ITO, WARD-40(1), KOLKATA, KOLKATA vs. DILIP KUMAR SHAW, KOLKATA

The assessee in the present case is an individual, who filed his return of income for the year under consideration on 31.10.2006 declaring total income of Rs.8,85,386/-. In the assessment completed under section 143(3) vide an order dated 18.07.2008, the total income of the assessee was determined by the Assessing Officer at Rs.9,25,390/-. Thereafter it was noticed by the Assessing Officer that the contractual receipts credited in the Profit & Loss Account of the assessee were to the tune of Rs.2,91,42,128/- whereas the contract receipts of the assessee as per TDS Form 16A were Rs.2,99,89,617/-. He, therefore, held that there was a mistake in the assessment order passed under section 143(3) in taking the contract receipts short by Rs.8,47,489/- and the same was Assessment year: 2006-2007 Page 2 of 4 rectified by him vide an order dated 08.12.2012 passed under section 144, wherein an addition of Rs.8,47,489/- was made by him to the total income of the assessee.

Against the order passed by the Assessing Officer under section 154, an appeal was preferred by the assessee before the ld. CIT(Appeals) and after considering the submission made by the assessee as well as the material available on record, the ld. CIT(Appeals) set aside the order passed by the Assessing Officer under section 154 by holding the same as not maintainable for the following reasons given in his impugned order:- “It is well recognised law that any erroneous assessment cannot be the subject matter for rectification under section 154 of the Income- tax Act. The erroneous order of assessment can be rectified only under procedure known to law by carrying the matter before the appropriate authority to rectify the erroneous order or revise it as per law. A debatable point cannot be a reason for rectification under section 154. Further, in order to invoke section 154 for rectification of mistake, the mistake sought to be rectified should be a mistake apparent on the record and must be an obvious and patent mistake and not something which could be established by long drawn process of reasoning on the point in issue on which there may be conceivably two opinions. A decision on a debatable point of law cannot be regarded as a mistake apparent on the face of the record amenable for rectification under section 154 of the Income Tax Act. The Hon'ble Apex Court in T.S Balaram Vs Volkart Brothers and Others reported in 1971 (82) ITR 50 has observed that a mistake apparent on record must be obvious and patent mistake and not something which is established by long drawn process of reasoning. Thus keeping in mind the dicta laid down in the above case when the facts on hand are perused yet again, it is seen that the AO sought to rectify the assessment order on the ground that receipts as shown in the P&L account did not match with the receipts in Form 16A. There could be many reasons for such a mismatch. This point should have been scrutinized during assessment proceedings, which was obviously not done. The Income Tax Act provides sections such as 148 to deal with such matters. Thus I find force in the contention of the appellant that this issue is not a mistake apparent from record and hence not Assessment year: 2006-2007 Page 3 of 4

I have heard the arguments of both the sides and also perused the relevant material available on record. As rightly observed by the ld. CIT(Appeals) in his impugned order, there could be many reasons for the difference noted by the Assessing Officer in the contract receipts credited in the Profit & Loss Account of the assessee and the contract receipts as shown in the relevant TDS certificates. At the time of hearing before the Tribunal, the ld. Counsel for the assessee has also explained that the said difference was due to the mistake committed by the concerned party in deducting tax at source from the contract receipts of the earlier years, which was corrected by them by deducting more tax from the contract receipts of the year under consideration. The difference in the contract receipts as noticed by the Assessing Officer thus required more investigation and enquiry to find out as to whether there was any escapement of income of the assessee and as rightly held by the ld. CIT(Appeals) it was not a case of obvious and patent mistake, which could be rectified under section 154. This issue involved a debatable point which required further enquiry and investigation and the same, therefore, was beyond the scope of rectification permissible under section 154 as rightly held by the ld. CIT(Appeals). I, therefore, uphold the impugned order of the ld. CIT(Appeals) setting aside the order passed by the Assessing Officer under section 154 by treating the same as not maintainable and dismiss this appeal of the Revenue.

In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on June 13, 2018. Sd/- (P.M. Jagtap) Accountant Member Kolkata, the 13th day of June, 2018