INCOME TAX ACT 1961

Section 154 Section 244A

Rectification - Mistake apparent - Withdrawal of excess interest granted under section 244A -

AO passed rectification order under section 154 of the Act withdrawing erroneous grant of interest under section 244A. On appeal CIT(A) dismissed the order of AO passed under section 154. Revenue filed appeal against the order of CIT(A) viewing that AO was wrong in resorting to rectifying the order under section 154 to withdraw the excess interest granted under section 244A to the assessee, failing to appreciate that it was a mistake apparent from record. Held: There is more than one opinion on the meaning of “regular assessment” which is critical issue for deciding whether or not the assessee was eligible for interest under section 244A. In such scenario, the scope of rectification proceedings under section 154 spells out that only mistake apparent from record can be rectified. The Apex Court in the case of T.S. Balram, ITO v Volkart Bros (1971) 82 ITR 40 (SC) : 1971 TaxPub(DT) 0355 (SC), held that mistake apparent on record must be obvious and patent mistake and not something which has to be established by a long drawn process of reasoning on the points on which there may be conceivably two opinions. Therefore, the AO was wrong in resorting to section 154 to withdraw the excess interest granted under section 244A to the assessee as it was not something mistake apparent from record. Hence, CIT(A) rightly dismissed the order of AO passed under section 154. Thus, no infirmity was found with the findings of CIT(A) and the relief provided to the assessee was sustained. The grounds of appeal of the Revenue were dismissed.

Followed:T.S. Balram, ITO v Volkart Bros (1971) 82 ITR 40 (SC) : 1971 TaxPub(DT) 0355 (SC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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