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2016 (6) TMI 79 - AT - Income TaxRectification of mistake - adhoc disallowance of 20% labour expenditure - Held that - Section 154 of the Act provides for rectification of mistake apparent from the records. As per the said section, mistake not confined to mere clerical or arithmetical mistake. The only point is that the mistake must be obvious and patent and not involving a debatable point. Similarly, the word record has not been defined u/s 154 of the Act or in the definition section. Therefore, the said word will have to be given a wider import by including the records that is available with the A.O. In the present case on hand, on perusal of the assessment records, we find that the A.O. at the time of finalization of assessment u/s 143(3) of the Act, intend to disallow 20% labour expenses for which the authorized representative of the assessee has agreed. However, while finalizing the assessment order, the A.O. has made addition of ₹ 17,76,410/- without any basis. Therefore, in our considered view, the said mistake is a mistake apparent from the records which needs to be rectified u/s 154 of the Act. The assessee s contention is that records means only an assessment order is not acceptable for the reason that record means not only the assessment order, but also includes any records available with the A.O. at the time of passing assessment order. Therefore, we are of the opinion that the A.O. has rightly rectified the assessment order u/s 154 of the Act. Hence, we inclined to uphold the order passed by the CIT(A) and reject the ground raised by the assessee. - Decided against assessee.
Issues:
Rectification of assessment order under section 154 of the Income Tax Act, 1961 based on alleged mistake apparent from the records. Detailed Analysis: Issue 1: Rectification under Section 154 of the Act The appeal pertains to the rectification of the assessment order under section 154 of the Income Tax Act, 1961. The Assessing Officer (A.O.) had initially made an addition of a specific amount towards disallowance of labour expenses during the assessment under section 143(3) of the Act. Subsequently, the A.O. issued a notice under section 154 proposing to rectify the order, claiming a mistake in the disallowance amount. The appellant contended that there was no apparent mistake justifying rectification. The CIT(A) upheld the A.O.'s decision, leading to the current appeal. Issue 2: Mistake Apparent from Records The core dispute revolves around whether the alleged mistake in the assessment order was indeed apparent from the records, warranting rectification under section 154. The appellant argued that the A.O.'s quantification of disallowance was based on verified bills and vouchers, and the discussion on a 20% disallowance during assessment proceedings did not constitute a mistake in the order. Conversely, the A.O. and CIT(A) asserted that the discrepancy between the agreed disallowance percentage and the actual addition was a clear mistake evident from the assessment records. Issue 3: Interpretation of "Records" for Rectification A critical aspect of the case was the interpretation of the term "records" under section 154. The appellant contended that only the assessment order itself should be considered, while the A.O. and CIT(A) argued for a broader interpretation encompassing all available records at the time of assessment. The Tribunal ultimately supported the wider interpretation, emphasizing that the mistake need not be limited to clerical or arithmetical errors but should be obvious and patent, as per the provisions of section 154. Conclusion: The Tribunal dismissed the appeal, upholding the CIT(A)'s decision and affirming the rectification made by the A.O. under section 154. The judgment highlights the significance of determining whether a mistake is truly apparent from the records, emphasizing the need for clarity and patent nature of the error for rectification purposes.
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