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TMI Blog2024 (11) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... income on 21.09.2015 declaring total income of Rs. 8,46,600/-. The case of the assessee was selected through CASS for limited scrutiny for verification of the following issues: (a) Interest expenses (b) Unsecured loans 4. Accordingly, statutory notice u/s 142(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') was issued and served on the assessee, in response to which the assessee filed the requisite details. The Assessing Officer completed the assessment on 27.12.2017 by accepting the returned income. 5. Subsequently, the Assessing Officer noticed that under the head 'Preliminary Expenses' the assessee had claimed deduction of Rs. 3,44,38,300/- which was allowed in full in the assessment order. According to the Assessing Officer, the same should have been allowed @ 20% as per provisions of section 35D of the Act. Accordingly, he issued a notice u/s 154 of the Act. Rejecting the various explanations given by the assessee, the Assessing Officer made addition of Rs. 2,75,50,640/- to the total income of the assessee by observing as under: "ORDER U/S 154 OF THE INCOME TAX ACT 1961 It has been come to the notice of the undersigned that while passing the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.1. At this juncture, it will be beneficial to refer to the decision of the Hon'ble Supreme Court in the case of TS. Balaram, ITO v. Volkart Brothers [1971] 82 ITR 50 wherein the Hon'ble Supreme Court has held as follows "From what has been said above, it is clear that the question whether section 17(1) of the Indian Income-tax Act, 1922, was 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 As seen earlier, the High Court of Bombay opined that the original assessments were in accordance with law though in our opinion the High Court was not justified in going into that question In Sathyanarayan Laxminarayan Hegde v Mallikarjun Bhavanappa Tirumale [1950] 1 SCR 890, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... batable issue. .............. 11. To the same effect is the judgment of this Court in the case of CCE v. A.S.C.U. Ltd. 2003 (151) ELT 481, wherein it has been held that a 'rectifiable mistake' is a mistake which is obvious and not something which has to be established by a long drawn process of reasoning or where two opinions are possible. Decision on debatable point of law cannot be treated as "mistake apparent from the record". 12. For the afore-stated reasons, appellant-assessee succeeds 7.3. Various high courts have time and again followed this principle and have quashed any ramification of debatable nature u/s 154 of the Act. 8. Considering the facts of the case and position of law, grounds of appeal are decided in favour of the appellant." 7. Aggrieved with such order of CIT(A) / NFAC, the Revenue is in appeal before the Tribunal by raising the following grounds: 1. On the basis of facts and circumstances of the case and in law. Ld CIT(A) erred in holding that the issue subjected to rectification u/s 154 was debatable and could not legally be treated as a mistake apparent from record, without appreciating the fact that in the assessment order the prelimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quashing the order passed u/s 154 submitted that the case was selected for limited scrutiny and therefore the Assessing Officer could not have extended the scope of limited scrutiny to complete scrutiny without taking mandatory approval of the PCIT. 11. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. It is an admitted fact that the case was selected for limited scrutiny under CASS for verification of interest expenses and unsecured loans which is evident from para 2 of the assessment order, which reads as under: "2. The case was selected for Limited Scrutiny under Computer Assisted Selected Scrutiny i.e. CASS for verification of i. Interest expenses ii. Unsecured loans. Notice u/s. 143 (2) was issued by ITO, Wd 7(2), Pune on 27.07.2016 which was served on 06/08/16. Thereafter the case was transferred to ITO, Wd 2(2), Pune over change in jurisdiction." 12. A perusal of the order sheet entry shows that on 27.12.2017 the assessee has filed a Note on preliminary expenses in Dak of the office of the Assessing Officer which is evident from page 93 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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