2007 (4) TMI 259 - HC - Income Tax

Rectification of mistake apparent mistake of law and facts u/s 154 presumption of evidence period of limitation - held that - Rectification under section 154 can only be made when a glaring mistake of fact or law committed by the officer passing the order becomes apparent from the record. Rectification is not possible if the question is debatable. Moreover, a point which was not examined on facts or in law cannot be dealt with as a mistake apparent from the record - there is a presumption embedded in the order of the CIT(A) that when he made the earlier order there was no evidence before him to show from the record that the assessment was saved by limitation because of the concealment by the assessee are based on correct appreciation of evidence on record - the notice under section 271(1)(c) was issued on March 13, 1975, i.e., after the limitation for final assessment had elapsed for normal cases, therefore, it cannot be said that the Assessing Officer was satisfied on the date on which normal limitation for assessment expired that the assessee had concealed his income

Summary

Issues:
1. Rectifiability of the order of the Commissioner of Income-tax (Appeals) under section 154
2. Possibility of rectification being a disguised review
3. Assessment limitation in cases of concealed income

Analysis:

1. The first issue revolves around whether the order of the Commissioner of Income-tax (Appeals) dated February 3, 1983, contained an error apparent on record that could be rectified under section 154 of the Income-tax Act, 1961. The court emphasized that rectification is only permissible in cases of glaring mistakes of fact or law, not debatable points. The decision-making process must be flawed to qualify for rectification. The Supreme Court's ruling in CIT v. Hero Cycles P. Ltd. outlined the limited scope of rectification under section 154, confining it to clear errors on record.

2. The second issue delves into the possibility of rectification being used as a guise for review, a power not vested in the Commissioner of Income-tax (Appeals) under the statute. The court highlighted that rectification is not a substitute for review. Detailed reasoning is necessary to demonstrate a mistake of fact or law, indicating a review rather than a rectification. The judgment cited the case of CIT v. Hero Cycles P. Ltd. to emphasize the distinction between rectification and review.

3. The final issue concerns the assessment limitation in cases where the Assessing Officer suspects income concealment by the assessee. The court clarified that the limitation for assessment is eight years if concealment is proven. In this case, the notice under section 271(1)(c) was issued after the normal assessment limitation had expired, indicating that the Assessing Officer did not suspect concealment until the actual completion of assessment. The court referred to the decision of the Gauhati High Court in Savitri Rani Malik v. CIT to support its conclusion that the assessment limitation was not saved by the provisions of the Income-tax Act.

In conclusion, the High Court upheld the Tribunal's decision, ruling that rectification was not permissible in this case, and the assessment limitation was not saved by the provisions of the Income-tax Act. The reference was disposed of accordingly.