T. S. BALARAM, INCOME TAX OFFICER,COMPANY CIRCLE IV, BOMBAY vs M/S. VOLKART BROTHERS, BOMBAY

The Supreme Court held that a mistake apparent from the record under Section 154 of the Income Tax Act, 1961 must be an obvious and patent mistake, not one that requires extensive reasoning or where there may be two opinions. The Court found that the applicability of Section 17(1) of the Income Tax Act, 1922 to firms was a matter of legal interpretation, thus not constituting a mistake apparent from the record. The High Court's ruling that the Income Tax Officer lacked the authority to rectify the assessments was upheld.