AMAR NATH SINGH,MIRZAPUR vs. ITO WARD-3(2), MIRZAPUR

ITA 51/ALLD/2024Status: DisposedITAT Allahabad29 September 2026AY 2016-176 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the issue of whether the difference in sales amounts between the ITR and financial statements was examined by the AO during the original assessment with reference to VAT returns, and the AO was satisfied that the difference was due to a typographical error. Therefore, it could not be considered a mistake apparent from the record without specifying the mistake. Disregarding the AO's view after inquiry, solely based on an audit observation of a contradiction, amounts to forming an opinion based on speculation and borrowed satisfaction. The Tribunal noted that these facts were presented to the CIT(A) in the statement of facts but were disregarded. Consequently, the Tribunal found that the AO's action in passing a rectification order under Section 154, being based on borrowed satisfaction and without a finding of mistake in the inquiries conducted during assessment, was not maintainable. The rectification order was quashed, and the addition of Rs. 80,60,870/- was deleted. The appeal of the assessee was allowed.

What were the facts?

The assessee, Amar Nath Seth, is appealing against an order of the CIT(A), NFAC, which dismissed his appeal against a rectification order passed under Section 154 of the Income Tax Act, 1961, for Assessment Year 2016-17. The Assessing Officer (AO) initially assessed the assessee's income at Rs. 2,06,570/- under Section 143(3). Subsequently, based on an audit objection highlighting a discrepancy between sales reported in ITR-4 (Rs. 89,56,524/-) and the profit and loss account (Rs. 8,95,654/-), the AO initiated rectification proceedings under Section 154. The AO proposed to add back Rs. 80,60,870/-. The assessee contended that the higher figure in the ITR was a clerical error. The CIT(A) dismissed the assessee's appeal for non-submission of written submissions.

What were the issues?

1. Whether the learned CIT(A) erred in law and on facts by dismissing the appeal in limine without deciding on merits, despite the statement of facts containing sufficient material? (Assessee's contention: The CIT(A) failed to appreciate that the statement of facts provided sufficient material for decision and that the AO had already accepted the correct sales figure after verification during the original assessment. The rectification under Section 154 was based on a change of opinion, not a mistake apparent from the record). 2. Whether the learned CIT(A) erred in law and on facts in sustaining the addition of Rs. 80,60,870/- on account of the difference in sales figures, by invoking Section 154, when the difference was due to a clerical mistake in the ITR? (Assessee's contention: The higher sales figure in the ITR was a clerical mistake, with an extra digit typed. The AO had accepted the correct sales figure of Rs. 8,95,654/- after considering the assessee's explanation and verifying VAT returns during the original assessment. The subsequent rectification was based on a change of opinion and not a mistake apparent from the record). 3. Whether the learned CIT(A) failed to appreciate that the discrepancy in reporting sales was noticed during assessment, the assessee provided an explanation, and the AO made a conscious decision to accept the correct sales figure? (Revenue's contention: The Sr. DR submitted that since the CIT(A) had not considered the issue on merits, it would be appropriate to restore the matter to him for giving a finding on facts and deciding the legal issue.

Which sections of the Income-tax Act were involved?

Section 154,Section 143(3),Section 44AD,Section 250,Section 234A,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ALLAHABAD BENCH, ALLAHABAD

Hearing: 07.09.2026Pronounced: 29.09.2026

PER NIKHIL CHOUDHARY, A.M.: This is an appeal filed by the assessee against the order of the ld. CIT(A), NFAC dated 3.03.2024, wherein the ld. CIT(A) has dismissed the appeal of the assessee against the order passed under section 154 of the Income Tax Act, 1961 for the assessment year 2016-17 on 3.03.2024. The grounds of appeal are as under: - “1. BECAUSE learned CIT(A) has erred in law and on facts in dismissing the appeal in limine without giving any finding on merit. The learned CIT(A) has failed to appreciate the fact that statement of facts as filed along with memo of appeal itself contains the sufficient material to decide the appeal.

2.

BECAUSE the learned CIT(A) has failed to appreciate the fact that there was no mistake in order passed under se

The order continues below.

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