2002 (10) TMI 13 - HC - Income Tax

Whether, Tribunal was right in holding that the Assessing Officer was not justified in taking recourse to section 154 to make disallowance under section 43B of the sales tax collected by the assessee and was shown as outstanding liability as on March 31, 1984? - rectification proceedings were initiated with reference to an issue for which there is more than one view possible and hence it is a debatable issue - question whether disallowance can be made when the amount was not shown in the profit and loss account and further the character of the receipt are also matters on which more than one view is possible Thus, it cannot be said that there is a mistake apparent from the records which calls for the exercise of the power of rectification under section 154 Order of tribunal is justified - Accordingly, we answer the question of law referred to us in the affirmative, in favour of the assessee and against the Revenue

Summary

The High Court of Madras ruled that the Income-tax Officer was not justified in using section 154 to disallow sales tax collected by the assessee as outstanding liability. The court found that the issue was debatable and not a clear mistake, supporting the decision of the Appellate Tribunal. The judgment favored the assessee against the Revenue without any costs awarded.