AO can invoke Section 154 for Glaring Mistakes in Assessment Orders

Sabari Alloys & Metals India Private Limited Vs DCIT (Madras High Court)

AO can invoke section 154 if glaring mistake of Fact/Law is committed while passing assessment order

Conclusion: Where an AO had also failed to do what was required under the law at the time of passing Assessment Order and had passed an Assessment Order with such defects, such assessment orders could be rectified by the officer by exercising power under section 154.

Held: In the instant case, by the Impugned Notice issued under Section 154, the respondent had sought to alter the Assessment Order dated 23.01.2021 for the Assessment Year 2018-2019. The respondent sought to alter the Assessment Order dated 23.01.2023 made under Section 143(3) by including those issues which were not expressly dealt earlier namely (i) Interest on Borrowing, (ii) Goods in Transit & (iii) Interest on account of Excess Refund of amounts. These items were not included in the Assessment Order dated 23.01.2021. It was submitted that only a notice under Section 154 had been issued to assessee. Responedent submitted that since there was an error apparent on the face of record, AO had rightly invoked the jurisdiction under Section 154. It was therefore submitted that the present writ petition was liable to be dismissed. It was held that the meaning of the expression, “error apparent on the face of record” was wider than the expression “mistake apparent from the record”. An AO was not incompetent to invoke the jurisdiction under section 154 if such officer had committed a glaring mistake of fact or law while passing the assessment order as held by the Hon’ble Supreme Court in Commissioner of Income Tax vs. Hero Cycles (P) Ltd., (1997) 94 Taxman 271(SC), referred. If an AO had also failed to do what was required under the law at the time of passing Assessment Order and had passed an Assessment Order with such defects, such assessment orders could be rectified by the officer by exercising power under section 154. In this case, this was the effort of AO while exercising the power under section 154. Therefore, there was no merits in the submission that the impugned notice was liable to be interfered and quashed.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

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