RAKESH KUMAR GARG, J. - (1.) THE assessee has filed the present appeal under s. 260A of the IT Act, 1961 (hereinafter referred to as the "Act"), asst. yr. 1998 -99.
(2.) 35,38,62,548 after making various adjustments. It is relevant to mention here that during the financial year 1996 -97 corresponding to asst. yr. 1997 -98, the appellant had made a provision of Rs. 7 crores for payment of arrears of the salary to the employees. Since it was only a provision and the exact liability had not been quantified, it was added back as income in the return filed and the amount of Rs. 7 crores was taxed. In the next financial year i.e., 1997 -98, the liability was quantified and an amount of Rs. 4,99,37,406 was paid during the next year i.e. 1998 -99. Since the amount was paid out of the provision made in financial year 1996 -97, it was not charged to P&L a/c for the financial year 1997 - 98. While computing the income for filing its return for the asst. yr. 1998 -99, the appellant did not claim the said amount i.e. Rs. 7 crores as expenses. As a result, the income of Rs. 7 crores was assessed in excess for asst. yr. 1998 - 99.
(3.) IT is further pleaded in the appeal that thereafter the appellant filed an application under s. 154 of the Act before the AO claiming that since the omission to claim the expenditure of Rs. 7 crores was a mistake apparent from the record, this may be rectified and the income assessed be reduced by the said amount of Rs. 7 crores. However, the AO did not said deduction had not been claimed either in the return of income or during the course of assessment proceedings and therefore the said claim of deduction, which is not apparent from the record, can (sic -not) be allowed in the rectification application. Aggrieved against the said order, the assessee filed an appeal submitting therein that the provision of s. 154 of the Act does not provide for rectification only when a mistake in the order is detected. The mistake has to be on the record of the case and the record would include everything on the case file i.e. the return, the evidence and the order are a part of the record. The mistake can be detected from anything on the file and therefore, the appellant is entitled for rectification as prayed for. The CIT(A) accepted the appeal and directed the AO to give relief as claimed by the appellant Tribunal, wherein it was contended on behalf of the Revenue that the decision of the CIT(A), Chandigarh, was contrary to the well settled principles of law regarding the scope of provisions of s. 154 of the Act. It was further contended that the assessee never made a claim either in the return of income or in the course of assessment proceedings under s. 143 (3) and further the assessee had also not filed a revised return. On the basis of these facts, it was argued that the Hon'ble Supreme Court in case of Goetze (India) Ltd. vs. CIT (2006) 204 CTR (SC) 182 : (2006) 284 ITR 323 (SC) has held that no deduction can be allowed to the assessee unless the same is claimed in the return of income or in the revised return of income. The Revenue also placed reliance on the decision of this Court in the case of Mittal Alloys & AO could not allow the deduction in the course of assessment proceedings unless the claim was made by the assessee by filing the revised return, it cannot be said that there is a mistake in the assessment made by him under s. 143(3) of the Act and therefore, there was no mistake apparent from the record, which could be rectified by the AO. Mr. M.L. Garg, learned counsel for the appellant, argued that for the purpose of s. 154, the record does not mean the return of income and the assessment record of the same assessment year only. Since the provision had been made in the preceding year in respect of the arrears of salary payable to the employees and in the year under appeal, the assessee had made the payment out of the payment of the salary and the same was liable to be deducted to the assessee on payment basis. However, inadvertently, the assessee had failed to make the said claim in the return of income and this was a mistake, which is apparent from the record, which could be rectified under s. 154 of the Act. Shri M.L. Garg, learned counsel for the assessee, placed strong reliance upon the judgment of this Court in CIT vs. Smt. Aruna Luthra (2001) 170 CTR (P&H) 73 : (2001) 252 ITR 76 (P&H) and the judgment of the Hon'ble Supreme Court in Anchor Pressings (P) Ltd. vs. CIT & Ors. (1986) 58 CTR (SC) 126 : (1986) 161 ITR 159 (SC) in support of its case.;