1. Decision rendered on a debatable point of law is not a mistake apparent from the record. It was held that the word “apparent” must be something which appears to be so ex facie and it is incapable of argument or debate and therefore it follows that a decision on a debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectification.
2. Rectification is a process by which a mistake is set at right. It thus means correcting an error which was apparent from record and not deciding the matter over and again on merits.
3. The rectified order does not supersede the original order but continues with the incorporated changes.
4. Section 154 can not be applied where a finding is based clearly on facts which is susceptible to an appeal
1. The assessee is a Trust registered under Sec.12AA and filed its return of income for the assessment year 2006-07 on 31.10.2008, declaring nil return
2. During the course of assessment proceedings u/s 143(3) even though opportunity was provided to produce the required documents on various occasions, neither the appellant nor its authorized representatives had furnished the relevant documents of the funds being corpus, apart from a letter which merely indicated the transfer of the loan funds to the capital and did not specify the actual utilization of the funds in the hands of the Trust
3. The Assessing Authority after taking into account the facts and circumstances, found that the assessee Trust has no corroborative evidence to prove that the donation received by it was a capital donation and therefore the entire receipt of the Trust during the assessment year in question was treated as its income and the claim of the appellant for exemption under Sec.11 of the Act was rejected and thereupon the assessment was completed accordingly
4. Aggrieved by the order, appellant had chosen to file an application for rectification under Sec.154 of the Act, seeking to rectify the order of assessment, contending that out of the gross income of Rs.2,66,50,000/- an amount of Rs.84,00,000/- was received during the previous year ending 31.03.2005 from Mr. K.K. Joseph as loan and Rs.1,62,50,000/- was also received as loan from K.K. Joseph during the current
year. Further, it was contended that vide book entry dated 31.03.2006, Rs.1,01,00,000/-was shown as corpus donation, and that the appellant vide his letter dated 07.01.2009 had raised objection against the treatment of the same as the income of the Trust by the Assessing Officer
5. Aggrieved by the order passed by the Assessing Officer, the appellant preferred appeal before the Commissioner of Income Tax (Appeals) and by Annexure-C order, the Commissioner a lowed the appeal partly and held that the treatment of Rs.1,00,00,000/- as corpus donation in the hands of the assessee, since the trustee has given letter of consent that the amount of loan earlier given should be treated as corpus donation
6. Aggrieved by the said order, Revenue preferred appeal before the Appellate Tribunal
7. Tribunal found that there was no mistake apparent from record in the order of the Assessing Officer so as to seek the rectification under Sec.154 of the Act and therefore the appeal filed by the Revenue was allowed
8. Aggrieved by the ITAT order assessee moved to the High Court
9. Tribunal after hearing both the parties decided the issue in favour of Revenue and against the Assessee
This Court found that the mistake to be rectified must be one apparent from the record and a decision rendered on a debatable point of law is not a mistake apparent from the record. Further, it was held that the word “apparent” must be something which appears to be so ex facie and it is incapable of argument or debate and therefore it follows that a decision on a debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectification.
It is a settled proposition of law that rectification is a process by which a mistake is set at right. It thus means correcting an error which was apparent from record and not deciding the matter over and again on merits and that the rectified order does not supersede the original order but continues with the incorporated changes.
We are of the considered opinion that the question raised for invoking Sec.154 of the Act was a question ought to have been raised in a regular appeal and the same has nothing to do with rectification of any mistake apparent from the record. The findings entered by the
Assessing Authority was based clearly on facts which was susceptible to an appeal. We also did not find any error apparent from the record which enabled the assessee to invoke the said provision. It is apposite and clear that the power under Sec.154 can be invoked only to correct an error and not to disturb a concluded finding.
Cases referred to
2. Nagaraj v. State of Karnataka' [(1993) Supp. 4 SCC 595]
3. Ammonia Supplies Corporation Pvt. Ltd. v. Modern Plastic Containers Pvt. Ltd.' [AIR 1998 SC 3153]