Law:

Section:

Section 145, read with section 154, of the Income-tax Act, 1961 - Method of accounting - Valuation of stock - Assessment years 1987-88 and 1988-89 - Assessee-company was deriving income from execution of contract works that included construction of bridge, etc. - With effect from assessment year 1986-87, assessee changed its method of accounting for valuation of work-in-progress - As per new method, assessee set off anticipated loss in future years against work-in-progress valued at contracted rate - Assessing Officer did not accept changed method and increased closing value of work-in-progress by adding back adjustment made for losses - Said order of Assessing Officer had attained finality - For assessment years 1987-88 and 1988-89, assessee had prepared its accounts according to changed method and submitted its income-tax return accordingly - Assessing Officer passed assessment orders accepting returned income - Thereafter, assessee made an application under section 154 for assessment years 1987-88 and 1988-89 requesting Assessing Officer to rectify assessments in accordance with department's own stand for assessment year 1986-87 and to take closing stock of assessment year 1986-87 as determined by Assessing Officer, as opening stock for assessment year 1987-88 - Application was rejected on ground that there was no mistake apparent on record as assessment was made on returned income - Whether since while passing order for assessment years 1987-88 and 1988-89, Assessing Officer ignored his own finding made for assessment year 1986-87 by not following well-settled law of accountancy that closing stock of an assessment year should be opening stock of next assessment year, there was a glaring mistake apparent on record which would come within purview of section 154 - Held, yes - Whether merely because in original return there was a mistake on part of assessee, such fact could not be a ground for refusing prayer of rectification, when mistake was apparent from record and dispute was also not debatable - Held, yes [Matter remanded] FACTS The assessee-company was a Central Government undertaking deriving income from execution of contract works that included…

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