TaxTMI 
TaxTMI 
2009 (12) TMI 99
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....me-tax Act, 1961 on the ground of 'mistake apparent on record' when the assessee has not claimed it at the time of the original assessment? (2)Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the issue of bad debt is allowable by the order of the rectification under Section 154 on the ground that the issue is not debatable? (3) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the assessee's petition under Section 154 dated 11.08.1989 claiming deduction for an additional amount of Rs.15,85,017/- as bad debts should be allowed overlooking the clear provisions of Section 154 (1A) as per which the assessing officer could not rectify an order on a matter which had been the subject matter of appeal before the Commissioner of Income Tax (Appeals) and when the appellate order had been passed on 15.07.1987?" 3. The facts of the case in a nutshell are as follows: 3.1. For the assessment year 1983-84, an order of assessment was passed by the assessing officer disallowing the deductions sought for by the assessee towards the bad debts for a sum of Rs.51,19,096/- and also t....
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....ht to be allowed. 3.4. The Tribunal further held that a duty is cast upon the assessing officer to pass an order for the entire gross amount in view of the earlier orders passed by the First Appellate Authority as confirmed by the Income Tax Tribunal treating the net amount as bad debts and the failure to rectify the said mistake the power under Section 154 of the Income Tax Act, 1961 ought to have been exercised by the assessing officer and accordingly allowed the appeal filed by the assessee by directing the assessing officer to give deduction for the gross amount of Rs.66,82,375/-. Not being satisfied with the said order, the Revenue has filed the present appeal. 4. Contentions of the learned counsel appearing for the Revenue: 4.1. Shri.K.Subramaniam, learned senior counsel appearing for the Revenue submitted that there is no mistake apparent from the record and therefore the Tribunal has committed an mistake in allowing the appeal filed by the assessee. It is the further submission of the learned counsel that the assessee having not included the entire gross amount in the earlier claim, he cannot be allowed to include the same by way of an application under Section 154 invok....
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....d debt, the same will have to be made applicable to the entire gross amount as well. Admittedly, the assessee has been following the mercantile system of accounting and the interest has been kept in the suspense account on accrual basis. Further a duty is cast upon the assessing officer to declare the entire gross amount as bad debts in view of the orders passed by the higher authorities in the earlier round of litigation. The Circular by the C.B.D.T. in Circular No.14 dated 11.04.1955 clearly states that a duty is cast upon the officers of the Department to assist a tax-payer in every reasonable way and particularly in the matter of claiming and securing reliefs by guiding the tax-payer for making a correct assessment. 8. The assessee has filed the application under Section 154 of the Income Tax Act, 1961 only after the orders passed by the First Appellate Authority on 15.07.1987 wherein it was observed while rejecting the contention of the assessee that the interest kept in the suspense account is not exigible to tax, that the assessee could take appropriate steps at the appropriate time in respect of the interest kept in suspense account. It is also not in dispute that the asse....
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....tent, manifest and self-evident error which does not require elaborate discussion of evidence or argument to establish it, can be said to be an error apparent on the face of the record and can be corrected under Section 254(2). An error cannot be said to be apparent on the face of the record if one has to travel beyond the record to see whether the judgment is correct or not. An error apparent on the record means an error which strikes one on mere looking and does not need a long drawn out process of reasoning on points on which there may be conceivably two opinions. The error should not require any extraneous matter to show its incorrectness. To put it differently, it should be so manifest and clear that no court would permit it to remain on record. If the view accepted by the court in the original judgment is one of possible views, the case cannot be said to be covered by an error apparent on the face of the record. Section 254(2) specifically empowers the Tribunal to amend at any time within four years from the date of an order, any order passed by it under Section 254(1) with a view to rectify any mistake apparent from the record either suo motu or on an application. In o....
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....there could reasonably be no two opinions entertained about it, is a clear case of error apparent on the face of the record." 12. In the judgment reported in (1997) 228 ITR 463 [COMMISSIONER OF INCOME-TAX v. HERO CYCLES PVT. LTD. AND OTHERS], the Hon'ble Apex Court was pleased to hold that a rectification under Section 154 can only be made when there is a glaring mistake of fact or law committed by the officer passing the order becomes apparent from the record. In the said case the issue was the consideration of the granting of weighted deduction under Section 35B of the Act. The Hon'ble Apex Court was pleased to observe that the said issue being a debatable issue the same cannot be gone into under Section 154 of the Income Tax Act, 1961. In view of the fact that the facts involved in the said case are being totally different, the judgment rendered by the Hon'ble Apex Court is not applicable to the present case on hand wherein there is no dispute on facts and there is no debatable issue involved. 13. In the judgment reported in (2008) 298 ITR 53 [UTKAL GALVANIZERS P. LTD. v. ASSISTANT COMMISSIONER OF INCOME-TAX AND ANOTHER] the issue of merger was considered by the Division Bench....
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....ake, the mistake sought to be rectified should be a mistake apparent on the record and must be an obvious and patent mistake and not something which could be established by long drawn process of reasoning on the point in issue on which there may be conceivably two opinions. A decision on a debatable point of law cannot be regarded as a mistake apparent on the face of the record amenable for rectification under Section 154 of the Income-tax Act. Useful reference can be had to the judgments of T.S.Balaram, ITO v. Valkart Brothers reported in [1971] 82 ITR (SC) and CIT v. Hero Cycles P. Ltd. reported in [1997] 228 ITR 463 (SC). Hence, we do not find any question of law, much less, substantial question of law, for entertaining this appeal as the issue has already been covered by the decisions of the Supreme Court. Therefore, the Tax Case (Appeal) is dismissed." 16. This Court on the facts of the said case was pleased to observe that the issue involved in the said case being a debatable issue, the same cannot be decided by invoking the power under Section 154 of the Income Tax Act. As observed earlier in the present case on hand, there is no debatable issue and the facts are not ....
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....al condition for exercising the power under section 154 of the Act is the existence of a mistake in the record. The mistake is not to be a mistake which requires in-depth probing to discover, but is a mistake which is "apparent" from the record. The power conferred by this provision is only to enable the authorities to rectify the "apparent" mistakes in the record. The record referred to is the record which the authorities are required to examine for the purpose of rectifying the mistakes in the orders mentioned in clauses (a), (b) and (c) of section 154(1) of the Act. The section does not either expressly or implicitly require that the authorities exercising power under this provision should limit their attention only to the order sought to be rectified. The requirement that the mistake in the record be "apparent" does not imply that no other relevant document should be looked into. If in the light of other legally valid orders it is found that the original order contains mistakes which are apparent, the rectification of such mistakes is not barred under section 154. The object of the provision is the rectification of mistakes in the record and that object is ill-served if the au....