What did the Tribunal hold?

The Tribunal held that the addition made to the business income under section 143(1) was not covered under the permissible adjustments for arithmetical errors or incorrect claims. Therefore, the addition was deleted.

The assessee declared business income of Rs. 30,11,340, but the CPC processed the return under section 143(1) and assessed business income at Rs. 69,70,776, resulting in an addition of Rs. 39,59,636. The assessee argued that there was no justification for this addition in the lower proceedings.

What were the issues?

Whether an addition to business income made under section 143(1) processing, without any justification or basis, is valid.

G M Texfab Industries Private… vs ITO | ITAT Delhi 2026

Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI NAVEEN CHANDRA

Hearing: 03.08.2026Pronounced: 03.08.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘A’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No.1549/Del/2026 Assessment Year: 2019-20 M/s. G.M. Texfab Industries Vs. Income Tax Officer, Pvt. Ltd., Ward -10(4), 10149, First Floor, New Delhi Katra Chhajju Pandit, East Park Road, New Delhi PAN: AACCG7929H (Appellant) (Respondent) Assessee by Sh. KVS Gupta, Adv. Department by Sh. Balkishan Gopal, Sr. DR Date of hearing 03.08.2026 Date of pronouncement 03.08.2026 ORDER PER SATBEER SINGH GODARA, JM This assessee’s appeal for assessment year 2019-20, arises against the Commissioner of Income Tax (Appeals)/ Addl./JCIT(A)- 1 [in short, the “CIT(A)/NFAC”], Hyderabad’s order dated 21.01.2026, having DIN and order no. ITBA/APL/S/250/2025- 26/1085022388(1), involving proceedings under section 143(1) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

ITA No.1549/Del/2026

Heard both the parties. Case file perused. 2. The assessee raises the following substantive grounds in the instant appeal: “1 The action of the Learned 1st appellate authority in confirming the action of the Learned CPC by taking Business income at Rs.69,70,976/- by including capital gain net after allowing exemption u/s.54EC of Rs.50 lakhs as against profits from business income declared in ITR is illegal, arbitrary, unwarranted, uncalled for and against the facts and circumstances of the case. 2. The action of the Learned 1st appellate authority in confirming the action of the Learned CPC in making adjustment of prima-facie debatable issues u/s.143(1) is illegal, arbitrary, and against the facts and circumstances of the case. 3. The action of the Learned 1st appellate authority in confirming the action of the Learned CPC in taking deemed total income u/s 115JB at Rs. 9925540/- as per Profit and Loss Account including the capital gain of Rs.7094636/- forming part of Profit and Loss Account and not excluding the capital gain of Rs.7094636/- while calculating book profits u/s 115JB, is illegal, arbitrary, unwarranted, uncalled for and against the facts and circumstances of the case. 4. The action of the Learned 1st appellate authority in confirming the action of the Learned CPC in not giving any opportunity to the Appellant before making adjustments to declared income is illegal, arbitrary, unwarranted, uncalled for and against the facts and circumstances of the case and renders the adjustments as null and void. 5. The action of the Learned 1st appellate authority in confirming the action of the Learned CPC in making adjustment of capital gain by including them in Profit and Loss Account for calculating book profits u/s.115JB is beyond his jurisdiction while making adjustments u/s. 143(1) of the I. T. Act, 1961. 6. The action of the Learned 1st appellate authority in confirming the action of the Lea ned CPC in charging penal interest u/s.234A, 234B and 234C is illegal, arbitrary. unwarranted, uncalled for and against the facts and circumstances of the case. 7. The Appellant reserves the right to add, alter, modify and withdraw any grounds of appeal. 2 | P a g e

ITA No.1549/Del/2026

The above grounds are without prejudice to each other.” 3. Suffice to say, the assessee’s sole substantive ground pressed during the course of hearing is that of assessment of its business income amounting to Rs.69,70,976/- in both the lower proceedings. That being the case, learned counsel invites our attention to the assessee’s computation as well as section 143() processing herein at page 27 of the paper-book wherein it had declared business income amounting to Rs.30,11,340/- which was assessed to that at Rs.69,70,776/- resulting in addition of Rs.39,59,636/-. Its case, therefore, is that there is no indication at all whatsoever in both the lower proceedings as to why and under which head the impugned addition has been made in the assessee’s hands. This clinching factual position has gone unrebutted from the Revenue side. We observe in this factual backdrop that such an enhancement in the assessee’s business income in section 143(1)(a) “processing” is nowhere covered as an arithmetical error in the return, an incorrect claim and disallowance of expenditure; as the case may be. The impugned addition of Rs.39,59,636/- stands deleted in very terms therefore. No other ground or argument has been pressed.

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ITA No.1549/Del/2026

This assessee’s appeal is allowed. Order pronounced in the open court on 3rd August, 2026 Sd/- Sd/- (NAVEEN CHANDRA) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 19th August, 2026. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi

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G M TEXFAB INDUSTRIES PRIVATE LIMITED,NEW DELHI vs. ITO WARD 10(4), NEW DELHI

What did the Tribunal hold?

What were the facts?

What were the issues?

Which sections of the Income-tax Act were involved?

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