MEETA TUSHARBHAI TANNA,RAJKOT vs. ITO,WARD-2(1)(2), RAJKOT, RAJKOT

आयकरअपीलीयअिधकरण,राजकोट�ायपीठ,राजकोट। IN THE INCOME TAX APPELLATE TRIBUNAL, “SMC” RAJKOT BENCH, RAJKOT

BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER आयकरअपीलसं./ITA No. 265/RJT/2026 (�नधा�रणवष�/Assessment Year: (2016-17) Smt. Meeta Tusharbhai Tanna, The ITO, wd – 2(1)(2) Jalaram Kutir, Laxmivadi Street No. 4, Vs. Aayakar Bhavan, Race Course Ring Laxmivadi Main Road, Road, Rajkot-360002, Gujarat Rajkot – 360001, Gujarat �थायीलेखासं./जीआइआरसं./PAN/GIR No.: APVPT3740G (अपीलाथ�/Appellant) (��यथ�/Respondent)

Appellant by : Shri Mehul Ranpura, Ld. AR Respondent by : Shri Abhimanyu Singh Yadav, Ld. Sr. DR Date of Hearing : 23/03/2026 : 18/06/2026 Date of Pronouncement

ORDER Per, Dr. Arjun Lal Saini, AM:

Captioned appeal filed by the assessee, pertaining to Assessment Year 2016- 17, is directed against the order under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC) Delhi, dated 12.12.2025, which in turn arises out of rectification order passed by the Assessing Officer u/s 154 r.w.s. 147 of the Act, on 22.06.2024. 2. The grounds of appeal raised by the assessee are as follows:

ITA No. 265/Rjt/2026 Smt. Meeta T. Tanna “1. The grounds of appeal mentioned hereunder are without prejudice to one another. 2. of The Ld. Addi. /Joint Commissioner Income-tax-6, Mumbai (hereinafter referred as to the "CIT(A)"] erred on facts as also in law in confirming action of AO in rejecting the claim of current year's loss of Rs. rectification 56,22,789/- by rejecting application on the alleged ground that the same is not allowable as the appellant has not claimed in the return of income filed u/s.139(1) of the Act. The action of AO in denying claim of loss of Rs. 56,22,789/- is unjustified and uncalled for, which deserves to be quashed, may kindly be quashed. 3. The Ld. CIT(A) erred on fact as also in not giving setoff of loss against the addition made u/s.69A r.w.s.115BBE of the Act of Rs.4,85,800/- as the same is allowable as per provision of section 115BBE of the Act for the relevant assessment year. The AO may kindly be directed to allow setoff of the loss against the addition made u/s.69A r.w.s. 115BBE of the Act. 4. Your Honour's appellant craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of appeal.”

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ITA No. 265/Rjt/2026 Smt. Meeta T. Tanna Upon review of the assessment order passed u/s 147 r.w.s 144B on 29.03.2022, it has been observed that "Although the addition was made as per assessment order, the tax was calculated at NIL income instead of the assessed income resulting in a short/non levy of tax along with interests thereon. Therefore, the assessment order is hereby rectified to calculate the tax on the assessed income instead of the returned NIL income. The assessed income, as per the assessment order under reference, however remains unchanged.”

Therefore, assessing officer held in the rectification order that the order is passed to rectify the mistake apparent from the record in accordance with the provisions of section 154 of the Income Tax Act, 1961.

“6. Decision: I have gone through the appeal filed by the appellant against order u/s 143(3) of the Act and the submissions made by the appellant in this case. It is seen that all the ground raised are related to disallowance of set off of addition to the loss declared in return of income, accordingly, the grounds are adjudicated together as under: 6.2 The appellant has assailed the order of AO in revising computation without allowing set off of losses as per return of income filed by the appellant. During the course of assessment proceeding the AO had observed that the appellant had not filed her return of income as per provision of section 139 of the Income Tax Act. Accordingly, the Assessing Officer disallowed the losses to be carried forward which were claimed in return of income filed in response to the notice u/s 148 of the Income Tax Act. Further, the Assessing Officer made the addition of Rs.4,85,800/- on account of unexplained money u/s 69A of the Income Tax Act. The relevant extract of the assessment order is reproduced herein below- 1. Since the assessee did not filed her return of income for A.Y.2016-2017 as per the provisions of section 139 of the Act the amount of loss of Rs.56,22,788/- is not allowed to be carried forward. The assessee has also not claimed carry forward of loss in her return of the income filed in response to notice u/s 148 of the Act. Penalty proceeding u/s 271F of the It Act is initiated as assessee has not filed return of income as per provisions of section 139 of the Act.

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ITA No. 265/Rjt/2026 Smt. Meeta T. Tanna 4. A show-cause notice dated 23.03.2022 was issued to the assessee asking to file explanation against the proposed addition in draft order. The assessee uploaded the submission on 24.03.2022 and sought hearing through video conference. The hearing of the assessee thorough video conference is held on 28.03.2022 at 12.30 pm. Submission of the assessee in writing and through video conference is duly considered. The assessee in her reply to show cause notice uploaded the submission wherein offered to tax Rs.81,00/- being unexplained cash deposits in her account with HDF Bank and Canara Bank. Further the assesse has no documentary evidence in support of credit entries Rs.4,04,700/- therefore offered to tax. Accordingly, the amount of Rs.4,85,800/- is treated as unexplained money as per the provisions of the section 69A of the It Act of the assessee and taxed for A.Y. 2016-2017. Penalty notice u/s 271(1)(c) of the Act is initiated as the assessee has concealment her particulars of income. 6.3 In this proceeding, the appellant has submitted that in the Assessment Order the AO has made computation of assessed income at Rs. Nil as there is a loss during the year under consideration and issue demand notice without any tax liability. Accordingly, the AO has rightly computed assessed income at Rs. Nil and not invoking provision of section 115BBE in assessment order. However, in the rectification order dated 22.06.2024 the AO has applied tax rate as per provision of section 115BBE without set off loss of the year and issue demand notice of Rs.3,52,292/-. 6.4 It is pertinent to mention here that the Assessing Officer in the Assessment Order dated 29.03.2022 clearly rejected the claim of losses as claimed by the appellant. Further, the present appeal has been filed by the appellant against the order passed u/s 154 of the Income Tax Act, 1961 dated 22.06.2024 and the said grounds raised in the present appeal with regard to not setting off income with losses do not pertain to the rectification order passed under section 154 of the Act. Instead, the subject matter of the ground relates to the assessment order passed u/s 143(3) read with section 144B of the Act. It is a settled position in law that the scope of an appeal has to be confined to the order impugned before the appellate authority. Since the present appeal has been filed against the order u/s 154, any grievance arising out of the assessment order passed u/s 143(3) r.w.s. 144B cannot be adjudicated in this proceeding. The remedy, if any, against the said assessment order lies in filing a separate appeal before the appropriate appellate forum in accordance with the provisions of the Act. Accordingly, the grounds of appeal raised on this aspect are held to be not maintainable in the present proceedings. It is further noted that the Jurisdictional Assessing Officer while passing the rectification order u/s 154, has correctly computed the tax at special rate without setting off with the losses as claimed by the appellant. Consequently, the grounds raised in the present appeal, being unrelated to the rectification order under appeal and effectively rendered in fructuous in view of the above, the appeal filed by the appellant is disposed of as no issue arises for adjudication.”

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ITA No. 265/Rjt/2026 Smt. Meeta T. Tanna 6. I have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the Id CIT(A) and other materials brought on record. Learned Counsel for the assessee submitted that issue is squarely covered in favour of the assessee by CBDT circular dated 19.06.2019, no. 11/2019. The assessing officer has failed to consider old notification of CBDT, dated 19.06.2019, vide no. 11/2019, for assessment year 2016-17, as per para 4 of the circular, loss can be set off. The said circular is reproduced below:

"SECTION 71, READ WITH SECTION 115BBE, OF THE INCOME TAX ACT, 1961- LOSSES-SET OFF OF FROM ONE HEAD AGAINST INCOME FROM AN OTHER CLARIFICATION REGARDING NON-ALLOWABILITY OF SETOFF OF LOSSES AGAINST THE DEEMED INCOME UNDER SECTION 115BBE OF THE INCOME TAX ACT, 1961 PRIOR TO ASSESSMENT YEAR 2017-18 CIRCULAR NO. 11/2019 [F.NO.225/45/2019-ΓΤΑ.II), DATED 19-6-2019 With effect from 1-4-2017, sub-section (2) of section 115BBE of the Income-tax Act, 1961 (Act) provides that where total income of an assessee includes any income referred to in section(s) 68/69/694/698/69C/69D of the Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provisions of the Act in computing the income referred to in section 115BBE(1) of the Act. 2. In this regard, it has been brought to the notice of the Central Board of Direct Taxes (the Board) that in assessments prior to assessment year 2017-18, while some of the Assessing Officers have allowed set off of losses against the additions made by them under section(s) 68/69/691/698/69C/69D, in some cases, set off of losses against the additions made under section 115BBE(1) of the Act have not been allowed. As the amendment inserting the words 'or set off of any loss' is applicable with effect from 1st of April, 2017 and applies from assessment year 2017- 18 onwards, conflicting views have been taken by the Assessing Officers in assessments for years prior to assessment year 2017-18. The matter has been referred to the Board so that a consistent approach is adopted by the Assessing Officers while applying provision of section 115BBE in assessments for period prior to the assessment year 2017-18. 3. The Board has examined the matter. The Circular No. 3/2017 of the Board dated 20th January, 2017 which contains Explanatory notes to the provisions of the Finance Act, 2016, at para 46.2, regarding amendment made in section 115BBE(2) of the Act mentions that currently there is

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ITA No. 265/Rjt/2026 Smt. Meeta T. Tanna uncertainty on the issue of set-off of losses against income referred to in section 115BBE. It also further mentions that the pre-amended provision of section 115BBE of the Act did not convey the intention that losses shall not be allowed to be setoff against income referred to in section 115BBE of the Act and hence, the amendment was made vide the Finance Act, 2016. 4. Thus keeping the legislative intent behind amendment in section 115BBE(2) vide the Finance Act, 2016 to remove any ambiguity of interpretation, the Board is of the view that since the term 'or set off of any loss' was specifically inserted only vide the Finance Act 2016, w.e.f. 1-4-2017, an assessee is entitled to claim set-off of loss against income determined under section 115BBE of the Act till the assessment year 2016-17. 5. The contents of this Circular may be circulated widely for information of all stakeholders and departmental officers. The pending assessments and litigations on this issue may be handled accordingly."

7.On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

Order is pronounced in the open court on 18/06/2026.

Sd/- (Dr. Arjun Lal Saini) लेखा सद�/Accountant Member राजकोट/Rajkot िदनांक/ Date:18/06/2026

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ITA No. 265/Rjt/2026 Smt. Meeta T. Tanna Copy of the order forwarded to :  The assessee  The Respondent  CIT  The CIT(A)  DR, ITAT, RAJKOT  Guard File /True copy/ By order

Assistant Registrar/Sr. PS/PS ITAT, Rajkot

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