Section 245D(4) of the Income Tax Act
The decision most relied on for Section 245D(4) is T.S. Balaram ITO v. Volkart Bros. (82 ITR 50), cited in 382 of the 189 judgments on BharatTax that turn on this section.
Leading authorities on Section 245D(4)
A mistake apparent from the record under Section 154 must be an obvious and patent error, not one that requires a long and elaborate process of reasoning or where two opinions are conceivable. Rectification under Section 154 is not permissible for re-examining issues already considered or requiring detailed re-computation.
An assessment order is unsustainable if the Assessing Officer denies the assessee the opportunity to cross-examine deponents whose statements are relied upon or fails to provide the material used against them, as this violates principles of natural justice.
Interest under section 234 cannot be levied if the employer fails to deduct tax at source, as the employee should not be faulted for the employer's default.
Penalty under section 271(1)(c) cannot be levied when a substantial question of law is admitted by the High Court on an addition, indicating the issue was debatable and the assessee acted bona fide.
Forms provided by a rule-making authority, being delegates of the legislature, cannot override a statutory provision and are subservient to legislation. Forms facilitate implementation and cannot supplant the law. Also, interest under section 234B, being compensatory, cannot be charged if taxes have already been paid.
The case is cited for the principle that the Assessing Officer (AO) should consider the assessee's plea regarding genuine transactions made through cheque, particularly when relying on judicial pronouncements concerning the failure of the assessee to establish genuineness.
Loans or advances given by a company to shareholders are not deemed dividends under section 2(22)(e) if they are given in return for an advantage conferred on the company, such as being for business purposes like the purchase of an asset. This also applies if the payment is not out of accumulated profits or is a trade advance made as consideration for goods received or asset purchase.
Once an application for settlement is made under Section 245C(1) and accepted by the Income Tax Settlement Commission (ITSC), and a final order is passed under Section 245D(4), the Assessing Officer loses jurisdiction to reopen the assessment. An order under Section 245D(4) is distinct from a regular assessment under Sections 143(1), 143(3), or 144.
