The Calcutta High Court recently held that an assessment order inconsistent with a binding precedent would amount to an error apparent on the record for the purpose of invoking rectification under section 154 of the Income Tax Act, 1961.
The department invoked provisions of section 154 of the Act of 1961 in respect of the relevant assessment years on the strength of the ratio laid down in Apeejay wherein it was held that the blending of different kinds of tea carried on by an assessee does not constitute manufacture or production of articles or things within the meaning of section 80 J of the Act of 1961. On the basis of the judgment, the authorities proposed to withdraw deductions allowed under Section 80 I of the Act of 1961 as the petitioner is not engaged in the manufacture or production of any article at its units.
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The assessee approached the High Court contending that As there was a debate on such a point, it cannot be said that, there is an error apparent on the face of the record requiring invocation of Section 154 of the Act of 1961. They further pointed out that in a similar case, an appeal is pending before the same Court and requested the Court to deny permission to invoke Section 154 till the disposal of the case.
Dismissing the petition, Justice Debangsu Basak observed that section 154 can be invoked to correct an error apparent on the face of the record.
“An order of assessment must be in tune with the law laid down by a binding precedent. The subject orders of assessment not being in terms of the ratio of Apeejay (supra) contains errors. An error in order not in consonance with a binding precedent is an error apparent on the face of the record,” the Court said.
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