UMA ORGANICS,VADODARA vs. INCOME TAX OFFICER WARD 1(3)(1), VADODARA

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ITA 366/AHD/2026Status: HeardITAT Ahmedabad29 May 2026AY 2023-244 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal directed the assessee to file a reconciliation of turnover with the Assessing Officer, considering the GST component. The AO was instructed to decide the issue based on this reconciliation and principles of natural justice.

What were the facts?

The assessee's return was deemed defective for non-furnishing of a tax audit report, as the CPC included GST in the turnover, exceeding the threshold. The assessee argued that excluding GST brought the turnover below the limit, but the AO and CIT(A) upheld the rejection.

What were the issues?

Whether GST should be included in turnover for determining the applicability of tax audit under Section 44AB, and whether the rejection of the return and rectification applications were justified.

Which sections of the Income-tax Act were involved?

Section 139(9),Section 44AB,Section 154,Section 145A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH

Before: Dr. BRR Kumar & Ms. Suchitra Kamble

For Appellant: Shri Sunil Talati, A.R
For Respondent: Shri VeerabadramVislavath, Sr. D.R

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before Dr. BRR Kumar, Vice President And Ms. Suchitra Kamble, Judicial Member ITA No. 366/Ahd/2026 Assessment Year 2023-24

Uma Organics, The ITO, Block 1132, Ward-1(3)(1) Majusar Ta Savli Vs Vadodara Manjusar (Respondent) Vadodara-391775 PAN: AAAFU5306K (Appellant)

Assessee by: Shri Sunil Talati, A.R. Revenue by: Shri VeerabadramVislavath, Sr. D.R.

Date of hearing : 24-03-2026 Date of pronouncement : 29-05-2026 आदेश/ORDER Per Suchitra Kamble, Judicial Member: This is an appeal filed against the order dated 13-01- 2026 passed by ADDL-JCIT(A)-1, Pune for assessment year 2023-24.

2.

The grounds of appeal are as under:- “Your appellant being aggrieved by the Order passed by the Ld. ADDL/JCIT (A)-1 Pune, under section 250 of the Income Tax Act, 1961 (the Act) presents this appeal against the same on the following, amongst others: 1. That the Ld. CIT(A) erred in not granting relief by directing the deletion of the defect raised u/s 139(9) merely on the basis of non-furnishing of the Tax Audit Report because the turnover for the year calculated by the CPC is inclusive of GST. In view of the same, the defect notice and consequential rejection of return u/s

I.T.A No. 366/Ahd/2026 Uma Organics, A.Y. 2023-24 139(9) be directed to be cancelled, and the return filed by the appellant be treated as valid. 2. That the Ld. CIT(A) erred in law in holding that the CPC had correctly raised the defect under section 139(9) of the Act and that the GST component was correctly included in the turnover for the purpose of determining turnover under section 44AB, thereby denying relief to the appellant. In view of the same, the CPC be directed to accept the return of income for the year filed on 28th July 2023, treating the appellant as not liable to tax audit u/s 44AB. 3. That the Ld. CIT(A) erred in law and on facts in upholding the rejection of the rectification application u/s 154 and in confirming the order dated 27.01.2025. In view of the same, the impugned order passed u/s 154 be quashed. 4. That the Ld. CIT(A) erred in law in confirming the reliance on section 145A of the Act for the purpose of determining the turnover limit under section 44AB of the Act. In view of the same, it be held that section 145A has no application for determining the audit threshold under section 44AB of the Act, and for the same, the Guidance Notes on Tax Audit issued by The Institute of Chartered Accountants of India are to be referred to.” 3. M/s Uma Organics (PAN AAAFU5306K), a partnership firm filed its ITR-5 return of income for Assessment Year 2023-24 (F.Y. 2022-23) on 28.07.2023 declaring total income of Rs. 86,47,260/- with tax paid Rs. 27,16,874/-. CPC issued notice u/s 139(9) on 31.08.2023 deeming the return defective for non-filing of balance sheet, P & L account, and tax audit report u/s 44AB, as gross receipts exceeded Rs. 10 crores threshold. The assessee responded claiming non-applicability contending that the net turnover is Rs. 9,87,80,999/- excluding GST, but CPC rejected the claim of the assessee vide order dated 25.11.2024. Assessee filed multiple rectification applications u/s 154 on 21.12.2024, 23.12.2024, and 09.01.2025 arguing error apparent on record on the grounds that turnover for sec. 44AB should exclude GST and also the gross receipts is 2

I.T.A No. 366/Ahd/2026 Uma Organics, A.Y. 2023-24 below Rs. 10 crore limit. AO rejected the rectification request on 27.01.2025 holding that inclusion or exclusion of GST in turnover is a debatable issue & that section 145A requires taxes to be included while computing sale value, and therefore the error, if any, is not a "mistake apparent from record" rectifiable under section 154.

4.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

5.

The A.R. submitted that the assessee is having a turnover of the purpose of tax audit should be inclusive of GST, resulting in net turn-over of Rs. 9,87,80,999/- which is below the threshold of Rs. 10 crore for tax audit applicable u/s. 44AB of the Act. The ld. A.R. relied upon the decision of the Tribunal in case of Wholery Infrastructure Pvt. Ltd. vs. DCIT ITA 525/JP/2023 order dated 30-10-2023 wherein it is held that mistakes apparent from record can be rectified u/s. 154 if there is a clear legal precedent supporting the rectification. The ld. A.R. further submitted that the Assessing Officer while deciding the rectification application has not taken cognizance relating to turnover whether it includes GST or not.

6.

The ld. D.R. relied upon the order u/s. 154 and the order of the CIT(A).

7.

We have heard both the parties and perused all the relevant material available on record. The observation of the

I.T.A No. 366/Ahd/2026 Uma Organics, A.Y. 2023-24 CIT(A) that section 145(A) primarily with the method of accounting valuation of purchases, sales and inventory in computing business income, nonetheless the statutory mandate that sales be taken inclusive of tax necessarily forms the figure of sales or turnover emerges from the accounts and reported in the statutory return. This turnover should take into account the GST component. Therefore, we direct the assessee to file re-conciliation to that effect before the Assessing Officer and after taking into account this re-conciliation, decide the issue as per the Income Tax Act. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice.

8.

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

Order pronounced in the open court on 29-05-2026

Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 29/05/2026 a.k. TRUE COPY आदेश की �ितिलिप अ�ेिषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद 4

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