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The P&H High Court in Commissioner of Income-tax Vs. Smt. Aruna Luthra (252ITR76) explained the scope of the authority given to the assessing officer for rectification of any mistake apparent from record. In this case the assessee claimed a chit loss. Based on a jurisdictional order of the High Court in the case of Soda Silicate [1989] 179 ITR 588 the assessing officer rectified his order u/s 143(1) admitting the loss returned from chits. The Tribunal took the view that the issue regarding the admissibility of the deduction was debatable as ITAT, Delhi Bench after considering the decision of the Punjab and Haryana High Court in the case of Soda Silicate had taken a different view and, thus, it goes out of the purview of the provisions of section 154.The P&H High Court reversed such action of the ITAT in this case and held that the proceedings for rectification of an order can be initiated on the basis of an order passed by the jurisdictional High Court or the Supreme Court subsequent to the order passed by the authority under the Act.

The High Court held as under:

A) Section 154 does not provide that the error has to be seen in the order with reference to the date on which it was passed. Thus a decision delivered by a court subsequent to the passing of the order can constitute an error apparent from the record so as to entitle the authority to proceed under section 154.
B) Even in the case of an assessment under section 143(1), it cannot be assumed that there can be no error apparent from the record.
C) The obvious intention of the Legislature is that if the mistake has come to the notice of the authority within the prescribed time, it should not be allowed to continue.
D) The action can benefit the assessee as well as the Revenue.

Thus it is always advisable to review previous returns filed or assessments completed and identify issues where a favourable judgment of the jurisdictional High Court or the SC is available. If so a rectification application must be moved on the basis of this judgment.

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