1979 (7) TMI 149 - AT - Income Tax

Summary

Issues:
1. Rectification of assessment order under section 154 regarding interest receipt.
2. Interpretation of mistake apparent from the record for rectification under section 154.

Detailed Analysis:

Issue 1: The main issue in this case was whether the assessee's request for rectification of the assessment order under section 154 to modify the addition of interest receipt from Rs. 54,209 to Rs. 36,000 should be allowed. The Income Tax Officer (ITO) had initially disallowed interest of Rs. 54,209, but the assessee contended that only Rs. 36,000 should be disallowed. The Assistant Commissioner of Income Tax (AAC) allowed the assessee's contention, stating that there was a mistake in the determination of the interest amount, and the figure of Rs. 36,000 should be substituted. The AAC found the assessee's application under section 154 to be based on reasonable grounds supported by the appellate order, indicating a mistake apparent from the record.

Issue 2: The second issue revolved around the interpretation of what constitutes a mistake apparent from the record for the purpose of rectification under section 154. The AAC had dismissed the assessee's appeal on the grounds of non-payment of tax but discussed the merits of the interest disallowance issue. The AAC's detailed discussion led the assessee to believe that there was a mistake in the assessment order. However, the Appellate Tribunal noted that a mistake apparent from the record must be obvious and patent, not requiring a lengthy process of reasoning. The Tribunal found that there was no clear error on the record, especially not a mere arithmetical mistake as claimed by the assessee. Consequently, the Tribunal vacated the AAC's order and reinstated the ITO's order, disallowing the interest amount of Rs. 54,209.

In conclusion, the Appellate Tribunal allowed the Revenue's appeal, holding that there was no mistake apparent from the record justifying the rectification of the assessment order under section 154 to modify the interest receipt amount. The Tribunal emphasized the need for a clear and obvious error for rectification under section 154, which was not present in this case.