2018 (6) TMI 1683 - HC - Income Tax

Rectification of mistake u/s 154 - assessee did not show any long-term capital gains in the return of income for the relevant assessment year - HELD THAT - The concurrent findings of the appellate authorities below appropriately recorded that a mistake apparent from the record had to be an obvious and patent mistake and not something which could be established by a long-drawn process of arguments or reasoning. The Supreme Court view on the relevant provision is also on similar lines. Since both appellate authorities below found, as a matter of fact, that the Assessing Officer could not have reopened the matter on the basis that long-term capital gains had not been disclosed by the assessee, the order impugned herein does not call for any interference. The appellate authorities below were perfectly justified in holding that the issue as to capital gains was a matter of argument, reasoning and investigation which could not be regarded as a mistake apparent from the records.

Summary

Issues: Extent of rectification permissible under Section 154 of the Income Tax Act, 1961

The judgment by the High Court of Calcutta delves into the question of the extent of rectification permissible under Section 154 of the Income Tax Act, 1961. The case involved an assessment completed under Section 143(3) of the Act, where the Assessing Officer sought to rectify the order due to the absence of disclosure of long-term capital gains by the assessee for the relevant assessment year. The Commissioner (Appeals) and the Appellate Tribunal both concluded that there was no apparent mistake from the record that warranted rectification under Section 154. They emphasized that a mistake apparent from the record must be obvious and patent, not requiring a lengthy process of arguments or reasoning to establish. The judgment highlighted the necessity for a clear and indisputable error to qualify for rectification under this provision, aligning with the Supreme Court's stance on the matter. The High Court upheld the decisions of the appellate authorities, emphasizing that issues requiring argument, reasoning, and investigation cannot be considered as mistakes apparent from the records. Consequently, the court dismissed the appeals, affirming that the Assessing Officer's attempt to reopen the matter based on undisclosed capital gains did not constitute a rectifiable error under Section 154. The judgment concluded by dismissing the appeals without any order as to costs.