PIYUSHKUMAR VRAJLAL MEHTA,GANDHINAGAR vs. DCIT CIRCLE (INT TAXN) 1, AHM, AHMEDABAD

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ITA 1246/AHD/2026Status: DisposedITAT Ahmedabad02 July 2026AY 2022-20235 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the allowability of the brought forward loss was allegedly accepted in AY 2020-21. To verify this, the matter was set aside to the Jurisdictional AO to check if the loss was allowed in AY 2020-21.

What were the facts?

The assessee claimed set-off of brought forward long-term capital loss from AY 2019-20 in AY 2022-23. The CPC initially allowed this but later disallowed it through a rectification order under Section 154, leading to an appeal.

What were the issues?

Whether the rectification under Section 154 was valid when the issue involved a debatable question of law and whether the set-off of brought forward capital loss was correctly disallowed.

Which sections of the Income-tax Act were involved?

Section 154,Section 139(1),Section 139(3),Section 80,Section 139(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Kanaiyalal Modi, AR
For Respondent: Shri Rameshwar P Meena, SR-DR
Hearing: 15.06.2026Pronounced: 02.07.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the assessee against the order of Commissioner of Income Tax, Appeal, Ahmedabad-13 [hereinafter referred to as “CIT(A)”] dated 17.02.2026 for the Assessment Year (A.Y.) 2022-23 in the proceeding u/s 154 r.w.s of the Income Tax Act [hereinafter referred as “the Act”].

2.

The brief facts of the case are that the assessee had filed his return of income for A.Y. 2022-23 on 27.09.2022, wherein set-off of brought forward long term capital loss of Rs. 70,44,092/- was claimed. The return was processed by the CPC on 17.01.2023 and the set-off of brought

ITA No. 1246/Ahd/2026 Piyushkumar Vrajlal Mehta. Vs DCIT, AY- 2022-23 2

forward capital loss as claimed by the assessee was allowed. Thereafter, the CPC had initiated rectification proceeding and the claim for set-off of brought forward long term capital loss was disallowed vide order u/s. 154 of the Act dated 24.11.2025, raising a demand of Rs. 12,55,240/-.

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. 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) erred in law in upholding the Section 154 rectification by holding that the COVID-19/TOLA extension of the due date for AY 2019-20 does not operate for the purposes of Section 80 r.w.s. 139(3) of the Act. 2. The Ld. CIT(A) erred in law in upholding the Section 154 rectification order, as the issue involved a debatable question of law and did not constitute a mistake apparent from the record. 3. The selective initiation of rectification in AY 2022-23 alone, without disturbing the identical treatment of the same AY 2019-3 20 B/F loss in AY 2020-21 and AY 2021-22, is arbitrary, discriminatory, and violates the principle of consistency in tax administration. 4. The AY 2019-20 intimation u/s 143(1) dated 08.01.2021 which accepted and carried forward the B/F LTCL was never rectified and attained finality the impugned rectification in AY 2022-23 is in substance an impermissible collateral reversal of that final order 5. The Ld. CIT(A) violated Section 250(6) and the principles of natural justice by passing the impugned order dated 17.02.2026 without affording the appellant a personal hearing, despite the appellants specific written request dated 13.01.2026 6. The appellant craves leave to add, amend OR DLEETE any grounds of appeal.

ITA No. 1246/Ahd/2026 Piyushkumar Vrajlal Mehta. Vs DCIT, AY- 2022-23 3 5. Shri Kanaiyalal Modi, the Ld. AR of the assessee submitted that the brought forward long term capital loss claimed by the assessee in the return for the current year pertained to A.Y. 2019-20. He explained that the return for A.Y. 2019-20 was filed by the assessee on 23.09.2020, which was within the extended time limit. Therefore, the CPC was not correct in disallowing the set-off brought forward capital loss on the ground that the return for A.Y. 2019-20 was not filed within the due date. He further explained that the assessee had also claimed set-off of brought forward capital loss in the return for A.Y. 2020-21, which was allowed by the CPC while processing the return u/s. 143(1) of the Act and no such rectification order was passed in that year. Considering the fact that the brought forward capital loss was allowed in the earlier A.Y. 2021-22, the CPC was not correct in disallowing the claim for set-off in the current year by passing this rectification order. The Ld. AR further submitted that the issue was debatable in nature and beyond the scope of proceeding u/s. 154 of the Act.

6.

Per Contra Shri Rameshwar P Meena, the Ld. SR-DR submitted that the allowability of brought forward loss is to be determined in the year in which set-off is claimed. He explained that the due date of filing of return for A.Y. 2019-20 was extended till 30.09.2020 for filing of return u/s. 139(4) of the Act, and not u/s. 139(1) of the Act. According to the Ld. SR- DR, since the assessee did not file his return of income for A.Y. 2019-20 within the due date u/s. 139(1) of the Act, the set off of brought forward loss was rightly disallowed by the CPC, vide the rectification order. He, therefore, strongly supported the order of the lower authorities.

ITA No. 1246/Ahd/2026 Piyushkumar Vrajlal Mehta. Vs DCIT, AY- 2022-23 4 7. We have considered the rival submissions. The brought forward long term capital loss claimed in the return for the current year pertains to A.Y. 2019-20. According to the assessee, he had claimed set-off of part of brought forward capital loss in the A.Y. 2020-21, which was allowed by the CPC vide intimation dated 04.07.2022. Thus, the admissibility of brought forward capital loss was duly examined in the A.Y. 2020-21, as set-off of Rs. 3,66,346/- was allowed to the assessee in that year and the balance of Rs. 1,11,75,372/- was further carried forward. In the current A.Y. 2022-23, the assessee had claimed set-off of brought forward long term capital loss of Rs. 70,44,092/-. According to the assessee, the CPC while accepting the claim of adjustment of brought forward loss in the A.Y. 2021-22 had passed the rectification order in the A.Y. 2022-23 denying the claim for similar set-off and such a divergent approach on the part of the CPC in two different years is not found justified. The assessee has, however, not brought on record the copy of his return for A.Y. 2020-21 and also the intimation order passed by the CPC for that year. Therefore, the fact that the part of loss was allowed set-off in the A.Y. 2021-22 cannot be verified. In the interest of justice, therefore, we set aside the matter to the file of the Jurisdictional AO with a direction to verify whether the part of brought forward long term capital loss for A.Y. 2019-20 was allowed set-off in the A.Y. 2020-21. If yes, then the set-off of brought forward long term capital loss cannot be denied to the assessee in the current A.Y. 2022-23. Further, in such an eventuality, the rectification order passed in A.Y. 2022-23 will also be beyond the purview of section 154 of the Act, as the stand of the Department in the two years will be contrary. The JAO is, therefore, directed to allow set-off of brought forward capital loss in the

ITA No. 1246/Ahd/2026 Piyushkumar Vrajlal Mehta. Vs DCIT, AY- 2022-23 5

current year, if the similar claim made by the assessee in the earlier A.Y. 2021-22 was allowed by the Department.

8.

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

Order pronounced in the Court on 02/07/2026 at Ahmedabad.

Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 02nd 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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