TaxTMI 
TaxTMI 
2022 (2) TMI 491
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....n the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 3,06,32,000/- made by AO on account of provision for leave encashment. (ii) That the said addition has been confirmed despite the fact that the amount of Rs. 17,846.14 lakhs shown by the auditor in its Audit Report as against the actual provision of Rs. 17,539.82/- is purely a typographical error and can be easily verifiable from Audited Financial Statements. 4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition by indulging in surmises and conjectures without appreciating and verifying the facts on record. 5. That the assessee craves leave to add. Amend or alter any of the grounds of appeal." 2. Facts giving rise to the present appeal are that in this case, the assessee had filed its return of income through e-mode, declaring loss of Rs. 14,76,94,22,781/- on 29.09.2011. The case was processed u/s 143(2) of the Income Tax Act, 1961 ("the Act") and subsequently was taken up for scrutiny assessment and the assessment u/s 143(3) of the Act was framed vid....
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....the tax Auditor in Tax Auditors's report has certified that the assessee had incurred an amount of Rs. 17846.14 lakhs [PB Pg.79]. The learned AO has alleged that the amount of Rs. 17,846.14 lakhs must have booked in the profit and loss account and the same should have been added back in the computation instead of Rs. 17539.82/- and hence the AO alleged that the mistake resulted in over assessment of loss of Rs. 306.32 lakhs (17846.14- 17539.82). 5. In this regard, assessee submitted before the AO that provision for leave encashment of Rs. 17,539.82 lakh was made in the Profit & loss account and the same was added back in the computation of taxable income by the assessee. The said amount is as per the audited Balance sheet and the same has been correctly taken into account while filing the income tax returns. However, due to some clerical typographical error, the Tax audit report depicted an amount of Rs. 17,846.14 lakh on account of Leave Encashment and hence there is a difference of Rs. 306.32 lakh (17846.14 -17539.82) on this account. The assessee further submitted that there was no intention of the assessee company to evade tax payment through over assessment of los....
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....ting the submissions made by the assessee that the actual figure is Rs. 17,539.82 and not Rs. 17,846.14 as alleged by the AO. 13. Further, the issue raised by the AO in proceeding under section 154 of the Act was highly debatable and AO has no power to review his entire assessment order and to make certain additions by passing the order under section 154 of the Act. 14. Your Honors, it is humbly submitted that the impugned rectification order passed u/s 154 of the Act is absolutely bad in law and liable to be quashed. Your Honors, the powers conferred upon the Ld. AO u/s 154 of the Act are only w.r.t 'mistakes apparent from record' in any order/ intimation passed by him under the Act. In this regard, relevant excerpts of Section 154 of the Act are also reproduced below: "154. (1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to in section 116 may,- (a) amend any order passed by it under the provisions of this Act; (b) amend any intimation or deemed intimation under subsection (1) of section 143; (c) amend any intimation under sub-section (1) of section 200A; (d) ....
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.... reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on a debatable point of law is not a mistake apparent from the record-see Sidhramappa v. Commissioner of Income-tax, Bombay. The power of the officers mentioned in Section 154 of the Income- tax Act, 1961 to correct "any mistake apparent from the record" is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an "error apparent on the face of the record". In this case it is not necessary for us to spell out the distinction between the expressions "error apparent on the face of the record" and "mistake apparent from the record". But suffice it to say that the Income-tax Officer was wholly wrong in holding that there was a mistake apparent from the record of the assessments of the first respondent. " * . The above judgement was followed by Hon'ble Delhi Court in the case of COMMISSIONER OF INCOME TAX VERSUS MR. FEDDERS LLOYED CORPN. (P) LTD.- 2010 (9) TMI 63 - DELHI HIGH COURT Dated, 01.09.2010 wherein Hon'ble Court has held as under: 2. This reference pertains to the assessment....
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....spelling out the scope of the power of a High Court under Article 226 of the Constitution ruled that an error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on a debatable point of law is not a mistake apparent from the record-see Sidhramappa v. Commissioner of Income-tax, Bombay. The power of the officers mentioned in Section 154 of the Income- tax Act, 1961 to correct "any mistake apparent from the record" is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an "error apparent on the face of the record". In this case it is not necessary for us to spell out the distinction between the expressions "error apparent on the face of the record" and "mistake apparent from the record". But suffice it to say that the Income-tax Officer was wholly wrong in holding that there was a mistake apparent from the record of the assessments of the first respondent." 3. We, thus, answer the question in favour of the assessee and against the revenue. " * The Kerala High Court in its yet another....
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....and the same has nothing to do with rectification of any mistake apparent from the record. The findings entered by the Assessing Authority was based clearly on facts which was susceptible to an appeal. We also did not find any error apparent from the record which enabled the assessee to invoke the said provision." * JMD Auto India Pvt. Ltd. Vs. Assistant Commissioner Of Income Tax-15 (2) (2) , Mumbai, 2020 (7) TMI 642 -ITAT MUMBAI, Dated:17July, 2020 The power of rectification u/s 154 of the Act can be exercised only if there is a mistake apparent from the record of the assessment of the assessee. In other words, in order to attract the power to rectify u/s 154, it is not sufficient, if there is merely a mistake in the order sought to be rectified. The mistake could be rectified must be one apparent from the record. The plain meaning of the word "apparent" is that it must be something which appears to be so ex facie and is incapable of argument or debate. It, therefore, follows that a decision on a debatable point of law or fact or failure to apply the law to a set of facts, which remain to be investigated, cannot be corrected by way of rectification. ....
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....quivocally pointed out discrepancy in the figure disclosed by the assessee and certified by the Tax Auditor. Ld.Sr.DR submitted that both these figures are part and parcel of records. 8. We have heard the rival submissions and perused the material available on records. The undisputed facts in this case are that the AO carried out rectification on the basis that the assessee made provision for leave encashment of Rs. 17,539.82 Lakhs but the Auditor certified in the tax audit report a sum of Rs. 17846.14 Lakhs on account of leave encashment. Hence, there was mismatch between the figure claimed by the assessee and certified by the Tax Auditor. Admittedly, the assessee did not file any clarification by the Tax Auditor in this regard. In this back drop, we need to examine the correctness of action of Assessing Officer for making rectification order u/s 154 of the Act. For the sake of clarity, section 154 of the Act is reproduced herein below:- Rectification of mistake. 154. (1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to in section 116 may,- (a) amend any order passed by it under the provisions of this Act ; ....
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....his Act shall apply accordingly. (7) Save as otherwise provided in section 155 or sub-section (4) of section 186 15 no amendment under this section shall be made after the expiry of four years from the end of the financial year in which the order sought to be amended was passed. (8) Without prejudice to the provisions of sub-section (7), where an application for amendment under this section is made by the assessee or by the deductor or by the collector on or after the 1st day of June, 2001 to an income-tax authority referred to in sub-section (1), the authority shall pass an order, within a period of six months from the end of the month in which the application is received by it,- (a) making the amendment; or (b) refusing to allow the claim." 9. As per above provision, the Assessing Officer is empowered to amend any order passed by him under the Act with a view for rectifying the mistake apparent from record. Therefore, for exercising power under section 154 of the Act, there should exist a mistake apparent from record. In the present case as per Assessing Officer, the assessee failed to furnish any evidence with regard to its contention that ....