Section 154 – Non-consideration of decision of Jurisdictional High Court or of the Supreme Court can be termed as ?mistake apparent from the record’ which can be the subject matter of rectification application u/s. 154 even if not claimed earlier by the assessee during assessment proceedings or appellate proceedings

Section 154 –
Non-consideration of decision of Jurisdictional High Court or of the Supreme
Court can be termed as ?mistake apparent from the record’ which can be the
subject matter of rectification application u/s. 154 even if not claimed
earlier by the assessee during assessment proceedings or appellate proceedings

FACTS

The assessee’s income was subject to assessment u/s. 143(3).
Additions were made u/s. 35D as also under other sections. The assessee did not
contest addition u/s. 35D but filed appeal against the other additions. In the
meanwhile, the assessee filed an application for rectification to allow the
expenditure on issue of bonus shares, in terms of decision of the Bombay High
Court in CIT vs. WMI Cranes Limited [326 ITR5 23] and the Supreme
Court in CIT vs. General Insurance Corporation [286 ITR 232].
However, the AO denied the rectification; consequently, the assessee appealed
to the Commissioner (Appeals) against the AO’s order rejecting his
rectification application. However, the assessee’s claim was rejected by the
Commissioner (Appeals) also. The assessee then filed an appeal to the Tribunal.

HELD

The Tribunal observed that the assessee moved
rectification petition u/s. 154 for the first time towards his claim u/s. 35D
relying upon the decision of the Hon’ble Supreme Court as well as the decision
of the jurisdictional High Court. The only basis on which the same was denied
by first appellate authority is the fact that there was no mistake apparent
from the record. The Tribunal considered the decision of the Supreme Court in ACIT
vs. Saurashtra Kutch Stock Exchange Ltd. [305 ITR 227]. It observed
that non-consideration of a decision of the Jurisdictional High Court or of the
Supreme Court could be termed as ‘mistake apparent from the record’.

The Tribunal also analysed the said facts from the angle
of constitutional authority – in terms of Article 265 of the Constitution of
India, no tax is to be levied or collected except by the authority of law. It
is trite law that true income is to be assessed and the Revenue could not
derive benefit out of the assessee’s ignorance or procedural defects. The
Tribunal finally allowed the appeal filed by the assessee considering the
principles of rectification pronounced in Saurashtra Kutch Stock Exchange
Ltd. (supra) and merits of the case as held in General Insurance
Corporation (supra).