2023 (2) TMI 50 - AT - Income Tax

Rectification of mistake u/s 154 - rectify the charge of interest income under the head Income from Other Sources IOS - contention of the assessee firm that the said amount of interest was wrongly added while filing ITR - HELD THAT - The appellant s retuned income, after due examination and verification was accepted by an order dt. 07/12/2017 u/s 143(3) - Subsequently, on the receipt of demand intimation from CPC, the appellant finding fault with the tax liability determined u/s 143(3) of the Act, filed a rectification application dt. 14/05/2019 u/s 154 seeking thereby deletion of interest income charged to tax under IOS, alleging it as erroneously crept-in while filing the ITR, which both the Ld. TAB rejected as falling outside the jurisdiction of section 154 of the Act. In our considered view, no error can be said to be apparent on the face of the record if it does not manifest or self-evident and requires an examination or argument to establish it. As in the present case, the appellant after culmination of regular assessment proceedings brought up the matter u/s 154 before the Ld. TAB alleging the interest income charged to tax u/s 143(3) of the Act as unearned and wrongly crept-in in the ITR, which invariably requires to be established so only by re-examination of records which ispo-fact falls outside the jurisdiction of section 154 of the Act. Since the plea of the appellant is neither visible nor obvious nor self-evident on the face of the records which can be established without having re-examined the facts in the light of evidential document and without any lengthy and complicated arguments, hence to our considered view, sails out of apparent from record, for the reasons we approbate the action of both the Ld. TAB in the light of Hon ble Supreme Court s judgment of ITO Vs Volcart Bros. 1971 (8) TMI 3 - SUPREME COURT categorically held that the mistake apparent from records must be obvious and patent, that is, the mistake may be a mistake of fact or mistake of law but it must not involve a debatable point of law. Appeal dismissed.

Summary

Issues:
- Rectification of tax demand under section 154 of the Income Tax Act, 1961 for assessment year 2015-16.
- Jurisdiction of the Tribunal to decide on rectification applications.
- Mistake apparent on the face of the record for rectification under section 154.

Analysis:

Issue 1: Rectification of tax demand under section 154
The appellant, a partnership firm, filed a return of income declaring total income which was subjected to limited scrutiny. The Assessing Officer (AO) accepted the returned income without variation after detailed submissions by the appellant's authorized representative. The appellant sought rectification under section 154 for the charge of interest income under Income from Other Sources. However, the AO rejected the plea for rectification, deeming it extra-territorial under section 154. The appellant, aggrieved by this denial, approached the first appellate authority and subsequently the Tribunal.

Issue 2: Jurisdiction of the Tribunal
In the absence of representation by the appellant at the scheduled hearing, the Tribunal proceeded to adjudicate the matter as per Rule 24 of the ITAT-Rules. The Tribunal has the power to decide ex-parte when the appellant does not appear, subject to certain conditions. The Tribunal considered the provisions of Rule 18 ITAT Rules, 1963, and after hearing both parties, examined the case records and relevant legal positions.

Issue 3: Mistake apparent on the face of the record
The Tribunal analyzed whether the alleged error in the interest income was a mistake apparent on the face of the record under section 154. It emphasized that an error must be self-evident and not require extensive examination or argument to establish it. The Tribunal found that the appellant's claim of unearned interest income in the ITR required re-examination of facts, falling outside the purview of section 154. Citing the judgment in "ITO Vs Volcart Bros.," the Tribunal held that a mistake apparent from records must be obvious and not involve a debatable point of law.

In conclusion, the Tribunal dismissed the appeal, stating that the appellant's plea did not meet the criteria of a mistake apparent on the face of the record. The judgment emphasized the need for errors to be self-evident and not involve complex re-examination of facts.