Income Tax Officer has jurisdiction to rectify assessment mistakes under Section 154 despite assessee's challenge

The Madras HC dismissed a writ petition challenging an Income Tax Officer's notice under Section 154 for rectification of assessment order. The assessee contested inclusion of previously unaddressed items: interest on borrowing, goods in transit, and interest on excess refund. The court held that the Assessing Officer has jurisdiction to rectify mistakes apparent from record, distinguishing between "error apparent on face of record" and "mistake apparent from record." The court ruled that officers can rectify glaring mistakes of fact or law in assessment orders, and the impugned notice was validly issued with proper jurisdiction under Section 154.

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Issues:
The judgment involves a challenge to an Impugned Notice dated 27.01.2023 issued under Section 154 of the Income Tax Act, 1961 seeking to rectify alleged mistakes in the Assessment Order dated 23.01.2021. The main issues include interest on borrowing, goods in transit, and excess refund.

Interest on Borrowing:
The petitioner argued that the interest amount was not actually paid but only provided, thus it should be disallowed and brought to tax.

Goods in Transit:
Goods in transit worth a specific amount were not reflected in the opening stock/sales figures of the relevant year, and the respondent sought to disallow and bring this amount to tax.

Excess Refund:
An excess refund granted under Section 143(1) was added back to the tax payable, but the corresponding interest under Section 234D was omitted to be levied, which the respondent sought to rectify.

Jurisdictional Facts and Errors:
The petitioner contended that the power to rectify the Assessment Order was not available for issues not considered in the original order, and that there was no error apparent on the face of the record to justify the rectification.

Legal Precedents:
The petitioner relied on Supreme Court decisions such as T.S.Balaram, Income Tax Officer vs. Volkart Brothers and Commissioner of Income Tax vs. Hero Cycles (P) Ltd. to support their argument against the rectification.

Rectification under Section 154:
The Court examined the provisions of Section 154 of the Income Tax Act, 1961, emphasizing that rectification can be made for mistakes apparent from the record, and the assessing officer has the authority to correct glaring mistakes of fact or law.

Decision:
After considering arguments and legal precedents, the Court found that the assessing officer was not incompetent to invoke Section 154 for rectification of mistakes. The Court dismissed the writ petition, stating that the impugned notice was not liable to be interfered with and deserved to be dismissed.

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