CYPET TECHNOLOGIES INDIA PRIVATE LIMITED,AHMEDABAD vs. ITO, WARD 1(1)(3), AHMEDABAD

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ITA 1513/AHD/2026Status: DisposedITAT Ahmedabad15 July 2026AY 2020-215 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the totalling errors in the inventory figures were apparent from the record and were due to system processing, not the assessee's fault. Therefore, the matter was set aside to the Jurisdictional AO for rectification.

What were the facts?

The assessee filed a return declaring Nil income, but the processing under Section 143(1) resulted in a substantial income and tax demand due to system-driven arithmetical errors in stock valuation. The assessee's rectification application under Section 154 was rejected by the CPC and subsequently by the CIT(A).

What were the issues?

Whether a system-driven arithmetical error in stock valuation during processing under Section 143(1) constitutes a mistake apparent from the record that can be rectified under Section 154. Whether the rejection of the assessee's rectification application by the CPC and CIT(A) was justified.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 154

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SHRI TR SENTHIL KUMAR & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Aseem L Thakkar, AR
For Respondent: Shri Kiran Unavekar, CIT-DR
Hearing: 10.06.2026Pronounced: 15.07.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the assessee against the order of Commissioner of Income Tax, Addl/JCIT (Appeal) – Kochi, [hereinafter referred to as “Addl. CIT(A)”] dated 27.02.2026 for the Assessment Year (A.Y.) 2020-21 in the proceeding u/s 154 of the Income Tax Act [hereinafter referred as “The Act”].

2.

The brief facts of the case are that the assessee had filed its return of income for A.Y. 2020-21 on 08.01.2021 declaring Nil income. The

ITA No.1513/Ahd/2026 Cypet Technologies India Pvt Ltd., AY- 2020-21 2 return was processed u/s. 143(1) of the Act, on 23.12.2021. In the intimation order profit from business was computed by CPC at Rs.7,60,72,928/- instead of Rs.31,999/- after allowing set-off of brought forward loss and unabsorbed deprecation. The gross total income computed u/s. 143(1) was Rs.7,60,54,744/- instead of Nil income, which has resulted in tax demand and interest of Rs. 2,66,70,190/-. Thereafter, the assessee had filed an application u/s. 154 of the Act, to rectify the mistake apparent from record in the intimation order. The CPC had passed a rectification order u/s 154 of the Act on 07.07.2022 but no correction was made in the intimation order. The assessee had also approached the Jurisdictional Assessing Officer (JAO) to rectify the mistake. However, the JAO could not pass any order as the rectification right was not transferred to him by the CPC.

3.

Aggrieved with the rectification order passed by the CPC, the assessee had filed an appeal before the first appellate authority, which was decided by the Ld. Addl. CIT(A), vide the impugned order and the appeal of the assessee was dismissed. Th

4.

Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:

1.

The Ld. CIT(A) has erred in confirming the action of the CPC, Income Tax Department in rejecting the rectification application filed by the appellant u/s. 154 of the Act. 2. The Ld CIT(A) has erred in confirming the action of the CPC, Income Tax Department in computing the total income at Rs. 7,60,54,744/- and raising demand of Rs. 2,66,70,190/- as against returned income of Rs. Nil declared by the appellant.

ITA No.1513/Ahd/2026 Cypet Technologies India Pvt Ltd., AY- 2020-21 3 3. The appellant craves leave to add, alter, amend modify and/or withdraw all or any of the grounds on or before the final hearing. 5. Shri Aseem L Thakkar, the Ld. AR of the assessee explained that there was a system driven arithmetical error in the return which continued in the intimation order u/s. 143(1). He has drawn out attention to schedule part ‘A’ of manufacturing account clause 4(A)(iv), 4(D), 6, 10(xii) and 12 of schedule Part-A of Trading account and clause 13, 14(xii), 15, 50, 53, 56 and 60 of schedule Part-A of Profit and loss account. Some of these clauses pertain to debits to manufacturing, trading and profit & loss accounts and some pertain to credit side of manufacturing trading and profit and loss accounts. He explained that totals of these clauses are calculated automatically and assessee is not allowed to mention totals manually. While processing the Income tax Return us 143(1), totals of clauses pertaining to credit side of manufacturing, trading and profit and loss accounts have been automatically captured and totals of clauses pertaining to debit side of manufacturing, trading and profit & loss accounts have been considered NIL in spite of dully reporting of correct figures in individual components of these clauses. Because of this, while processing the return under section 143(1), Gross Total Income was adjusted to Rs 7,60,54,744 on which tax demand of Rs. 2,66,70, 190 was raised. Also, in the ITR form 6, totals of all the items in Schedule PART A BS Balance Sheet as on 31st day of March, 2020 are reported to be NIL. However, these totalling errors in the balance sheet do not have a direct impact on income computation. The Ld. AR submitted that the CPC did not rectify the totalling error in the intimation and the demand wrongly raised was not removed. He further submitted that the JAO was also unable to rectify the totalling mistake in the intimation order u/s. 143(1) of the Act, as the rectification right was not transferred to him. According to

ITA No.1513/Ahd/2026 Cypet Technologies India Pvt Ltd., AY- 2020-21 4 the Ld. AR, the Ld. Addl. CIT(A) was not correct in rejecting the appeal of the assessee on the ground that the assessee should have filed a revised return. He explained that this totalling mistake had occurred due to system error and no mistake was made by the assessee while feeding the data. The Ld. AR, therefore, requested that the matter may be set aside to the file of the Jurisdictional AO with a direction to rectify the mistake apparent from record in the intimation.

6.

Per Contra, Shri Kiran Unavekar, the Ld. CIT-DR, had no objection if the matter was set aside to the file of the Ld. JAO with a direction to examine the mistake in the intimation, if any.

7.

We have considered submissions of the assessee. As explained the difference in the total income as per intimation vis-à-vis the ITR was due to certain arithmetical mistake in the manufacturing account. It transpires that the assessee had shown an opening stock of WIP of Rs. 66,74,588/- but the total opening inventory was wrongly taken at Nil in the ITR and this mistake continued in the intimation as well. On the other hand, the assessee had shown closing stock of WIP of Rs. 5,91,41,538/- but the total was taken as Nil in the ITR. However, the total of closing stock of WIP was rightly taken at Rs. 5,91,41,538/- in the intimation u/s. 143(1). These mistakes in the figure of opening and closing inventory are evident from record and should have been rectified in pursuance to the rectification application filed by the assessee. In the ITR, the assessee had option only to feed the data for opening and closing stock and the totalling was done automatically by the system. Therefore, any mistake done in the totalling of figures cannot be attributed to the assessee. We, therefore, deem it proper to set aside the matter to the file of JAO with a

ITA No.1513/Ahd/2026 Cypet Technologies India Pvt Ltd., AY- 2020-21 5

direction to verify the mistake apparent from record in the ITR as well as in the intimation u/s. 143(1) of the Act, and thereafter rectify the mistake apparent from record. The JAO may also allow an opportunity of being heard to the assessee and may also obtain any clarification and details from the assessee, if so required.

8.

In the result, the appeal of the assessee is allowed for statistical purpose.

Order pronounced in the Court on 15/07/2026 at Ahmedabad.

Sd/- Sd/- (TR SENTHIL KUMAR) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 15th July, 2026 Neelesh, Sr. PS (True Copy) आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file. आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार पंजीकार (Dy./Asstt.Registrar) उप उप/सहायक उप उप सहायक सहायक पंजीकार सहायक पंजीकार पंजीकार आयकर आयकर अपीलीय आयकर आयकर अपीलीय अपीलीय अिधकरण अपीलीय अिधकरण अिधकरण, अहमदाबाद अिधकरण अहमदाबाद अहमदाबाद / ITAT, Ahmedabad अहमदाबाद

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