SURLON INDIA LIMITED,DELHI vs. DCIT, DELHI

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ITA 7395/DEL/2025Status: DisposedITAT Delhi25 May 2026AY 2017-20183 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that section 154 rectification proceedings are only for correcting apparent mistakes and not for conducting detailed inquiries. Therefore, the rectification order was invalid.

What were the facts?

The Assessing Officer initiated section 154 rectification proceedings to disallow bonus paid to directors under section 36(1)(ii) of the Act, based on the tax audit report. This rectification order was upheld by the CIT(A).

What were the issues?

The primary issue was the validity of the section 154 rectification proceedings initiated by the Assessing Officer. The Tribunal also considered whether the disallowance under section 36(1)(ii) was a matter of apparent mistake or required detailed inquiry.

Which sections of the Income-tax Act were involved?

Section 154,Section 36(1)(ii),Section 143(3)

AI-generated summary — verify with the full judgment below

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

Before: SHRI SATBEER SINGH GODARA & SHRI NAVEEN CHANDRA

For Appellant: Shri. Rakesh Garg, CA, Shri Ankit Garg, CA
For Respondent: Ms. Ankush Kalra, Sr. DR
Hearing: 20.05.2026Pronounced: 20.05.2026

PER SATBEER SINGH GODARA, JM

This assessee’s appeal for assessment year 2017-18, arises against the Commissioner of Income Tax (Appeals) [in short, the “CIT(A)”], Mumbai’s order dated 11.10.2025 passed in DIN and order no. ITBA/APL/S/250/2025-26/1081665624(1), involving proceedings under section 154 of the Income-tax Act, 1961; hereinafter referred to as ‘the Act’.

ITA No. 7395/Del/2025 Heard both the parties. Case file perused.

2.

We now advert to the first and foremost issue of validity of section 154 rectification proceedings herein itself between the parties. We wish to make it clear that the learned Assessing Officer had admittedly framed section 143(3) assessment in the assessee’s case on 12.12.2019. He thereafter set into motion section 154 rectification proceedings in its case for the purpose of invoking section 36(1)(ii) disallowance of bonus to the directors u/s 36(1)(ii) of the Act after taking up some threads from its Form 3CD tax audit report. It in in this factual backdrop that he passed rectification order dated 30.03.2024 to the very effect which has been upheld in the lower appellate discussion leaving the assessee aggrieved.

3.

Both the parties vehemently reiterate their respective stands against and in support of correctness of the impugned section 154 rectification. We wish to emphasize herein that hon’ble apex court’s landmark decision in T.S. Balram , Income Tax Officer vs M/s. Volkart Brothers, Bombay (1971) 82 ITR 50(SC) has settled the issue long back that such a rectification u/s 154 of the Act ought to be set into motion for the purpose of correcting apparent

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ITA No. 7395/Del/2025 mistakes only than those requiring detailed inquiries. We draw strong support therefrom to accept the assessee’s first and foremost legal ground challenging validity of the impugned rectification itself which stands quashed in very terms. All other remaining pleadings between the parties on merits stand rendered academic.

4.

This assessee’s appeal is allowed.

Order pronounced in the open court on 20th May, 2026.

Sd/- Sd/- (NAVEEN CHANDRA) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 25.05.2026 Pooja Mittal/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi

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