Rectification for apparent mistake upheld where belated annuity deposit was allowed without meeting statutory condonation conditions.

The mistaken allowance of a deduction for a belated annuity deposit was treated as a mistake apparent from the record because the statutory preconditions for condonation had not been met. The discretion to condone delay under the annuity deposit scheme was not unfettered; it depended on compliance with the prescribed application procedure, prior approval of the Inspecting Assistant Commissioner, and a written order under the relevant scheme provisions. On the admitted facts, those requirements were absent, so the entry allowing the deduction could not be a lawful exercise of discretion. The rectification under section 154 was therefore upheld.

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Issues: Whether the Income-tax Officer's original allowance of deduction for belated annuity deposit could be treated as a mistake apparent on the record and rectified under section 154 when the statutory conditions for condonation of delay were not complied with.

Analysis: The scheme governing annuity deposits did not confer an unfettered power on the Income-tax Officer to condone delay. The discretion under section 280C(2) was subject to the conditions prescribed in section 280W and in clause 4 of the Annuity Deposit Scheme, 1966, including an application in the prescribed form within the specified time, previous approval of the Inspecting Assistant Commissioner, and an order in writing. On the admitted facts, none of these requirements had been satisfied. The mere entry in the assessment order allowing the deposit as deductible did not amount to lawful exercise of the statutory discretion. The defect was therefore discernible from the assessment record itself and did not require any long-drawn reasoning.

Conclusion: The rectification was valid, and the alleged mistake was a mistake apparent from the record. The finding was against the assessee and in favour of the Revenue.

Final Conclusion: The references were answered by upholding the rectification orders under section 154, with the Income-tax Officer's failure to comply with the statutory preconditions treated as an apparent error on the record.

Ratio Decidendi: Where statutory condonation of delay is conditional upon prescribed procedural requirements, non-compliance with those conditions renders the mistaken allowance of deduction an error apparent from the record and amenable to rectification.

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