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TMI Blog2020 (1) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of construction. X X X X Extracts X X X X X X X X Extracts X X X X ..... by ₹ 27,88,995/-." 4. The A/R of the appellant made exhaustive submissions disputing the action of the AO, the relevant portion of such submissions is reproduced as under: - "At the outset and in respect of ground no. 1, it is vehemently contended that in the instant case the assumption of jurisdiction by the Ld. Assessing Officer u/ s. 154 of the Income Tax Act, 1961 was not within the statutory parameters. It is most respectfully pointed out that there is no apparent mistake in the return and enclosures thereto and therefore the Ld. Assessing Officer exceeded his power and acted contrary to law in invoking s. 154 of the Income Tax Act, 1961 to impose his view that the cost allocation between sold and unsold area was disproportionate. An apparent mistake presupposes an arithmetical error and such obvious mistake so as not to require any process of interpretation to arrive at such conclusion. The application of the provisions of s. 154 of the Income Tax Act, 1961 is restrictive and extends only to errors which are beyond the pale of any argument. However, it was entirely a matter of subjective opinion of the Ld. Assessing Officer to arrive at the conclusion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mistake and not something which can be established by a long drawn process of reasoning on which there may be conceivably two opinions. It is settled in the case of STAR ROLLING MLLS P. D. - VS- C.I.T. (1988) 174 ITR 396 (CAL) that the provision of s. 154 of the Act is applicable obvious mistake only. There must be a mistake apparent on the face of the record. It does not cover any mistake which may be discovered by a process investigation, argument of proof It is also settled in the case of BALARAM, I.T.O. -vs- VOLKART BROTHERS (1971) 82 ITR 50 (SC) that not open to the ITO to go into the true scope of the relevant provisions of Act in a proceeding under section 154 of the 1961 Act. A mistake apparent the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. Further in the case of C.I.T.-VSSATYANARAYAN BHALOTIA (1994) 74 TAXMAN 34 (CAL), when a mistake has to be discovered on the interpretation or the construction of the provisions of the Act, it could never be a mistake apparent from the record. Again, in the case of BATA INDIA LTD. -VS- I.A.C. (2001) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sum of ₹ 27,88,995/- without giving any basis thereof in the order framed u/s 154 of the Act is thoroughly illegal and unfounded. In fact, there is no material evidence with the Ld. Assessing Officer to construe that such cost of construction was not actually incurred by the appellant. Therefore, his action was born of unilateral surmise, suspicion and conjecture not amenable to reason and having no relevance to facts. It is settled in the case of C.I.T. - vs- MAHARAJADHIRAJA KAMESWAR SINGH OF DARBHANGA (1933) 1 ITR 94 (PC) that an assessment is not a leap in the dark. The AO is not entitled to make a guess without evidence. It is also settled in the case of DHAKESWARI COTTON MILLS LTD. - VSC. I. T. (1954) 26 ITR 775 (SC) that an assessment which is based on conjecture, suspicion and surmise is invalid and unsustainable in law. In the present context, it is submitted that the investment in the sum of ₹ 27,88,995/- in cost of construction does not warrant application of provisions of s. 69 of the Act. It is reiterated that the appellant has duly appropriated the cost of construction in actuality and thus, it goes without saying that it would be monstrously impossibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve no hesitation to hold that the order passed by the AD under section 154 of the Act is valid in the eye of law, as the true intent behind passing such a rectification order is to ensure that the mistake apparent from record, is stricto sensu given effect to. Thus, the grounds raised in this respect fails." 3. Learned authorized representative vehemently submitted during the course of hearing that both the lower authorities have erred in law and on facts in taking recourse to sec. 154 rectification proceedings despite the fact that the impugned showcause notice dated 10.11.2014 (supra) had made it clear that it was an instance of under assessment of income amounting to ₹27,88,995/- than that of an apparent error. The Revenue draws strong support of the lower authorities' impugned action. We notice in this backdrop of pleadings that the learned lower authorities' action invoking sec. 154 proceedings is not liable to be concurred with. We reiterate that the Assessing Officer has himself treated the assessee's case as involving under assessment and not rectification as indicated in preceding paragraphs. Hon'ble jurisdictional high court's decision in Commissioner of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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