Aggrieved By Such Order, The Assessee Is Before Us By Way Ofpresent Appeal Suggesting The Aforementioned Substantial Questions Oflaw v. Sundaram Textiles Ltd. [1984] 149 Itr 525 (Mad.) Whileconsidering The Provisions Of Section 154 Of The Act It Was Held Thatthe Application Of A Wrong Provision

OD-7 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT/431/2016IA NO: GA/1/2016 (OLD NO. GA/3668/2016)SMT. CHETNA JAINVS. COMMISSIONER OF INCOME TAX BEFORE :THE HON’BLE JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE BIVAS PATTANAYAKDate : 20[th ]July, 2022. Appearance :-Mr. Ananda Sen, Adv. ….for appellant. Mr. Smarajit Roychowdhury, Adv. …for respondent The Court : This appeal by the assessee filed under Section260A of the Income Tax Act, 1961 (the Act for brevity) is directedagainst the order dated 5[th] August 2016 passed by the AccountantMember of the Income Tax Appellate Tribunal, Kolkata “C” (SMC)Bench in ITA/222/KOL/2014 for the assessment year 2005-06(Financial Year 2004-05). The assessee has raised the following substantial questions oflaw for consideration: “Whether the Learned Tribunal erred in law in observing thatthe issue under consideration regarding giving credit of Taxdeduction at source in the year in which income is assessablewas debatable when the on the contrary the issue actually involved application of a provision namely Section 199 ofIncome Tax Act, 1961 which squarely came within purview ofsection 154 and hence rectifiable?” We have heard Mr. Ananda Sen, learned Counsel appearingfor the appellant and Mr. Smarajit Roychowdhury, learned standingCounsel for the respondent department. The short question involved in this case is whether the assessingofficer ought to have exercised his powers under Section 154 of theAct pursuant to an application filed by the assessee for rectification ofa mistake. In fact, there were two sets of mistakes pointed out by theassessee, one of them being credit for advance tax to the tune ofRs.2,70,000/- and self-assessment tax of Rs.84,373/-. This mistakewhich was pointed out by the assessee was accepted by the assessingofficer. Accordingly, the assessment under Section 143(1) of the Actstood rectified. The second mistake pointed out by the assessee withregard to credit of TDS of Rs.3,61,059/- which was disallowed byprocessing the return of income for the assessment year underconsideration, A.Y. 2005-2006. According to the assessing officer, thecredit of TDS related to the assessment year 2004-05 and, therefore,opined that it was rightly disallowed in processing the assessment forthe assessment year 2005-06. The assessee carried the matter onappeal before the Commissioner of Income Tax (Appeals), Central 1,Kolkata. The assessee contended that the assessing officer was erredwhile assessing insurance commission income for the assessmentyear 2005-06 but not allowed the credit of TDS of Rs.3,61,059/- deducted thereon, thereby depriving the assessee from getting thebenefit of deduction of TDS from the tax payable by her for theassessment year 2005-06. The appellate authority by order dated 18[th]November, 2013 dismissed the application on the ground that the plearaised by the assessee was beyond the scope of Section 154 of the Act.The assessee filed appeal against the said order before the learnedTribunal. The learned Tribunal was of the view that the issue whichwas raised by the assessee was a debatable issue as two learnedMembers of the Tribunal had disagreed warranting reference to thethird learned Member and, therefore, such debatable issue cannot beagitated in an application filed under Section 154 of the Act. Aggrieved by such order, the assessee is before us by way ofpresent appeal suggesting the aforementioned substantial questions oflaw. Aggrieved by such order, the assessee is before us by way ofpresent appeal suggesting the aforementioned substantial questions oflaw. After we have elaborately heard the learned counsel for the parties,we note that the effect of Section 199 of the Act was not considered.Partially, the assessee is to be blamed because such issue was notraised substantially by the assessee. Nevertheless, it being a questionof law, the assessee should be permitted to raise such a question.Sub-section (1) of Section 199 states that any deduction made inaccordance with the other provisions of Chapter XVII of the Act andpaid to the Central Government shall be treated as payment of tax onbehalf of the person from whose income the deduction was made andcredit shall be given to him for the amount so deducted on productionof certificate furnished under Section 203 for the assessment made under the Act for the assessment year for which such income isassessable. It is not in dispute that the income was assessed for theassessment year 2005-06. If such is the case, the question would bewhether the assessing officer could have ignored Section 199 of theAct. If the answer to the said question is in the negative, then the nextquestion would be whether such order of assessment made underSection 143(1) could be rectified by invoking Section 154 of the Act.In CIT Vs. Sundaram Textiles Ltd. [1984] 149 ITR 525 (Mad.) whileconsidering the provisions of Section 154 of the Act it was held thatthe application of a wrong provision of the Act or the erroneousapplication of the same to the facts of the case which do not call forsuch application, will amount to a mistake apparent from the recordfor the purposes of Section 154 of the Act. In the said decision, anearlier decision of the High Court of Mad in T. ManickavasagamChettiar V. CIT [1983] 143 ITR 269 (Mad.) was followed. In T.S.Balaram ITO V. Volkart Bros. [1971] 82 ITR 50 (SC), the Hon’bleSupreme Court held that a mistake apparent on the record must bean obvious and patent mistake and not something which can beestablished by a long drawn process of reasoning on points, on whichthere may be conceivably two opinions. The aforementioned decisions were taken note of by the HighCourt of Madras in the case of Commissioner of Wealth Tax V. LabhKavvar Bai; [1999] 236 ITR 872 (Mad.). The facts of the said case isconverse to the facts before us. The revenue had approached the HighCourt stating that in view of the definite provisions contained in Section 2(m)(ii) and Section 5(1)(6)(vi) of the Wealth Tax Act, omissionto disallow in the original assessment, the debt owed by the assesseeon the life insurance policies, cannot be deducted from the totalwealth of the assessee. Therefore, the department contended thatwhen the provisions contained in Sec 2(m)(ii) of the Wealth Tax Actwere not followed in the original assessment order made by the wealthtax officer, there occurred a mistake apparent from the recordwarranting interference under Section 35 of the Wealth Tax Act, whichis pari materia to Section 154 of the Income Tax Act. The Hon’bleDivision Bench agreed with the contention raised by the departmentand held that it is not a case where any long drawn process ofreasoning was required, on which there may be conceivably twoopinions. Therefore, the order passed by the Tribunal in the said casewas reversed and the appeal filed by the department was allowed. Hadthe assessee pointed out with regard to the effect of Section 199 of theAct, the position might have been different and the assessee may nothave come to this Court. In any event, since we considered this issueto be a question of law and the effect of Section 199(1) of the Act isrequired to be examined in the assessee’s case, we deem it appropriatethat the matter should be remanded to the first Appellate Authoritynamely, the Commissioner of Income Tax (Appeals), to take a freshdecision in the matter. For the above reasons the appeal is allowed and the order passedby the learned Tribunal as well as the order passed by the LearnedCommissioner of Income Tax (Appeals) dated 18[th] November, 2013 are set aside and the matter is restored to the file of the first AppellateAuthority who shall consider the submissions of the assessee afteraffording an opportunity of hearing to the authorized representative ofthe assessee and take a fresh decision on merits in accordance withlaw. Consequently, the substantial question of law is left open. Accordingly, GA/1/2016 stands closed. (T.S. SIVAGNANAM, J.) (BIVAS PATTANAYAK, J.)