2024 (3) TMI 1206 - HC - Income Tax

Rectification of mistake u/s 154 - limited scrutiny of Agricultural Income - respondent seeks to alter the Assessment Order made u/s 143(3) by including those issues which were not expressly dealt earlier namely (i) Interest on Borrowing, (ii) Goods in Transit (iii) Interest on account of Excess Refund of amounts. These items were not included in the Assessment Order HELD THAT - Under Sub-Section(3) to Section 154 of the Income Tax Act, 1961, an amendment, shall not be made unless the authority concerned has given notice to the assessee or the deductor etc a reasonable opportunity of being heard where such amendment has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee or the deductor , Thus, it cannot be said that the impugned notice issued to the petitioner was without jurisdiction as the assessing officer is empowered to rectify a mistake which is apparent from the record. The power of the officers mentioned in Section 154 is to correct any mistake apparent from the record is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an error apparent on the face of the record . Court spelt out the distinction between the expressions error apparent on the face of the record and mistake apparent from the record and held suffice it to say that the Income Tax Officer was wholly wrong in holding that there was a mistake apparent from the record of the assessments of the first respondent. The meaning of the expression, error apparent on the face of record is wider than the expression mistake apparent from the record . An Assessing Officer is not incompetent to invoke the jurisdiction under section 154 of the Income tax Act, 1961 if such officer had committed a glaring mistake of fact or law while passing the assessment order as held by the Hon ble Supreme Court in Commissioner of Income Tax vs. Hero Cycles (P) Ltd 1997 (8) TMI 6 - SUPREME COURT If an Assessing Officer had also failed to do what was required under the law at the time of passing Assessment Order and has passed an Assessment Order with such defects, such assessment orders can be rectified by the officer by exercising power under section 154 of the Income tax Act, 1961. In this case, this is the effort of the Assessing Officer while exercising the power under section 154 of the Income tax Act, 1961. No merits in the submission that the impugned notice is liable to be interfered and quashed. Writ petition dismissed.

Summary

Issues:
The judgment involves a challenge to an Impugned Notice dated 27.01.2023 issued under Section 154 of the Income Tax Act, 1961 seeking to rectify alleged mistakes in the Assessment Order dated 23.01.2021. The main issues include interest on borrowing, goods in transit, and excess refund.

Interest on Borrowing:
The petitioner argued that the interest amount was not actually paid but only provided, thus it should be disallowed and brought to tax.

Goods in Transit:
Goods in transit worth a specific amount were not reflected in the opening stock/sales figures of the relevant year, and the respondent sought to disallow and bring this amount to tax.

Excess Refund:
An excess refund granted under Section 143(1) was added back to the tax payable, but the corresponding interest under Section 234D was omitted to be levied, which the respondent sought to rectify.

Jurisdictional Facts and Errors:
The petitioner contended that the power to rectify the Assessment Order was not available for issues not considered in the original order, and that there was no error apparent on the face of the record to justify the rectification.

Legal Precedents:
The petitioner relied on Supreme Court decisions such as T.S.Balaram, Income Tax Officer vs. Volkart Brothers and Commissioner of Income Tax vs. Hero Cycles (P) Ltd. to support their argument against the rectification.

Rectification under Section 154:
The Court examined the provisions of Section 154 of the Income Tax Act, 1961, emphasizing that rectification can be made for mistakes apparent from the record, and the assessing officer has the authority to correct glaring mistakes of fact or law.

Decision:
After considering arguments and legal precedents, the Court found that the assessing officer was not incompetent to invoke Section 154 for rectification of mistakes. The Court dismissed the writ petition, stating that the impugned notice was not liable to be interfered with and deserved to be dismissed.