Rectification for mistake apparent from record fails where entitlement to interest under advance tax provisions remains debatable.

Rectification under section 154 was unavailable because the alleged error was not apparent from the record. The court held that the legality of withdrawing interest allowed under section 214 on belated advance tax payment depended on an unsettled and debatable interpretation of sections 214 and 211, with conflicting High Court views and no definitive Supreme Court ruling. Since the issue required reasoning on a controversial point of law rather than correction of a patent mistake, the assessment order could not be revised under section 154 and the rectification order was unsustainable.

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Issues: Whether the Income-tax Officer could invoke section 154 of the Income-tax Act, 1961, to rectify the assessment order by withdrawing interest allowed under section 214 on advance tax paid belatedly during the financial year.

Analysis: Section 154 permits rectification only of a mistake apparent from the record, that is, an obvious and patent error and not an issue requiring elaborate reasoning or one on which different views are possible. The interpretation of section 214, read with section 211, was found to be unsettled and controversial, with several High Courts taking a view different from that earlier taken by the Andhra Pradesh High Court. The existence of divergent judicial opinions, the subsequent reference of a similar issue to a Full Bench, and the absence of a definitive pronouncement by the Supreme Court showed that the legal position was not free from doubt. In such a state of uncertainty, the assessment order allowing interest could not be treated as suffering from a manifest mistake capable of rectification under section 154.

Conclusion: The Income-tax Officer had no jurisdiction to invoke section 154 on the facts of the case, and the rectification order was not sustainable.

Final Conclusion: The reference was answered in favour of the assessee, and the Revenue failed on the question whether the assessment could be rectified as a mistake apparent from the record.

Ratio Decidendi: A rectification power confined to mistakes apparent from the record cannot be used where the issue is debatable and the legal position remains unsettled due to competing judicial views.

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