2004 (8) TMI 18 - HC - Income Tax

Mistake apparent from the record - 1. Whether Tribunal was correct in law in upholding the action of the Income-tax Officer in initiating proceedings u/s 154 and holding that there was a mistake apparent on the record which could be rectified under section 154? - we are satisfied that it is a clear case of a mistake apparent from the record which could have been rectified under section 154 of the Act. The assessee itself in the computation of Income had given the note requesting the Assessing Officer to consider the payment of interest under section 244(1A) which appears to have escaped the notice of the Assessing Officer when he framed the original assessment. In view of this matter there is possibly no question of this issue being termed as debatable. Hence We answer question No. 1 in the affirmative i.e. against the assessee and in favour of the Revenue.

Summary

Issues:
1. Validity of initiating proceedings under section 154 by the Income-tax Officer.
2. Taxability of interest received by the assessee-company for the assessment year 1978-79.

Issue 1:
The court addressed the validity of initiating proceedings under section 154 by the Income-tax Officer. The assessee received a sum of Rs. 58,069 as interest under section 244(1A) of the Income-tax Act for the assessment year 1978-79. The assessee did not include this income in the return but provided a footnote requesting consideration of the interest amount. The Assessing Officer, due to an oversight, did not include this amount in the total income. Subsequently, the Assessing Officer issued a notice under section 154 to rectify this mistake apparent from the record. The assessee argued that the interest under section 244(1A) was not taxable and that the issue was debatable, questioning the jurisdiction of the Assessing Officer to invoke section 154. However, the court held that the Assessing Officer correctly invoked section 154 as the interest amount was inadvertently omitted from the total income, constituting a mistake apparent from the record. The court concluded that the issue was not debatable, as the assessee's own note highlighted the interest payment, which the Assessing Officer overlooked during the original assessment. Therefore, the court upheld the action of the Assessing Officer and answered question No. 1 in the affirmative, favoring the Revenue.

Issue 2:
The second issue involved the taxability of interest received by the assessee-company for the assessment year 1978-79. The court did not delve into this issue extensively as counsel for the petitioner acknowledged that this question did not arise from the Tribunal's order. Consequently, the court returned question No. 2 unanswered, indicating that the taxability of interest for subsequent assessment years was not directly relevant to the proceedings under consideration.

In summary, the High Court of PUNJAB AND HARYANA addressed the validity of proceedings under section 154 initiated by the Income-tax Officer regarding the taxability of interest received by the assessee-company for the assessment year 1978-79. The court upheld the Assessing Officer's action, ruling that the omission of the interest amount from the total income constituted a mistake apparent from the record. The court did not extensively discuss the taxability of interest, as it was not directly relevant to the issues arising from the Tribunal's order.