INCOME TAX ACT, 1961

Section 154

Rectification under section 154 - Debatable issue - Issue as regards allowability of deduction under section 54B -

AO while passing order under section 154 rejected claim of deduction of assessee under section 54B on allegation that assessee being 'HUF' was not entitled to claim deduction under section 54B for relevant assessment year. Issue arose as to whether issue as regards allowance of benefit under section 54B was investigated by AO during course of original assessment proceedings and it was wrongly held that it was a mistake apparent from record, so as to invoke provision of section 154. Held: In land record maintained by Land Revenue Department, ownership of property was entered in name of an individual and not in name of 'HUF' and 'HUF' claim of ownership over such a property by virtue of the property being ancestral and put into the common hotchpotch of family. Under such circumstances, issue being highly debatable and required lengthy arguments. It is a settled law that powers of AO to rectify an order under section 154 are very limited and can be exercised only in a case where AO finds that a mistake apparent on record has occurred. AO thus, was not justified in passing order under section 154 with limited jurisdiction of rectification of order in case of a 'mistake apparent on record'.

REFERRED : T.S. Balaram v. Volkart Brothers & Ors. (1971) 82 ITR 50 (SC) : 1971 TaxPub(DT) 0355 (SC) CIT v. Ramesh Electric & Trading Co. (1993) 203 ITR 497 (Bom.) : 1993 TaxPub(DT) 0847 (Bom-HC)

FAVOUR : In assessee's favour

A.Y. :

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