANGALORE BENCH ‘C’
Cisco Systems Inc
v.
Deputy Commissioner of Income-tax, International Taxation*
Prashant Maharishi, Vice President
and Keshav Dubey, Judicial Member
MA No. 27 (Bang) of 2026
[Assessment year 2023-24]
JULY  3, 2026
Nageshwara Rao, AR for the Appellant. Sandeep Kumar H.S., DR for the Respondent.
ORDER
Keshav Dubey, Judicial Member.- The assessee by way of this miscellaneous application filed u/s 254(2) of the Income Tax Act, 1961 (in short “The Act”) is seeking to rectify the stay order passed by the ITAT in SA No.20/Bang/2026 dated 16.3.2026 on the reasoning that the AO has disregarded and violated the order of this Tribunal by recovering a total amount of Rs.205,90,60,377/- despite being informed of stay order on recovery of demand relating to AY 2023-24. Further, even after such violation was specifically brought to the notice of the AO, no steps have been taken to restore the status quo ante and/or restitution of amounts wrongly/illegally recovered during the operation of stay. Accordingly, the assessee by way of this miscellaneous application prayed that appropriate directions be issued to the AO to ensure forthwith refund of sums unlawfully recovered during operation of stay order and action be taken against the revenue by imposing exemplary cost and such further action as this Tribunal deems appropriate in the interest of justice.
2. The ld. D.R. vehemently submitted that the revenue is making full efforts to refund the said amount as early as possible.
3. We have heard the rival submissions and perused the materials available on record. The provisions of section 254(2) of the Act empowers the ITAT to rectify any type of mistake in its order provided it should be apparent from the record. Coming to the present case, admittedly no error has been pointed out by the ld. AR of the assessee in the stay order dated 16.3.2026. The only grievance of the ld. A.R. of the assessee is that the AO had disregarded and violated the stay order of this Tribunal by recovering a total amount of Rs.205,90,60,377/- despite being informed of stay order on recovery of demand relating to AY 2023-24. Before us, the ld. D.R. assured the bench that they are in the process of granting the refund and the same will be accorded as early as possible. This being so, as there is no mistake in the order of stay dated 16.3.2026 and the ld. D.R. has assured that the revenue is in the process of granting the refund, we are inclined to dismiss the miscellaneous application filed by the assessee.
4. In the result, the MA filed by the assessee is dismissed.