Rectification under section 154 fails where the tax treatment of cooperative bank interest is debatable and not an apparent mistake.

Rectification under section 154 cannot be used to withdraw deduction on interest income from cooperative banks where the tax treatment was debatable and supported by divergent judicial views. A mistake apparent from the record must be obvious and patent, not one requiring reasoning on a point capable of two possible views. Because the issue was not free from doubt, the rectification order was not permissible and the assessee's relief was sustained.

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Issues: Whether the rectification order under section 154 could be sustained for withdrawing deduction claimed on interest income from cooperative banks on the ground that the claim was contrary to binding precedent, and whether the issue was capable of rectification when two views were possible.

Analysis: The controversy turned on the character of interest earned from deposits with cooperative banks and whether such income could be brought to tax as income from other sources or treated as business income for the purposes of deduction under section 80P. The Tribunal noted that the assessee's claim and the Revenue's objection were both supported by judicial decisions, showing that the issue was not free from doubt and had generated divergent views. A mistake apparent from the record must be an obvious and patent error, not one that can be established only after a process of reasoning on a point capable of more than one view. In such a situation, the power under section 154 cannot be used to revisit the assessment.

Conclusion: The rectification under section 154 was not permissible because the issue was debatable; the Revenue's appeal was dismissed and the assessee's relief was sustained.

Ratio Decidendi: Rectification jurisdiction under section 154 cannot be invoked to correct a matter on which the law admits of two possible views, since such a controversy is not a mistake apparent from the record.

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