Income Tax Act, 1961

--Rectification--Debatable issue Refund along with interest under section 244A--During the assessment proceedings, assessee claimed that the amount disclosed as retention money which was offered as income could not be considered as part of its income and, therefore, could not be subjected to tax. Commissioner (Appeals) allowed the claim of assessee. Assessing officer, by an order, gave effect to the order of Commissioner (Appeals) and gave refund to assessee along with interest under section 244A. Commissioner in his administrative capacity directed assessing officer not to allow interest under section 244A till the date of Commissioner (Appeals)'s order and directed to assessing officer to rectify the mistake in granting interest. Assessing officer passed an order under section 154 to withdraw the interest granted to assessee. Held: Was not justified, as whether or not, there was a delay in the appellate proceedings and to whom was such delay attributable was a question of fact, requiring investigation. This investigation of the cause for the delay would itself make it a debatable issue as both the assessee and the Revenue would have different perspective on the same. Also, the communication made by the Commissioner was a communication based on his perspective of the reasons for the delay and the assessee's perspective had not even been considered by the Commissioner. Thus, rectification under section 154 could be made where mistake apparent on the record must be an obvious and patent mistake and not something on which there could be two possible opinions.

Income Tax Act, 1961 Section 154

Income Tax Act, 1961 Section 244A

In the Bombay High Court