This appeal has been filed by the assessee against the order of the CIT(A)22. Mumbai dt. 2nd July. 2014 relating to asst. yr. 2010-11.
2. The only issue involved in this appeal relates to the rejection of the application of the assessee under s. 154 of the IT Act in respect of the claim of deduction of the assessee under s. lOA amounting to Rs. 33,40.746.
3. The facts of the case. in brief. are that the assessee had filed the return of income on 7th Oct .. 2010 through e-filing. After processing the return under s. 143(3). the tax liability was determined at Rs. 6,37,056 disallowing the claim made by the assessee under s. }OA of the Act. The assessee aggrieved and filed a rectification application through e-filing under s. 154 of the Act. The CPC AO rejected the request of the assessee dt. 16th April. 2012 therefore, the assessee filed a second application dt. 4th Sept., 2012. The second application was filed as over the phone the CPC officials at Bangalore had informed the assessee that the xml uploaded file does not reflect the claim of deduction under s. lOA and therefore. the CPC officials have rejected the rectification application of the assessee. The AO also rejected the application stating that the change of income is not permitted. The assessee went in appeal before the CIT(A) and contended before him by referring to computation statement that in the computation the assessee has made the claim of deduction under s. lOA but due to software related problem, the claim did not appear in the uploaded return. The assessee also drawn attention towards the acknowledgement generated that the tax has been correctly determined and same reflects nil demand. The assessee also relied before the CIT(A) on the decision of the Tribunal, Mumbai in the case of Shrikant Real Estates (P) Ltd. us. ITO (2013) 152 ITJ {Mumbai} 30 : {2013} 81 DTR (Mumbai)(Trib) 431 : (2013) 26 taxmann.com 265 (Mumbai) in which it was held that clerical errors in e-filing needs to be rectified under s. 154 of the Act.
4. I have heard the rival submissions, carefully considered the same along with the orders of the tax authorities below. The first question before me is whether there is mistake apparent from the record in this case. I noted from page No. 2 of the computation statement which has been generated through 'software exports'. the assessee has duly deducted out of the income from business claim made under s. lOA amounting to Rs. 33,40.746 and the income from business has been shown at Nil. From the acknowledgement of the return, which has been uploaded, the copy of which is available at page No. 1 of the paper book, it is apparent that the tax payable has been shown at Nil after the payment of the tax amounting to Rs. 4.85,391. No doubt, the total income in the acknowledgement has beer: shown at Rs. 33,40.746 Le., the income in respect of which the assessee has claimed deduction under s. lOA of the Act. The net tax payable is shown at Rs. 4,85,391 on the total income of Rs. 33,40,746. The net tax payable cannot be at Rs. 4,85,391. From this it is apparent that there is mistake in uploading the return through the software.
5. The main question, therefore, is : what is a "mistake apparent from the record". Similar expression "error apparent on the face of the record" came up for consideration before the Courts while exercising certiorari jurisdiction under Arts. 32 and 226 of the Constitution. In T.S. Balaram, ITO us. Volkart Brothers 2 SCC 526, it was held that "any mistake apparent from the record" is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an "error apparent on the face of the record". It was, however, conceded in all leading cases that it is very difficult to define an "error apparent on the face of the record" precisely, scientifically and with certainty. In the case of Hart Vislmu Kamath us. Syed Ahmad Ishaque 1 SCR 1104, the Constitution Bench of the Supreme Court quoted the observations of Chagla C.J. in Batuk K. Vyas us. Surat Borough Municipality ILR 1953 Bom 191 : AIR 1953 Bom 133, that no error can be said to be apparent on the face of the record if it is not manifest or self-evident and requires an examination or argument to establish it. The Court in the said judgement admitted that though the said test might apply in a majority of cases satisfactorily, it proceeded to comment that there might be case in which it might not work in as much as an error of law might be considered by one judge as apparent, patent and self-evident, but might not be so considered by another judge. The Court, therefore, concluded that an error apparent on the face of the record cannot be defined exhaustively there being an element of indefiniteness inherent in its very nature and must be left to be determined judicially on the facts of each case. The Court stated:
"It may therefore be taken as settled that a writ of 'certiorari' could be issued to correct an error of law. But it is essential that it should be something more than a mere error; it must be one which must be manifest on the face of the record. The real difficulty with reference to this matter, however, is not so much in the statement of the principle as in its application to the facts of a particular case. When does an error cease to be mere error, and become an error apparent on the face of the record? Learned counsel on either side were unable to suggest any clearcut rule by which the boundary between the two classes of errors could be demarcated."
6. In Satyanarayan Laxminarayan Hegde us. MaUikaTjun Bhauanappa Tirumale (1960) 1 SCR 890, Hon'b1~ Supreme Court referring to Batuk K. Vyas and Hari Vislmu Kamath stated as to what cannot be said to be an error apparent on the face of the record. The Court observed :
"An error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions can hardly be said to be an error apparent on the face of the record. As the above discussion of the rival contentions show the alleged error in the present case is far from self evident and if it can be established, it has to be established by lengthy and complicated arguments. We do not think such an error can be cured by writ of certiorari according to the rule governing the powers of the superior Court to issue such a writ."
7. Thus, for an action under s. 154, there had to be a mistake apparent from record. A look at the record must show that there has been an error and that error may be rectified as held by the Hon'ble Supreme Court in the case of CIT us. Keshri Metal (1') Ltd. (1999) 155 CTR (SC)· 531 : (1999) 237 ITR 165 (SC), only an apparent error of fact or law can be rectified. From the computation it is apparent that the assessee made the claim under s. lOA of the Act. There may be problem in processing the return but so far the AO is concerned, he should have considered with due care all the material facts on record and the contention raised by the assessee in the light of the evidence and the relevant law. A decision has to be made only on the basis of t}le facts. In my view, the CIT(A) has totally ignored the fact that it is the mistake of uploading the return. The 'record' in my opinion. means the entire record consisting of not only grounds of the appeal and the case laws relied on and referred to before the CIT(A) but also the contentions, pleas and the arguments as well as the evidences filed by the assessee before the appellate authority must have been duly considered. The word "record" has not been defined under s. 154 or under s. 2 of the IT Act so as to restrict its meaning only to the issue decided in the order of the AO. The provisions of s. 154 could not be construed in a manner to produce otherwise irrational or illogical resuit. It is one of the basic principles and legal policy that when there is a power for rectification of a mistake apparent from record, that power should be allowed to be exercised rectifying a mistake and/or error from the record and if the AO feels that the software has committed an error, it would be against the concept of justice and fair play and also against the principle of legal policy not to allow the AO to exercise such power. If an error creeps in an order solely due to the uploading of the return or the software, it is an error apparent from the record and can be rectified under s. 154 of the IT Act.
7.1 In this regard, I may refer to the decision of Hon'ble Supreme Court in the case of Honda Siel Power Products Ltd. us. CIT(2007) 213 CTR (SC) 425: (2007) 295 ITR 466 (SC) in which Hon'ble Supreme Court has observed the scope of power of rectification with regard to the Tribunal that one of the reasons for giving the power of rectification, the Tribunal has to see that no prejudice is caused to either of the parties appearing before the Tribunal by a decision based on mistake apparent from record. When prejudice results from an order attributable to the Tribunal's mistake, error or omission, then it is the duty of the Tribunal to set it right. Atonement to the wronged party by the Court or the Tribunal for the wrong committed by it has nothing to do with the concept of inherent power of review. In view of this decision, in my opinion, the CIT(A) was bound to allow the appeal of the assessee. I accordingly set aside the order of CIT(A) and direct the AO to allow the deduction to the assessee under s. lOA amounting to Rs. 33,40,746. The claim of the assessee is also justified with the facts as in the preceding and succeeding assessment years completed under s. 143(3), the assessee was allowed the same deduction by the AG. I, therefore, set aside the order of CIT(A) and allow deduction to the assessee under s. lOA of the Act amounting to Rs. 33,40,746.
8. In the result, the appeal of the assessee stands allowed .