The main legal point established in the judgment is that a mistake apparent on the record must be obvious and patent, and not something which is established by a long drawn process of reasoning. The court emphasized that a decision on a debatable point of law is not a mistake apparent from the record.

Assessee is in appeal questioning the correctness of the order passed by Income Tax Appellate Tribunal (ITAT), Bangalore Bench in ITA No.60/BANG/2009.

2. Facts in brief which has led to the filing of this appeal are as under:

Return of income came to be filed for the assessment year 2004-05 claiming a loss of Rs. 24,23,760/- and the jurisdictional Assessing Officer after issuing notice under section 143(2) of the Income Tax Act (for short ‘Act’) framed the assessment order under section 143(3) of the Act on 30.11.2006 whereunder the carried forward loss of Rs. 24,23,760/- came to be accepted by the Assessing Officer and was allowed to be set off against total income of the assessee comprising “Income from Other Sources”, “Income from House Property” apart from “business income”. Subsequently by issuance of notice under section 154 the said order of assessment was sought to be rectified to which the assessee filed his objections contending that the issue involves long drawn process of reasoning and as such assessment order cannot be rectified under section 154. However, it was noticed by the authority that assessee had himself shown interest income earned from the Banks, NSCs and Fixed Deposits had been indicated as “Income from Other Sources” in the return of income and as such it came to be held that it is an error apparent on the face of the record and as such order passed by the Assessing Officer dated 30.11.2006 came to be rectified and the business loss as determined for the assessment year 2003-04 at Rs. 21,43,917/- was brought forward to the assessment year 2004-05 and was allowed to be set off only against business income of Rs. 6,23,596/- for the current year as per provisions of section 72 of the Act. Being aggrieved by the said order assessee filed an appeal before CIT(Appeals) who by order dated 24.11.2008 dismissed the appeal and affirmed the order passed by the jurisdictional Assessing Officer. Assessee carried the matter further in appeal before the Tribunal in ITA No.60/BANG/2009 and the appellate Tribunal after considering the rival contentions held that one cannot change the “head” in proceedings under section 154 and therefore Assessing Officer could not have changed the head from “income from other sources” as claimed by assessee to that of “income from business” and could not have allowed to set off against the carry forward business. As such the Tribunal dismissed the appeal filed by the Assessee by order dated 09.04.2009 and confirmed the orders passed by the authorities. Hence, this appeal by the assessee which has been admitted by order dated 15.12.2009 to consider the following substantial questions of law:

(i) “Whether the Tribunal was justified in law in holding that the provisions of section 154 of the Act are applicable to the facts and circumstances of the case?

(ii) Whether the Tribunal erred in law in holding that the appellant was not entitled to set off of the carry forward business loss on the facts of the appellant’s case?”

3. We have heard the arguments of Sri. A. Shankar, learned counsel appearing for appellant-assessee and Sri. K.V. Aravind, learned counsel appearing for the respondent-revenue.

4. It is the contention of Sri. A. Shankar, learned counsel appearing for the assessee that jurisdictional Assessing Officer could not have invoked section 154 of the Act since there was no error apparent on the record of the assessment order dated 30.11.2006 and if two (2) views are possible and one view has been adopted by the Assessing Officer, rectification proceedings cannot be initiated to take a different view and as such relies on the decision of Apex Court in T.S. Balaram, Income Tax Officer, Company Circle IV, Bombay Vs Volkart Brothers and others reported in 1971 (82) ITR 50 contending it is squarely applicable to the facts on hand whereunder it has been held if issue involves long drawn process of reasoning same cannot be construed as ground to hold there is error apparent on the fac