Rectification under section 154 upheld for Form 10B discrepancy, but charitable application of income required fresh evidence-based verification.

A discrepancy in Form 10B between the income applied to charitable purposes and the figure accepted in the original assessment was treated as a mistake apparent from the record, so rectification under section 154 was justified. However, the correct quantum of income applied to charitable purposes could not be fixed on the audit report alone and required examination of the assessee's evidence. The rectification power was therefore upheld, while the determination of the correct amount was remitted to the Assessing Officer for fresh verification on the material on record.

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Issues: Whether the rectification made under section 154 of the Income-tax Act, 1961 on the basis of the audit report in Form 10B was justified, and whether the correct amount of income applied to charitable purposes required fresh determination on the evidence.

Analysis: The audit report in Form 10B disclosed a discrepancy in the amount of income applied to charitable purposes as compared with the figure accepted in the original assessment. That discrepancy constituted a mistake apparent from the record, enabling rectification under section 154. At the same time, the correct quantum of application of income could not be determined solely from the audit report and had to be examined with reference to the evidence produced by the assessee.

Conclusion: The rectification jurisdiction under section 154 was upheld, but the matter was sent back to the Assessing Officer to determine the correct amount of income applied to charitable purposes on the basis of the evidence.

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