PIYUSH GORDHANBHAI PATEL,VADODARA vs. DY.CIT, CIRCLE 2(1)(1), VADODARA, VADODARA

The assessee has raised the following grounds of appeal:

The Assessing Officer, however, rejected the rectification application by passing an order under section 154 of the Act. In the said order, the Assessing Officer held that as per the records available on the system, the income had already been enhanced earlier through intimation under section 143(1) of the Act on account of disallowance of employees’ contribution to PF amounting to Rs. 4,72,474/-, and therefore the computation sheet reflecting the higher income was correct. The Assessing Officer thus held that there was no mistake apparent from record and rejected the rectification application.

Aggrieved by the order passed under section 154 of the Act, the assessee preferred an appeal before the Ld. CIT(Appeals). The assessee contended that once the assessment was completed under section 143(3) of the Act accepting the returned income, the earlier intimation under section 143(1) of the Act stood merged with the assessment order and could not be relied upon to alter the assessed income. It was further

The Ld. CIT(Appeals), while adjudicating the grounds of appeal, upheld the action of the Assessing Officer. The CIT(A) observed that the adjustment made under section 143(1) of the Act on account of employees’ contribution to PF had increased the income and that due to oversight, the same was not reflected in the assessment order under section 143(3) of the Act. According to the Ld. CIT(Appeals), the Assessing Officer was justified in invoking section 154 of the Act to rectify this mistake and bring the assessed income in line with the earlier adjustment. The Ld. CIT(Appeals) further held that the assessee’s contention regarding merger of intimation under section 143(1) with assessment under section 143(3) of the Act was not acceptable in the facts of the case. Accordingly, the grounds raised by the assessee were dismissed and the appeal was rejected.

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.

We have heard the rival contentions and perused the material on record. On careful consideration of the facts of the case and the submissions made by the Ld. Counsel for the assessee, we find that the assessment order passed under section 143(3) of the Act clearly records that the returned income of Rs. 35,60,040/- has been accepted. There is no discussion or finding in the assessment order making any addition or disallowance. In such circumstances, the computation sheet reflecting a

It is a settled position of law that once an assessment is completed under section 143(3) of the Act, the earlier intimation under section 143(1) of the Act merges with the assessment order and ceases to have independent existence. Therefore, the Assessing Officer could not have relied upon the adjustment made under section 143(1) of the Act to justify the higher income in the computation sheet after completion of scrutiny assessment.

We further find that the issue involved is not a simple clerical or arithmetical mistake but relates to determination of total income, which requires examination of facts and application of law. Such an issue cannot be rectified under section 154 of the Act, as it does not constitute a mistake apparent from record. The attempt of the Assessing Officer to alter the assessed income under the guise of rectification amounts to review of the assessment order, which is not permissible under section 154 of the Act.

On careful consideration of the facts of the case and the submissions made by the Ld. Counsel for the assessee, we find that the assessment order passed under section 143(3) of the Act clearly records that the returned income of Rs. 35,60,040/- has been accepted. There is no discussion or finding in the assessment order making any addition or disallowance on account of delayed PF contribution. In such circumstances, the computation sheet reflecting a higher income cannot override the findings recorded in the assessment order passed u/s. 143(3) of the Act.

In this regard, reliance is placed on the decision of the Hon’ble Supreme Court in the case of T.S. Balaram, ITO vs. Volkart Brothers (1971) 82 ITR 50 (SC), wherein it has been held that a mistake apparent on record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be two opinions. A debatable issue cannot be rectified under section 154 of the Act.

Further, we also find merit in the contention of the assessee that the demand raised in the computation sheet cannot survive when no addition has been made in the assessment order. In this regard, reliance is placed on the decision of the Hon’ble Madras High Court in the case of BVM Global Education Trust vs. Assessment Unit [W.P. No. 10834 of 2024], wherein it has been held that when no addition is made in the assessment order, the demand raised through computation sheet and demand notice cannot be sustained.

In view of the above judicial precedents and facts of the case, we are of the considered opinion that the rectification order passed under section 154 of the Act is not sustainable in law. The Ld. CIT(Appeals) has erred in upholding the same.

Accordingly, the order passed under section 154 of the Act is set aside and the Assessing Officer is directed to adopt the income as determined in the assessment order passed under section 143(3) of the Act, i.e., Rs. 35,60,040/-.

In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 23/04/2026