High Court Of Gujarat
CIT vs. Maheshkumar A. Rathod
Section 143(1)(a)
Y.R. Meena ACTG, C. J. & A.S. Dave, J.
IT Ref. No. 111 of 1996
28th November, 2006
Counsel Appeared : Manish R. Bhatt, for the CIT
JUDGMENT
By the court
The following question has been referred for the opinion of this Court :
“Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the issue being debatable, the AO was not justified in disallowing deduction claimed by way of adjustment under s. 143(1)(a) of the IT Act, 1961 ?”
2. At the outset, Mr. M.R. Bhatt, learned counsel for the Revenue, fairly admits that the issue is covered against the Revenue by a judgment of this Court dt. 2nd Nov., 2006, in CIT vs. Manubhai M. Patel (2008) 296 ITR 143 (Guj).
3. This Court has considered the issue in the case of Manubhai M. Patel (supra) as under (page 145) :
“5. Sec. 143(1)(a) of the Act says that where a return has been made under s. 139, or in response to a notice under sub-s. (1) of s. 142, then, particular powers can be exercised by the AO. Sec. 154 of the Act relates to rectification of mistakes. With a view to rectify any mistake apparent from the records, the income-tax authorities referred to in s. 116 may amend any order passed by it under the provisions of the Act. In the present matter, proceedings were drawn under s. 143(1)(a) on the premises that such deductions were not permissible. It is not in dispute before us that on the date when the assessee was claiming the deductions, the judgments of the Tribunal and of the different High Courts were in favour of the assessee wherein the Tribunals or the High Courts had observed that to the extent of 40 per cent, deductions would be permissible subject to verification. We are not concerned with the judgments of the Tribunals or of the High Courts, but, the question would be that whether the AO was justified in proceeding under s. 143(1)(a), especially, when the matter was debatable and the AO could proceed either under s. 143(2) or s. 143(3) of the Act. The apex Court, in the matter of T.S. Balaram, ITO vs. Volkart Brors. (1971) (1971) 82 ITR 50 (SC), has observed that a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. From the said judgment of the apex Court, it would be clear that in a case where the mistake is apparent from the record, powers under s. 154 of the Act could always be exercised. In the present matter, the AO, in view of the debatable issue relating to deduction or disallowance of the deductions, could not proceed under s. 143(1)(a) of the Act.”
When the issue relating to deduction or disallowance of deductions is 4 debatable, the AO cannot make any adjustment in an order under s. 143(1)(a). We, therefore, see no infirmity in the order of the Tribunal. Accordingly, we answer the question referred in favour of the assessee and against the Revenue. The reference stands disposed of.
[Citation : 296 ITR 146]
