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2008 (4) TMI 385 - AT - Income TaxRectification of mistakes u/s 154 - Mistake apparent from record - Assessing Officer to granted deduction in respect of bad debts which were written off in the relevant previous year - HELD THAT:- A mistake apparent from record is not only a mistake in the acts of an authority; even a wrongful inertia of a public authority is also a mistake apparent from record. All the powers of someone holding a public office are powers held in trust for the good of public at large. There is, therefore, no question of discretion to use or not to use these powers. It is so for the reason that when a public authority has the powers to do something, he has a corresponding duty to exercise these powers when circumstances so warrant or justify. The nature of ‘finding or direction’ under section 153(3), Hon’ble Supreme Court’s following observations in the case of Rajinder Nath v. CIT [1979 (8) TMI 3 - SUPREME COURT]. It is thus clear that the CIT(A)’s finding that bad debts are not allowable in the assessment year 2001-02 because the same is allowable in the assessment year 2002-03, which is the assessment year of actual write off, is the kind of ‘finding’ which is covered by the provisions of section 153(3) of the Act. In view of the fact that the CIT(A) has admittedly given a finding to the effect that the bad debt claim is admissible in the year of actual write off, which is previous year relevant to the AY 2002-03, coupled with the fact that the AO has the powers to do assessment, reassessment or recomputation on the assessee in consequence of, or to give effect to such a finding contained in an order passed by the CIT(A), the AO should have passed the order recomputing and correctly assessing the taxable income of the assessee for the AY 2002-03. By not doing so, the AO has not given effect to the ‘finding’ contained in the CIT(A)’s order for the AY 2001-02, and, to that extent, the AO’s inertia is clearly a mistake apparent from record. This inaction is clearly contrary to the scheme of the Act which permits any assessment, reassessments and recomputation orders to give effect to, or in consequence of, any findings or directions not only in the CIT(A)’s order but also orders of the Tribunal, Hon’ble High Courts, Hon’ble Supreme Court as well as of “any Court” in a proceeding otherwise than in appeal. AO, as indeed any other authority in the IT Act, cannot turn to the assessee and say that although he has authority to do something for the good of the assessee, it is not necessary that he must exercise that authority. The inaction of the AO, therefore, is a mistake apparent from the record, and there cannot be any two reasonable opinions on whether or not the AO should give effect to the finding of the CIT(A). It is also important to bear in mind that any other view of the matter will result in a double jeopardy to the assessee which will constitute ‘absurdity’ besides being grossly inequitable and patently unfair. An interpretation which leads to such absurdities, as is the settled law, is to be avoided. Therefore, we uphold the grievance of the assessee and direct the AO to give proper effect to the findings of the CIT(A) for the AY 2001-02 by recomputing the taxable income for the AY 2002-03 and allowing the bad debt in the year in which it is actually written off, i.e., 2002-03. The assessee gets the relief accordingly. In the result, the appeal is allowed. It was so pronounced in the open Court upon conclusion of hearing.
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