1980 (4) TMI 101

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..... d the assessee thus became liable to pay to the said firm Rs. 37,952 out of which an amount of Rs. 17,728 only was paid during the said financial year. The balance liability of the assessee for the payment of Rs. 20,224.80 to M/s. Ashoka Rice Mills remained undischarged until after 31st March, 1969. While completing the assessment for the assessment year 1969-70, the ITO, in view of the assessee's mercantile system of accounting, allowed to the assessee the full expenditure of Rs. 37,952 in connection with the rice husking service obtained from M/s. Ashoka Rice Mills. Later on, the ITO, discovered that the payment of Rs. 20,224.80 had been made by the assessee otherwise than by crossed cheque or crossed draft drawn on bank as contemplated .....

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..... ce consideration of Rs. 20,000 (for rice husking service) was discharged by the assessee on 2nd May, 1969, such discharge did not involve a payment within the meaning of s. 40A(3) read with section 43(2) of the Act. The following question of law has been referred for the opinion of this court at the instance of the revenue : " Whether, on the facts and circumstances of the case, the Appellate Tribunal was right, in law, in holding that the non-application of the provisions of section 40A(3) of the Income-tax Act by the Income-tax Officer to the expenditure incurred to get the rice husked did not constitute a mistake apparent from the record within the meaning of section 154(1), Income-tax Act ? " After hearing the learned counsel for t .....

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..... applicable to the case of the first respondent is not free from doubt. Therefore, the Income-tax Officer was not justified in thinking that on that question there can be no two opinions. It was not open to the Income-tax Officer to go into the true scope of the relevant provisions of the Act in a proceeding under section 154 of the Income-tax Act, 1961. A mistake apparent on 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. " The above-mentioned observations go to show that in that case, the application of the provisions of section 17(1) of the Indian I.T. Act, 1922, keeping in view the facts and circum .....

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