Rectification power under section 154 cannot reopen a debatable section 14A disallowance where no apparent mistake exists.

Rectification under section 154 cannot be used to enhance a disallowance under section 14A read with Rule 8D where the original assessment had already considered the relevant material, including exempt income and the assessee's suo motu disallowance. Because the proposed change required re-examination of the merits and involved a debatable issue rather than a patent error apparent on the face of the record, it fell outside the limited rectification power. The enhanced disallowance was therefore quashed in favour of the assessee.

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Issues: Whether the rectification made under section 154 of the Income-tax Act, 1961 to enhance the disallowance under section 14A read with Rule 8D of the Income-tax Rules, 1962 was valid when the original assessment had already considered the relevant material and no apparent mistake existed.

Analysis: The assessee had furnished the relevant facts during the original assessment proceedings, including the exempt income earned and the suo motu disallowance made. The addition sought in rectification required reconsideration of the merits of the disallowance under section 14A and was not a patent or obvious error on the face of the record. A matter requiring reasoning, examination of satisfaction, or debate cannot be corrected within the limited scope of section 154.

Conclusion: The rectification under section 154 was unsustainable and the enhancement of the disallowance under section 14A read with Rule 8D was quashed, in favour of the assessee.

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