2008 (8) TMI 93 - HC - Income Tax

Application for rectification of mistake on ground of mistake apparent from record - assessee claim of non-leviability of interests under sections 139(8) and 215/217 - Tribunal, held that application u/s 154 was not maintainable after four years from the date of intimation order of tribunal is justified no question of law arise - further, Section 154 of the Act could not be invoked where two views are possible

Summary

Issues:
1. Interpretation of section 154 of the Income Tax Act for rectification of mistakes of law in processing returns.
2. Application of interest under sections 139(8) and 215/217 of the Act.
3. Maintainability of application under section 154 after four years.
4. Invocation of section 154 in cases with debatable issues.

Analysis:
The appeal under section 260A of the Income Tax Act, 1961 was filed against the Income Tax Appellate Tribunal's order for the assessment year 1988-89. The primary issue raised was the Assessing Officer's deviation from the assessee's claim of non-leviability of interests under sections 139(8) and 215/217 of the Act during return processing under section 143(1). The Tribunal was questioned for failing to appreciate this deviation as a 'mistake of law' rectifiable under section 154. The assessee contended that the judgment in ITO v. Ch. Atchaiah supported their claim of non-liability to interest. However, the Assessing Officer processed the return on 30.12.1999, imposing interest, leading to subsequent appeals and the application under section 154.

The Tribunal's decision was based on the maintainability of the section 154 application after four years from the date of intimation, which was deemed inapplicable. Citing precedents like T.S. Balaram ITO v. Volkart Bros and CIT v. Hero Cycles (P) Limited, the Tribunal emphasized that section 154 cannot be invoked where two views are possible. Additionally, the Tribunal distinguished the judgment of the Rajasthan High Court in CIT v. Prem Lata Jalani, [2003] 264 ITR 774. The Tribunal's stance was that the application under section 154 was time-barred and that the existence of debatable issues precluded its invocation.

Upon hearing the arguments, the High Court concurred with the Tribunal's finding that the application under section 154 was indeed beyond the permissible four-year limit. As this crucial aspect was not contested, the Court found no substantial question of law to warrant further consideration. Consequently, the appeal was dismissed, affirming the Tribunal's decision.