Law:

Section:

Section 154 [as it stood prior to 1-10-1984] of the Income-tax Act, 1961 - Rectifica- tion of mistake - Apparent from record- For assessment year 1972-73, original assessments were completed under section 143(1), allowing set off of carried forward business loss of earlier years against income from lorry hire returned under 'other sources' by assessees - ITO, subsequently, realised his mistake and rectified same under section 154, by setting off carried forward business loss against business income - Tribunal held that question whether income from lorry hire charges came under 'other sources', was debatable, and as such there was no mistake apparent from record - Whether in absence of any objection from assessee to rectification proceedings, ITO was competent to rectify patent mistake by invoking section 154 - Held, yes Facts For the year 1972-73, the original assessments in case of the assessees were completed under section 143(1) after allowing set off of the carried forward business loss of the earlier years against the income from lorry hire returned under 'other sources'. The ITO, subsequently, rectified the mistake under section 154, by setting off the carried forward business loss against the income under the head 'Business'. On appeal, the AAC confirmed the ITO's orders of rectification. On second appeal, the Tribunal held that the ITO should have treated the lorry hire charges returned as income from business and should have allowed set off of the carried forward business loss of the earlier years against that amount. The Tribunal observed that it was the nature and character of the receipt that would determine the issue, and that alone could determine whether there was a mistake apparent from the record. According to the Tribunal, since it was a debatable issue, the orders passed under section 154 were unsustainable. On reference: Held If the set off of the business loss of earlier years against 'income from other sources' was a patent mistake, the ITO was competent to rectify the same. At that point of time unless the ITO was told or objection was raised that the income from lorry hire charges should have been assessed as 'business income' and so,…

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