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2017 (2) TMI 274

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..... ere there may conceivably be two opinions cannot be said to be mistake or error apparent from record.We also appreciate the circular of CBDT No. 715 is binding only on the tax authorities and not on the assessee as admittedly the circular cannot detract from the provisions of the Act. Addition made on account of closing stock - Held that:- Necessity of making such addition had been understood and accepted as a dispute and the said dispute has reached the corridors of the various High Courts hence, the same would make the issue debatable.Since the subject mentioned issue also is debatable the same cannot be adjudicated in section 154 proceedings. Hence, the grounds raised by the revenue are dismissed - I.T.A No.650/Kol/2014 - - - Dated:- 3-2-2017 - Shri N. V. Vasudevan, JM and Shri M. Balaganesh, AM For The Appellant: Md. Ghayas Uddin, JCIT For The Respondent: Shri D. K. Bandyopadhyay, FCA ORDER Per Shri M. Balaganesh, AM: This appeal by revenue is arising out of order of CIT(A)-XIX, Kolkata vide appeal No. 349/CIT(A)-XIX/Ward-41(2)/Kol/12-13 dated 10.01.2014. Assessment was framed by ITO, Wd-41(2), Kolkata u/s. 143(3) r.w.s. 154(1) of the Income-tax .....

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..... out deduction of tax at source. In response, the assessee replied that payment made under the head printing charges and vinyle printing charges are actually purchases i.e. contract for sale and not labour charges or job work. The assessee also pleaded that in the said bill VAT was also charged by the concerned supplier which goes to prove that the subject mentioned payments were made only towards purchases and not attributable to any labour charges or job work. Accordingly, it pleaded that no tax deduction at source would need to be made on the said payment. The AO, however, by placing reliance on the CBDT Circular No. 715 dated 08.08.2995 proceeded to hold that the printed material was done as per the prescribed specification of the assessee and to suit the requirement of the assessee and accordingly, concluded that the same would fall under the ambit of provisions of section 194C of the Act and consequently disallowance u/s. 40(a)(ia) of the Act is to be made thereon. 4. The Ld. CIT(A), however, went into the preliminary issue of adjudicating the subject mentioned disallowance u/s. 40(a)(ia) of the Act in the proceedings u/s. 154 of the Act, in accordance with the ground raise .....

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..... s and circumstances of the case Ld. CIT(A) erred in law in not dealing in the issue regarding addition on account of difference in closing stock on the ground that the order u/s. 154 was ultra vires order and therefore the ground become infructuous. 5. The Ld. DR reiterated the findings of the AO and vehemently argued that there were apparent mistake on the face of the record and accordingly, the order of the AO by making these two additions in 154 proceedings is valid as per law. He also argued on merits that these two additions were definitely required to be made as assessee is engaged in reprographic business wherein he gets contract and prepares advertisement materials for big companies in tune with their specification, for which purpose, printing charges were incurred by the assessee by getting the specific job done in the field of photo shopping, vinyle printing, computer designing and computer graphics, which involves specialized skills to be carried out by the independent parties and any payment made pursuant to such execution of work would fall within the ambit of works contract as defined in section 194C of the Act. Accordingly, disallowance u/s. 40(a)(ia) of the Ac .....

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..... art Bros. (1971) 82 ITR 50 (SC) wherein it has been held as under: It is not open to the ITO to go into the true scope of relevant provisions of the Act in proceeding u/s 154 of the Act. A mistake apparent on the record must be an bvious and patent mistake and not something which can be established by a long drawn process of reasoning of points on which there may, conceivably be two opinions. A decision on a debatable point of law is not a mistake apparent from record. The power of rectification u/s 154 of the Act cannot be understood to review, revise or re-consider the substantial decisions, taken after due consideration of law and facts. In a nut-shell, mistake apparent from record, u/s. 154 of the Act must be self evident, obvious and patent mistake of facts or law which is floating on the surface of the record and not the mistake which can be discovered or discerned or established by way of discussions, debate and investigation into the issue. 7. We also hold that what could be rectified u/s. 154 of the Act are mistakes that are patent, glaring and apparent from record. Mistake, if any, which has to be discovered by a long drawn process or reasoning or examination .....

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