1997 (2) TMI 62 - HC - Income Tax

Summary

Issues:
1. Application of section 154 of the Income-tax Act for rectification of mistake in assessment years 1966-67 and 1967-68.

Detailed Analysis:
The judgment delivered by the High Court of Madras pertains to the application of section 154 of the Income-tax Act in rectifying a mistake in the assessment years 1966-67 and 1967-68. The case involved a situation where the Income-tax Officer initiated action under section 154, alleging a mistake in the computation of capital for granting relief under section 84. The mistake was related to the non-deduction of self-assessment tax due on the date of filing the return under section 139 for the assessment years in question. The assessee contended that there was no apparent mistake as the tax liabilities were considered during the regular assessment process and were not required to be included in the capital base for relief under section 84.

The Appellate Assistant Commissioner initially held that section 154 would not apply as the issue was debatable. Upon further appeal by the Revenue, the Tribunal concurred with the Appellate Assistant Commissioner's decision, leading to the dismissal of the Revenue's appeal. The Department argued that the self-assessment tax became due on the date of filing the return under section 139, and therefore, the mistake was apparent, warranting the application of section 154. Conversely, the assessee's counsel contended that since there were differing views on when the tax became due under section 140A, section 154 should not be invoked.

The High Court analyzed the provisions of section 140A, which required the payment of self-assessment tax within 30 days of furnishing the return under section 139. The court deliberated on the point at which the tax became due and emphasized that the mistake must be obvious and patent to invoke section 154. It was noted that the self-assessment tax for the assessment years in question was not paid on the date of filing the return but presumably within the stipulated 30 days. The court highlighted that the timing of when the tax became due under section 140A was a debatable issue, requiring a detailed reasoning process to establish, thus not constituting an apparent mistake.

In conclusion, the High Court held that the mistake alleged did not meet the criteria of being apparent, evident, or patent, as required for the application of section 154 of the Income-tax Act. The court agreed with the Tribunal's decision that section 154 was not applicable to the facts of the case, as the timing of the self-assessment tax becoming due was subject to differing interpretations and not a clear-cut error. Therefore, the court ruled in favor of the assessee, answering the question referred in the affirmative and against the Department, with no costs awarded.