Scrutiny assessment prevails over earlier processing; rectification cannot be used to enhance income on a debatable issue.

A rectification under section 154 could not enhance assessed income after a scrutiny assessment under section 143(3) had accepted the returned income, because the issue required examination of facts and law and was not a mistake apparent from the record. Once the regular assessment was completed, the earlier processing under section 143(1) merged into the scrutiny order and could not override it. The computation sheet also could not displace the assessment order. The rectification-based enhancement was therefore unsustainable, and income had to be adopted as determined in the scrutiny assessment.

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Issues: (i) Whether the rectification order under section 154 could be sustained to enhance the assessed income after a scrutiny assessment under section 143(3) had accepted the returned income; (ii) whether the earlier intimation under section 143(1) could be relied upon to override the assessment order and the computation sheet.

Issue (i): Whether the rectification order under section 154 could be sustained to enhance the assessed income after a scrutiny assessment under section 143(3) had accepted the returned income.

Analysis: The assessment order under section 143(3) recorded acceptance of the returned income and did not make any addition or disallowance. The attempted enhancement arose from the computation sheet and from the earlier processing under section 143(1), but the issue involved determination of total income and was not a mere clerical or arithmetical error. A matter requiring examination of facts and application of law does not amount to a mistake apparent from record, and rectification cannot be used as a substitute for review.

Conclusion: The rectification order under section 154 was unsustainable and had to be set aside.

Issue (ii): Whether the earlier intimation under section 143(1) could be relied upon to override the assessment order and the computation sheet.

Analysis: Once a regular assessment is completed under section 143(3), the earlier intimation under section 143(1) merges with the assessment order and ceases to have independent existence. The computation sheet cannot override the clear findings in the assessment order, and the earlier processing could not justify a higher assessed income after scrutiny assessment.

Conclusion: The earlier intimation under section 143(1) could not be relied upon to sustain the higher income.

Final Conclusion: The assessee succeeded in challenging the rectification-based enhancement, and the income was directed to be adopted as determined in the scrutiny assessment.

Ratio Decidendi: A completed scrutiny assessment prevails over an earlier processing intimation, and rectification under section 154 cannot be used to alter assessed income on a debatable issue that is not an apparent mistake from the record.

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