DCIT, Hisar v. The Hisar District Primary Co-op Agri. Rural Dev. Bank Ltd., Hisar

ITA 4312/DEL/2011 | 2006-2007
Pronouncement Date: 30-03-2012 | Result: Dismissed

Appeal Details

RSA Number 431220114 RSA 2011
Assessee PAN AAEFT2419C
Bench Delhi
Appeal Number ITA 4312/DEL/2011
Duration Of Justice 6 month(s)
Appellant DCIT, Hisar
Respondent The Hisar District Primary Co-op Agri. Rural Dev. Bank Ltd., Hisar
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 30-03-2012
Date Of Final Hearing 26-03-2012
Next Hearing Date 26-03-2012
Assessment Year 2006-2007
Appeal Filed On 29-09-2011
Judgment Text
A HAIN THE INCOME TAX APPELLATE TRIBUNAL DELHI H BENCH BEFORE SHRI A.N. PAHUJA AM AND SHRI C.M. GARG JM ITA NO.4312/D/2011 ASSESSMENT YEAR:2006-07 DEPUTY CIT HISSAR V/S . THE HISAR DISTRICT PRIMARY CO- OPERATIVE AGRICULTURAL RURAL DEVELOPMENT BANK LTD. LAJPAT NAGAR HISAR [PAN:AAEFT 2419 C] (APPELLANT) (RESPONDENT) ASSESSEE BY NONE REVENUE BY MRS. REENA S. PURI DR DATE OF HEARING 26-03-2012 DATE OF PRONOUNCEMENT 30-03-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 29.09.2011 BY THE REVENUE AGA INST AN ORDER DATED 18.07.2011 OF THE LD. CIT(A) ROHTAK RAISES THE FOLLOWING GROUNDS:- 1. ON THE FACTS OF AND IN THE CIRCUMSTANCES OF THE CASE LEARNED CIT(A) HAS ERRED IN ALLOWING INTEREST ON STICKY LOANS (NPA ) TRANSFERRED TO SUSPENSE ACCOUNT AND NOT ACCOUNTED FOR IN P&L ACCOU NT OR IN ITS TOTAL INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE RATIO O F DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF STATE BANK OF TRAVANCORE VS. CIT (1986) 158 ITR 102 (SUPREME COURT) IS APPLICABL E TO THE CASE OF THE ASSESSEE AND FACTS OF THE CASE OF KESHAV JI RAV JI & CO. VS. CIT (1990) 183 ITR 1 (SUPREME COURT) RELIED UPON BY THE LEARNED CIT(A) ARE DISTINGUISHABLE. 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. 2. AT THE OUTSET WE FIND THAT NONE APPEARED ON B EHALF OF THE ASSESSEE NOR ANY REQUEST FOR ADJOURNMENT WAS RECEIVED. CONSIDERING T HE NATURE OF ISSUE THE BENCH DECIDED TO DISPOSE OF THE APPEAL AFTER HEARIN G THE LD. DR ITA NO.4312/DEL./2011 2 3. ADVERTING NOW TO GROUND NOS. 1 & 2 IN THE APPEA L FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT THE RETURN DECLARING L OSS OF ` `3 39 70 055/- FILED ON 31.10.2006 BY THE ASSESSEE A PRIMARY CO-OPERATIVE AGRICULTURE & RURAL DEVELOPMENT BANK AFTER BEING PROCESSED ON 29.12.20 06 U/S 143(1) OF THE INCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS TH E ACT) WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE ISSUED U/S 14 3(2) OF THE ACT. SUBSEQUENTLY THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON RETURNED LOSS VIDE ORDER DATED 06.11.2008. LATER ON PERUSAL OF ASSESSMENT RECORDS THE ASSESSING OFFICER (A.O. IN SHORT) NOTICED THAT AN AMOUNT OF ` `2 28 72 642/- WAS SHOWN AS LIABILITY IN THE BALANCESHEET UNDER THE HEAD SUSPE NSE INTEREST. THE AO WAS OF THE OPINION THAT INTEREST BEING REVENUE RECEIPT SHO ULD HAVE BEEN CREDITED TO PROFIT AND LOSS ACCOUNT AND OFFERED TO TAX. ACCORDINGLY A NOTICE DATED 02.03.2010 WAS ISSUED U/S 154 OF THE ACT. IN RESPONSE THE ASSESS EE REPLIED THAT NO BANKING COMPANY COULD CREDIT INTEREST ON NPAS TO THE INTERE ST ACCOUNT UNLESS INTEREST AMOUNT WAS REALIZED IN CASH OR CASH EQUIVALENT. SIN CE THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING WHILE RE LYING ON DECISION IN THE CASE OF STATE BANK OF TRAVANCORE VS. CIT (1977) 110 ITR 336 (KER) SUBSEQUENTLY AFFIRMED BY THE HONBLE APEX COURT IN A DECISION R EPORTED IN 158 ITR 102 (SC) THE AO BROUGHT TO TAX INTEREST OF ` ` 2 28 72 642/- ON STICKY LOANS VIDE ORDER DATED 30.3.2010 U/S 154 OF THE ACT. 4. ON APPEAL THE LD. CIT(A) DELETED THE ADDITION IN THE FOLLOWING TERMS:- 3. THE ABOVE ACTION OF THE ASSESSING OFFICER HA S BEEN CONTESTED IN MULTIPLE GROUNDS OF APPEAL AND WRITTEN SUBMISSIONS MADE BY THE AR BEFORE ME ARE SUMMARIZED AS UNDER:- 3.1 THE APPELLANT IS A BANKING COMPANY AND IT HAS T O FOLLOW THE PROVISIONS OF BANKING REGULATION ACT 1949 ON THE G UIDELINES OF RBI FOR APPROVAL OF INCOME AND PROVISIONS OF INTEREST S USPENSE ON NPA. AS PER THE PROVISIONS AND GUIDELINES OF RBI NPA IS RECOGNIZED AS INCOME ONLY WHEN IT IS RECEIVED. ONLY IN RESPECT O F INTEREST ON NPA THE APPELLANT IS FOLLOWING THE CASH ADVANTAGE SYSTEM ON VARIOUS COURTS HAVE ALLOWED CHANGE IN ACCOUNTING ME THOD FOR INTEREST INCOME IF THE CHANGE IS REQUIRED IN COMPLI ANCE OF LAW AND IT ITA NO.4312/DEL./2011 3 IS BONAFIDE AND REGULARLY FOLLOWED. THE CASE LAW O F STATE BANK OF TRAVANCORE VS. CIT (SUPRA) FOLLOWED BY THE ASSESSIN G OFFICER IS A VERY OLD CASE AND THEREAFTER A LOT OF CHANGES HAVE TAKEN PLACE IN THE ACT AND RBI GUIDELINES W.R.T. REVENUE RECOGNITI ON RELATING TO NPA AND THE RECENT CASE LAW OF APEX COURT IN UCO BA NK VS. CIT (1999) 237 ITR 889 IS SQUARELY APPLICABLE. 3.2 I HAVE CONSIDERED THE ISSUE AND THE SUBMISSIONS MADE BY THE AR. IN THE CASE OF UCO BANK VS. CIT (SUPRA) T HE HONBLE APEX COURT HELD THAT THE RATIO IN THE CASE OF STATE BANK OF TRAVANCORE VS. CIT (SUPRA) CANNOT BE LOOKED UPON AS LAYING DOWN CORRECT LAW AND IT HAS ALREADY BEEN DISTINGUISHED I N THE CASE OF KESHAV JI RAVJI & CO. VS. CIT (1990) 183 ITR 1 (SUP REME COURT). INTEREST ON A STICKY LOAN WHICH IS TRANSFERRED TO A SUSPENSE A/C PERTAINING TO DOUBTFUL LOANS WOULD NOT BE INCLUDED IN THE INCOME OF THE ASSESSEE IF FOR THREE YEARS SUCH INTEREST IS NO T ACTUALLY RECEIVED AS PER CIRCULAR OF 9 TH OCT 1984. IT IS THEREFORE HELD BY THE APEX COURT THAT INTEREST ON STICKY LOANS CANNOT BE BROUG HT TO TAX. IN VIEW OF THE ABOVE THE ADDITION MADE BY THE ASSESSING OF FICER IS DELETED AND THE GROUNDS OF APPEAL ARE ALLOWED. 5. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).THE LD. DR WHILE REFERRI NG US TO CIRCULAR NO.491 (F.NO.201/60/867-IT)A-II) DATED 30.06.1987 ISSUED BY THE CBDT SUPPORTED THE FINDINGS OF THE AO. SHE FURTHER CONTENDED THAT THE ASSESSEE FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING WAS REQUIRED TO REFLECT INTERE ST INCOME ON ACCRUAL BASIS. 6. WE HAVE HEARD THE LD. DR AND GONE THROUGH THE F ACTS OF THE CASE. INDISPUTABLY THE AO ACCEPTED THE RETURNED INCOME W HILE COMPLETING THE ASSESSMENT U/S 143(3) OF THE ACT. THEREAFTER IN PR OCEEDINGS U/S 154 OF THE ACT THE AO BROUGHT TO TAX THE DISPUTED AMOUNT OF INTER EST ON STICKY LOANS CREDITED IN SUSPENSE ACCOUNT WHILE RELYING UPON THE DECISION I N STATE BANK OF TRAVANCORE VS. CIT (1977) 110 ITR 336 (KER) SUBSEQUENTLY AFFI RMED BY THE HONBLE APEX COURT IN THEIR DECISION REPORTED IN STATE BANK OF TRAVANCORE VS. CIT 158 ITR 102 (SC). ON APPEAL THE LD.CIT(A) WHILE FOLLOWING TH E DECISION OF HONBLE APEX COURT IN UCO BANK VS. CIT 237 ITR 889 CONCLUDED T HAT INTEREST ON STICKY LOANS WHICH IS TRANSFERRED TO SUSPENSE ACCOUNT PERTAININ G TO DOUBTFUL LOANS COULD NOT BE INCLUDED IN THE INCOME OF THE ASSESSEE IF FOR TH REE YEARS SUCH INTEREST IS ITA NO.4312/DEL./2011 4 ACTUALLY NOT RECEIVED. T HE ISSUE NOW BEFORE US IS AS TO WHETHER THE THE A O IS CORRECT IN HOLDING THAT THE ASSESSEE IS LIABLE TO PAY INCOME TAX ON INTEREST ON STICKY LOANS UNDER THE MERCANTILE SYSTEM OF ACCOUNT ING IN PROCEEDINGS U/S 154 OF THE ACT. AS ALREADY OBSERVED THE AO FOLLOWED T HE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF STATE BANK OF TRAVANC ORE(SUPRA) WHEREIN WHILE DEALING WITH THE ISSUE OF INTEREST ON STICKY LOANS AND ADVANCES HONBLE APEX COURT TOOK THE VIEW THAT CIRCULARS OF CBDT WOULD BE BINDING ON ALL OFFICERS AND PERSONS EMPLOYED IN EXECUTION OF THE ACT BUT NO IN STRUCTION OR CIRCULAR COULD GO AGAINST THE PROVISIONS OF THE ACT. ACCORDINGLY THE HONBLE SUPREME COURT HELD THAT INTEREST ON STICKY LOANS AND ADVANCES WHETHER OR NOT CREDITED TO INTEREST SUSPENSE ACCOUNT WAS LIABLE TO INCOME TAX AS THE ASSESSEE FOLLOWED ACCRUAL SYSTEM OF ACCOUNTING. LATER A TWO JUDGE BENCH OF TH E HONBLE SUPREME COURT IN THE CASE OF KERALA FINANCIAL CORPORATION VS. CIT 2 10 ITR 129 (SC) ON IDENTICAL FACTS ALSO HELD IN SIMILAR TERMS. HERE IT MAY BE P OINTED OUT THAT EARLIER THE HONBLE SUPREME COURT IN THEIR LANDMARK JUDGMENTS I N NAVNIT LAL C JAVERI VS. K.K. SEN 56 ITR 198 (SC);ELLERMAN LINES VS. CIT 8 2 ITR 913 (SC); K.P. VARGHESE VS. ITO 131 ITR 597 (SC); KESHAVJI RAVJI & CO. VS. CIT 183 ITR 1 (SC) AND CB GAUTAM VS. UNION OF INDIA 199 ITR 530 (SC)HELD THAT THE BENEFICENT CIRCULARS ISSUED UNDER SECTION 119 OF TH E ACT ARE BINDING ON THE REVENUE AUTHORITIES EVEN IF CIRCULARS DEVIATED FRO M THE PROVISIONS OF THE ACT. IN MAY 1999 THE HONBLE SUPREME COURT ONCE AGAIN DEA LT WITH AN IDENTICAL ISSUE IN THE CASE OF UCO BANK VS. CIT 237 ITR 889 (SC) A ND OVERRULED ITS OWN JUDGMENT IN THE KERALA FINANCIAL CORPORATION (SUPRA ). IN THAT CASE FACTS WERE THAT THE UCO BANK IN AY 1981- 82 CREDITED INTERES T TO A SUSPENSE ACCOUNT BECAUSE RECOVERY OF THE SAID AMOUNT WAS CONSIDERED DOUBTFUL AND THERE WAS NO RECOVERY IN THOSE ACCOUNTS IN THE PRECEDING THREE Y EARS. THE AMOUNT CREDITED TO INTEREST SUSPENSE ACCOUNT WAS EXCLUDED BY THE BANK IN COMPUTATION OF ITS TOTAL INCOME. THE AO COMPLETED THE ASSESSMENT IN THE LIGH T OF THE BENEFICENT CIRCULARS OF THE CBDT. BUT THE CIT INVOKED THE REVISIONARY PO WER U/S 263 AND INCLUDED THE SAID AMOUNT IN THE INCOME OF THE ASSESSEE. HONBLE APEX COURT CONCLUDED THAT THE ACCOUNTING POLICY OF CREDITING INTEREST ON DOUB TFUL DEBTS TO SUSPENSE ACCOUNT ITA NO.4312/DEL./2011 5 AND NOT RECOGNISING THIS AS INCOME BEFORE ACTUAL RE ALISATION CONFORMED TO THE GENERALLY ACCEPTED ACCOUNTING PRACTICE AND SINCE TH E ISSUE AROSE BEFORE DIFFERENT AOS EXERCISING JURISDICTION OVER VARIOUS BANKS TH E CBDT WAS WITHIN ITS POWERS U/S119 OF THE ACT TO ISSUE BENEFICENT CIRCULAR. WHI LE ANLAYSING VARIOUS DECISIONS AND THE IMPACT OF THE BENEFICENT CIRCULARS THE HO NBLE APEX COURT OBSERVED THAT IN STATE BANK OF TRAVANCORES CASE(SUPRA) THE DECI SION OF THE CONSTITUTION BENCH OF THE COURT IN NAVNIT LAL C JHAVERI (SUPRA) AND KP VARGHESE(SUPRA) AS ALSO CBDT CIRCULAR DATED 9TH OCTOBER 1984 HAD NOT BEEN BROUGHT TO THE NOTICE OF THE HONBLE APEX COURT. THEIR LORDSHIPS WHILE DEALING WITH THE CASE OF UCO BANK RESPECTFULLY DISAGREED WITH THE JUDGMENT IN THE CAS E OF KERALA FINANCIAL CORPORATION(SUPRA) AND OBSERVED AS UNDER: THE QUESTION IS NOT WHETHER A CIRCULAR CAN OVERRID E OR DETRACT FROM THE PROVISIONS OF THE ACT BUT THE QUESTION IS WHETHER THE CIRCULA R SEEKS TO MITIGATE THE RIGOR OF A PARTICULAR SECTION FOR THE BENEFIT OF THE ASSESSEE IN CERTAIN SPECIFIED CIRCUMSTANCES . 6.1 THE HONBLE COURT WENT ON TO SAY SO LONG AS SUCH A CIRCULAR IS IN FORCE IT WOULD B E BINDING ON THE DEPARTMENTAL AUTHORITIES IN VIEW OF THE PROVISIONS OF SECTION 119 TO ENSURE A UNIFORM AND PROPER ADMINISTRATION AND APPLICATION O F THE INCOME-TAX ACT . 6.2 THE LD. DR APPEARING BEFORE US DID NOT EV EN WHISPER AS TO WHETHER OR NOT THE SAID CIRCULAR DATED 9.10.1984 ISSUED BY THE CBD T HAS BEEN WITHDRAWN NOR STATED AS TO WHY DECISION IN UCO BANK(SUPRA) IS NOT APPLICABLE IN THIS CASE. IN VIEW OF THE AFORESAID DECISION IN THE CASE OF UCO BANK(SUPRA) IT IS APPARENT THAT INTEREST ON STICKY LOANS AND ADVANCES NEED NOT BE T AXED IF THEY FALL WITHIN THE PURVIEW OF THE BENEFICENT CIRCULARS ISSUED BY THE B OARD. HERE IT MAY BE POINTED OUT THAT CONSIDERING THE DIFFICULTIES FACED BY THE BANKS AND FINANCIAL INSTITUTIONS ARISING OUT OF THE SUPREME COURTS DECISION IN THE CASE OF STATE BANK OF TRAVANCORE(SUPRA) SECTION 43D WAS BROUGHT IN THE STATUTE BOOK TO OVERRIDE ALL OTHER PROVISIONS OF THE ACT SO THAT IN THE CASE OF PUBLIC FINANCIAL INSTITUTIONS OR A SCHEDULED BANK OR A STATE FINANCIAL CORPORATION OR A STATE INDUSTRIAL INVESTMENT CORPORATION THE INCOME BY WAY OF INTEREST IN RELA TION TO SUCH CATEGORIES OF BAD AND DOUBTFUL DEBTS AS MAY BE PRESCRIBED BY THE RESE RVE BANK OF INDIA IN RELATION ITA NO.4312/DEL./2011 6 TO SUCH DEBTS MAY BE TAXED IN THE PREVIOUS YEAR IN WHICH IT IS CREDITED TO PROFIT AND LOSS ACCOUNT OR IN WHICH IT IS ACTUALLY RECEIVE D WHICHEVER IS EARLIER. THE SAID PROVISION IS ALSO IN ACCORD WITH THE ACCOUNTING S TANDARD-9 (REVENUE RECOGNITION) ISSUED BY THE INSTITUTE OF CHARTERED A CCOUNTANTS OF INDIA. THE BANKS AND FIS ACCOUNT FOR INTEREST ON STANDARD ASSETS ON ACCRUAL BASIS WHILE INTEREST ON NON-PERFORMING ASSETS IS RECORDED ON REALISATION . THUS THEY FOLLOW HYBRID SYSTEM OF ACCOUNTING AS PER RBIS PRUDENTIAL NORMS WHICH IS DEFINITELY CONTRARY TO THE PROVISION OF SECTION 145 OF THE ACT WHICH D EALS WITH METHOD OF ACCOUNTING FOR COMPUTATION OF BUSINESS INCOME AND INCOME FROM OTHER SOURCES. SECTION 145 PERMITS ASSESSEE TO FOLLOW EITHER CASH SYSTEM OR ME RCANTILE SYSTEM OF ACCOUNTING WITH EFFECT FROM 1.4.1997. 6.3 NOW IN THE INSTANT CASE BEFORE US THE AO COM PLETED ASSESSMENT U/S 143(3) OF THE ACT AND ACCEPTED THE RETURNED INCOME. IN PRO CEEDINGS U/S 154 OF THE ACT AO BROUGHT TO TAX THE INTEREST ON STICKY LOANS CREDI TED IN SUSPENSE ACCOUNT WHILE RELYING UPON THE DECISION IN STATE BANK OF TR AVANCORE(SUPRA) EVEN WHEN THE SAID DECISION HAD BEEN OVERRULED BY THE HONBLE APEX COURT IN A LATER DECISION IN UCO BANK(SUPRA). THE LD. DR APPEARING BEFORE US DID NOT EXPLAIN AS TO WHY THE AO CHOSE TO FOLLOW A DECISION WHICH HAD ALREADY BEEN OVERRULED. THOUGH THE LD. DR REFERRED US TO CBDT CIRCULAR NO. 491 DATED 30.6.1987 IN THE CONTEXT OF CHANGE IN METHOD ACCOUNTING BY CERTAIN S TATE FINANCIAL CORPORATIONS AS ALREADY OBSERVED BY US SHE DID NOT ELABORATE AS TO WHETHER OR NOT CIRCULAR NO 201/21 OF 1984 ITA-II DATED 9 TH OCTOBER 1984 RELIED UPON IN THE DECISION IN UCO BANK(SUPRA) FOLLOWED BY THE LD. CIT(A) HAD BEEN WI THDRAWN .IN ANY CASE WE ARE OF THE OPINION THAT THESE DISPUTED ISSUES IN RELATI ON TO ACCRUAL OF INTEREST ON STICKY ADVANCES OR TAXATION THEREOF AND WHETHER OR NOT DE CISION IN STATE BANK OF TRAVANCORE(SUPRA) OR UCO BANK(SUPRA) IS APPLICABLE IN THE CONTEXT OF FACTS OF THE CASE UNDER CONSIDERATION CANNOT BE ADJUDICATED IN PROCEEDINGS U/S 154 OF THE ACT. THE TRUE SCOPE OF ACCRUAL OF INTEREST ON STICK Y ADVANCES OR TAXATION THEREOF CANNOT BE DETERMINED IN PROCEEDINGS U/S 154 OF THE ACT. IT IS SETTLED LAW THAT A MISTAKE APPARENT FROM THE RECORD IS ONE THAT IS PAT ENT MANIFEST AND SELF-EVIDENT ITA NO.4312/DEL./2011 7 AND WHICH DOES NOT REQUIRE ELABORATE DISCUSSION OF EVIDENCE OR ARGUMENT TO ESTABLISH IT. A PERUSAL OF SECTION 154 SHOWS THAT T HE INTERVENTION OR ASSUMPTION OF JURISDICTION UNDER SECTION 154 CAN BE MADE ONLY TO CORRECT AN ERROR OR A MISTAKE WHICH WAS APPARENT AND NOT WHERE A DEBATABLE ISSUE COULD BE CONSIDERED. IN OTHER WORDS A LOOK AT THE RECORD MUST SHOW THAT TH ERE HAS BEEN AN ERROR AND THAT ERROR MAY BE RECTIFIED. SECTION 154 OF THE ACT PROVIDES FOR RECTIFICATION O F MISTAKES WHICH ARE APPARENT FROM THE RECORD. THE P HRASEOLOGY 'MISTAKE APPARENT FROM THE RECORD' HAS BEEN CONSIDERED BY SE VERAL JUDICIAL OPINIONS AND ALL THOSE JUDICIAL OPINIONS UNIFORMLY HELD THAT AN ERROR WHICH IS NOT SELF-EVIDENT AND HAS TO BE DETECTED BY A PROCESS OF REASONING C AN HARDLY BE SAID TO BE AN ERROR APPARENT ON THE FACE OF THE RECORD. THE HONB LE APEX COURT HAVE CONSISTENTLY HELD THAT WHERE IN RELATION TO INTERPR ETATION OF A PROVISION THERE ARE CONCEIVABLY TWO OPINIONS RECTIFICATION CANNOT BE R ESORTED TO. IN THIS CONNECTION HONBLE SUPREME COURT HELD IN THE CASE OF T.S.BALAR AM ITO VS. VOLKART BROTHERS& OTHERS 82 ITR 50(SC) THAT .IT WAS NOT OPEN TO THE INCOME-TAX OFFICER TO GO IN TO THE TRUE SCOPE OF THE RELEVANT PROVISIONS OF THE ACT IN A PROCEEDING UNDE R SECTION 154 OF THE INCOME- TAX ACT 1961. A MISTAKE APPARENT ON THE RECORD MUS T BE AN OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. AS SEEN EARLIER THE HIGH COURT OF BOMBAY OPINED THAT THE ORIGINAL ASSESSMENTS WERE IN ACCORDANCE WITH LAW THOUGH IN OUR OPINION THE HIGH COURT WAS NOT JUSTIFIED IN GOING INTO THAT QUESTION. IN SATYANARAYAN LAXMINARA N HEGDE V. MALLIKARJUN BHAVANAPPA TIRUMALE THIS COURT WHILE SPELLING OUT THE SCOPE OF THE POWER OF A HIGH COURT UNDER ARTICLE 226 OF THE CONSTITUTION RU LED THAT AN ERROR WHICH HAS TO BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS WHERE THERE MAY CONCEIVABLY BE TWO OPINIONS CANNOT BE SAID TO BE AN ERROR APPARENT ON THE FACE OF THE RECORD. A DECISION ON A DEBATABLE POINT OF L AW IS NOT A MISTAKE APPARENT FROM THE RECORD--SEE SIDHRAMAPPA ANDANNAPPA MANVI V . COMMISSIONER OF INCOME-TAX. THE POWER OF THE OFFICERS MENTIONED IN SECTION 154 OF THE INCOME-TAX ACT 1961 TO CORRECT ' ANY MISTAKE APPARENT FROM TH E RECORD ' IS UNDOUBTEDLY NOT MORE THAN THAT OF THE HIGH COURT TO ENTERTAIN A WRI T PETITION ON THE BASIS OF AN ' ERROR APPARENT ON THE FACE OF THE RECORD. ' 6.4. FOLLOWING THE DICTUM LAID DOWN IN T.S. BALA RAM ITO'S CASE [1971] 82 ITR 50 (SC) THE HONBLE CALCUTTA HIGH COURT IN VIJAY MALL YA V. ASSTT. CIT [2003] 263 ITR 41 HELD AS UNDER: ITA NO.4312/DEL./2011 8 'SECTION 154 CAN BE INVOKED FOR RECTIFICATION OF A MISTAKE APPARENT FROM THE RECORD. THE MISTAKE CONTEMPLATED UNDER SECTION 154 MUST BE A MISTAKE APPARENT ON THE FACE OF THE RECORDS. IT MUST BE OBVIOUS CLE AR AND PATENT. IT MUST NOT BE A MISTAKE TO ESTABLISH WHICH A LONG AND ELABORATE RE ASONING AND ARGUMENTS IS REQUIRED ON POINTS ON WHICH THERE MAY CONCEIVABLY B E TWO OPINIONS. IT MUST NOT BE A DEBATABLE POINT OF LAW. IT MUST BE A PATENT AN D APPARENT MISTAKE IN THE ASSESSMENT. IT MUST NOT BE A QUESTION WITH REGARD T O WHICH TWO DIFFERENT VIEWS MAY BE POSSIBLE OR WITH REGARD TO WHICH TWO DIFFERE NT OPINIONS CAN BE FORMED. IT MUST BE A GLARING OBVIOUS OR SELF-EVIDENT MISTAKE OF FACT OR A MISTAKE OF LAW IN RESPECT OF WHICH THERE CANNOT BE ANY TWO OPINIONS A ND IT SHOULD NOT BE ONE IN ORDER TO ESTABLISH WHICH A LONG-DRAWN PROCESS OF AR GUMENT OR REASONING IS TO BE ADVANCED.' 6.5. IN THE LIGHT OF AFORESAID DECISIONS ESPE CIALLY WHEN THE AO FOLLOWED A DECISION IN STATE BANK OF TRAVANCORE(SUPRA) IN PROC EEDINGS U/S 154 OF THE ACT AND BROUGHT TO TAX INTEREST ON STICKY ADVANCES EVE N WHEN AT THAT POINT OF TIME THE SAID DECISION HAD ALREADY BEEN OVERRULED BY THE HONBLE APEX COURT IN UCO BANK(SUPRA) IT IS APPARENT THAT IF THE ISSUE REQ UIRES DEBATE AND DISCUSSION IT CANNOT BECOME A SUBJECT-MATTER OF RECTIFICATION UND ER SECTION 154 OF THE ACT BECAUSE UNDER THIS SECTION ONLY PATENT AND OBVIOUS MISTAKES OF LAW AND FACTS CAN BE RECTIFIED. IN VIEW OF DECISION OF THE HONBLE SUPREME COURT I N THE CASE OF VOLKART BROTHERS& OTHERS(SUPRA) IT IS NOT OPEN TO THE AO TO GO INTO THE TRUE SCOPE OF THE RELEVANT PROVISIONS OF THE ACT IN PRO CEEDINGS UNDER SECTION 154 OF THE ACT. IT IS CLEAR FROM THE FACTS OF THE CASE THAT THERE W AS A DEBATABLE QUESTION RELATING TO ACCRUAL OF INTEREST ON STICK ADVANCES A ND TAXATION THEREOF. 7 IN VIEW OF THE FOREGOING ESPECIALLY WHEN THE REVENUE HAVE NOT PLACED BEFORE US ANY MATERIAL IN ORDER TO CONTROVERT THE F INDINGS OF THE LD. CIT(A) NOR EVEN POINTED OUT ANY CONTRARY DECISION WHILE THE I SSUES ARE DEBATABLE WE ARE NOT INCLINED TO INTERFERE WITH THE CONCLUSION OF TH E LD. CIT(A) AND ACCORDINGLY REJECT GROUND NOS. 1 & 2 RAISED BY THE REVENUE. 8.. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.3 IN THE APPEAL ACCORDINGLY T HIS GROUND IS ALSO DISMISSED. ITA NO.4312/DEL./2011 9 9. IN THE RESULT APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT SD/- SD/- (C.M. GARG) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER COPY OF THE ORDER FORWARDED TO :- 1 THE HISAR DISTRICT PRIMARY CO- OP AGRI. RURAL DEV . BANK LTD. LAJPAT NAGAR HISAR 2.DY. COMMISSIONER OF INCOME-TAX HISAR. 3.CIT HISAR 4. CIT (APPEALS) ROHTAK 5. THE DR ITAT H BENCH NEW DELHI 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT DELHI