2015 (10) TMI 821 - HC - Income Tax

Rectification of mistake - withdrawing the deduction allowed in terms of Section 80 HHC of the Act by the Assessing Officer in the order passed in terms of Section 154 - According to the Assessing Officer, the mistake was on the part of the assessee in not filing an auditor s certificate at the time of filing of the return. But, according to the assessee, in his reply to the notice under Section 263, the mistake was on the part of the Assessing Officer in not giving an opportunity under Section 139(9).Held that - The types of mistakes that could be rectified under Section 154 are also two fold. While Sub-section (1) uses the expression any mistake apparent from the records , Sub-section (2) uses the expression rectifying any such mistake which has been brought to its notice . Therefore, the thinking in the mind of the Commissioner as well as the Tribunal that Section 154 is available only to correct a mistake apparent from the record, may not be in tune with the Scheme of Sub-section (2) of Section 154. Mistakes can be of several kinds. An omission to produce the record is as much a mistake as an omission to take note of a record. Therefore, the Tribunal as well as the Commissioner were wrong in presuming that the case would not fall under Section 154. Hence, the questions of law are answered in favour of the assessee.

Summary

Issues:
1. Correctness of jurisdiction for withdrawing deduction under Section 80 HHC of the Income Tax Act.
2. Impact of filing audit report on deduction claim under Section 80 HHC.

Analysis:
Issue 1:
The appellant filed an appeal under Section 260-A of the Income Tax Act, 1961, challenging the correctness of the jurisdiction exercised by the respondent in withdrawing the deduction allowed under Section 80 HHC. The appellant's claim under Section 80 HHC was initially disallowed by the Assessing Officer due to the non-production of the auditor's certificate. Subsequently, the appellant filed a petition under Section 154 of the Act, enclosing the auditor's certificate, which was allowed by the Assessing Officer. However, the Commissioner of Income Tax, through a proposal under Section 263, contended that the Assessing Officer erred in invoking Section 154 without any apparent mistake. Despite objections raised by the appellant, the Commissioner set aside the order passed by the Assessing Officer. The Tribunal also dismissed the appellant's appeal, leading to the current tax case appeal before the High Court.

Issue 2:
The High Court analyzed the provisions of Section 154, highlighting that the Original Authority has the power to make amendments either suo motu or upon the identification of a mistake by the assessee or other parties. The Court emphasized that Section 154 encompasses two types of mistakes: those apparent from the records and those brought to the notice of the authority. The Court clarified that the mistake in this case, regarding the non-filing of the auditor's certificate, could be rectified under Section 154. The Court rejected the notion that only mistakes apparent from the record could be rectified, emphasizing that various types of mistakes, including omissions, could fall under the purview of Section 154. Consequently, the Court ruled in favor of the appellant, allowing the appeal and emphasizing that the Tribunal and Commissioner had erred in their interpretation of Section 154.