Rectification under section 154 cannot disallow disputed sales tax liability where no apparent mistake exists.

Section 154 rectification cannot be used to disallow sales tax under section 43B where the assessee disputed the adjustment and the character of the receipt itself was debatable. The High Court noted that the amount was not shown in the profit and loss account and that more than one view was possible on whether it could be treated as disallowable liability. In the absence of a mistake apparent from the record, rectification was impermissible and the disallowance failed.

---

---

Issues: Whether the Assessing Officer was justified in invoking section 154 of the Income-tax Act, 1961 to disallow, under section 43B, sales tax collected by the assessee and shown as outstanding liability.

Analysis: The assessment year was 1984-85. The authorities below found that the assessee had not agreed to rectification and had in fact objected to it. The issue whether the amount collected could be disallowed, particularly when it was not shown in the profit and loss account and the character of the receipt itself was in dispute, admitted more than one possible view. A power of rectification under section 154 cannot be exercised where the point is debatable and no mistake apparent from the record exists.

Conclusion: The invocation of section 154 was not justified, and the disallowance could not be made by way of rectification. The question was answered in the affirmative, in favour of the assessee and against the Revenue.

---