Calcutta H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the mistake sought to be rectified by the ITO was not a mistake which was apparent from the record within the meaning of s. 154 of the IT Act, 1961 ?

Sections 32, 154, Rule APPENDIX I, PART I, Item III

Asst. Year 1965-66

Counsel Appeared

Prosad for the Revenue : R.N. Dutta & D.C. Nandy, for the Assessee

C. SEN, J.:

The following question of law has been referred to this Court by the Tribunal under s. 256(1) of the IT Act, 1961 (“the Act”).

“Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the mistake sought to be rectified by the ITO was not a mistake which was apparent from the record within the meaning of s. 154 of the IT Act, 1961 ?”

2. This reference relates to the asst. yr. 1965-66 for which the relevant accounting period is the year ended on March 31, 1965. The ITO had passed an order of rectification for the asst. yr. 196364 under s. 154 of the Act, reducing the extra shift allowance granted to the assessee. To give consequential effect to that order, the assessment for the year 1965-66 was also rectified by withdrawing the excess development rebate allowed to be set off in the assessment. From the statement of the case filed before us, it appears that the earlier case has not been brought before us but it appears from its order that the Tribunal has merely followed its order passed for the asst. yr. 1963-64. While dealing with the question as to whether the mistake was rectifiable error, the Tribunal observed as follows: “We have considered the rival submissions of the representatives of the parties. Normal depreciation allowance is defined in the Explanation appended to the provision in sub-item No. (iii) relating to item No. III of Part I of Appendix 1. The view taken by the ITO is not based on the interpretation of the Explanation as he has taken into consideration r. 5. Both the views, i.e., the view of the ITO and that of the representative of the assessee, are conceivable. The whole controversy centres round the meaning of the expression ‘Normal allowance’ and the determination of that expression required a long-drawn out process of reasoning. We find ourselves in agreement with the AAC that the mistake, if any, is not an obvious or patent one and that the point in controversy is a debatable one.”

3. While passing the order, the Tribunal has merely followed its earlier decision. We are of the view that the Tribunal has taken a correct view of the matter that, when conceivably two views are possible on an issue, an order of rectification cannot be passed under s. 154.

4. Under the circumstances, the question is answered in the affirmative and in favour of the assessee.

5. There will be no order as to costs.

BHAGABATI PRASAD BANERJEE, J. :

I agree.

[Citation :180 ITR 247]