TaxTMI 
TaxTMI 
2016 (11) TMI 389
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.... business loss of Rs. 5,04,26,202/- against current years income from other heads but carried forward the same to the subsequent year. 2.2 The return was processed under section 143(1) of the Income Tax Act, 1961 (in short 'the Act') on 10.12.2009 wherein the income of the assessee was determined at Rs. 1,23,19,310/-. As returned by the assessee, the Assessing Officer (AO) also processed the return of income under section 143(1) of the Act without setting off the current business loss against income from other heads. The case was not selected for scrutiny in this year and therefore the order under section 143(1) of the Act dated 10.12.2009 was for all purposes and intent the assessee's order of assessment for A.Y. 2008-09. 2.3 Later, vide letter dated 26.06.2012 addressed to the AO, the assessee sought rectification of the order of assessment for A.Y. 2008-09 dated 10.12.2009 under section 154 of the Act, claiming that there were certain mistakes apparent from the record. It was submitted by the assessee that while verifying the order of assessment under section 143(1) of the Act and computation of tax liability, he realized (i) that he had not set off business loss a....
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....or in the return; or (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (b) the tax and interest, if any, shall be computed on the basis of the total income computed under clause (a); 2.5 From the above, it would be clear that while processing the return, the Assessing Officer can make the adjustment to the total income returned only on account of any arithmetical error in the return or on account of an incorrect claim. Not claiming of set off of business loss against incomes under the other heads is not an arithmetical error and it is also not in the nature of an incorrect claim. Hence, no adjustment to the total income of the assessee could have been carried out by the Assessing Officer while processing the return under section 143(1) of the I.T. Act, 1961. The Assessing Officer was not under any obligation under the Act to allow the set off of the business loss since he could have made adjustment to the returned income only in terms of the items specified in section 143(1)(a)(i) and (ii) of the I.T. Act, 1961. Therefore, there was no mistake apparent from the records in the intimation under section 143(1) of the ....
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....e statute. 3.2.2 In support of the above averments, the assessee, inter alia, placed reliance on the following judicial pronouncements/CBDT circulars, etc.: - (i) CBDT Circular No. 14 (XL-35) dated 11.04.1955 wherein it is conveyed that the intention and purpose of the circular is merely to emphasise that either suo moto or when a matter is brought to the notice of authorities concerned, action should be taken to see that only legitimate taxes are assessed and collected and that advantage should not be taken by the Department of an assessee's ignorance to collect more taxes from them than are legitimately due. (ii) CIT vs. Sankala Polymers (P) Ltd. (2012) 20 taxmann.com 378 (Karnataka), wherein it has been held that when a specific provision of the Act has not been applied, while passing an order of assessment, it constitutes a mistake apparent from record, and the authorities have the power to rectify the said mistake by invoking the provisions of section 154 of the Act. (iii) ACIT vs. Rupam Impex (2016) 66 taxmann.com 181 (Rajkot - Trib.), wherein assessee filed an application seeking rectification of the order of assessment on the ground that in computing income inco....
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....ld the AO's view. 3.4.3 Section 154 of the Act can be exercised only when there is a mistake apparent from the records of assessment; a mistake that is obvious and patent, and not something that can be established by a long drawn out process of reasoning on points on which there may be conceivably two opinions. The records, not only means the order of assessment but comprises all proceedings and record on which the assessment is based, i.e. the records of assessment, and it is to this which the assessing authorities must confine itself. We find from the details before us that in the orders of the authorities below, emphasis has been placed on the fact that the mistake of not setting off or claiming set off of the business losses of Rs. 5,04,26,202/- against the other heads of income (except salary income) was committed by the assessee. This itself, we find has resulted in the error, sought to be rectified, creeping into the order of assessment as well, since the AO after accepting and determining the business loss, ought to have set off the same against other permissible/eligible heads in accordance with law as embedded in the statute. Rather, it is seen that both the authoritie....