RAMAKRISHNA REDDY MAKIREDDY,HYDERABAD vs. ACIT, CIRCLE-5(1), HYDERABAD

ITA 70/HYD/2026Status: DisposedITAT Hyderabad16 October 2026AY 2007-0810 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the original rectification order passed by the AO under section 154 of the Act on 24.03.2014, concerning the admissibility of deduction under section 54F or section 54EC, was beyond the scope of section 154. The Tribunal reasoned that section 154 empowers rectification only for mistakes apparent from the record, not for debatable issues requiring examination of facts and interpretation of law. The issue of deduction under section 54F/54EC involves determining the nature of the capital asset, investment made, and statutory conditions, which is a substantive issue requiring adjudication, not mere rectification. The fact that the Tribunal had previously restored the issue for de novo consideration further supported its debatable nature. Therefore, the AO exceeded his limited jurisdiction under section 154. Consequently, the subsequent order dated 30.03.2023, being founded upon the invalid original rectification, was also quashed. The legal ground raised by the assessee was allowed, and the other grounds became academic. The Tribunal set aside the impugned order of the First Appellate Authority and quashed the AO's order.

What were the facts?

The assessee, Shri Ramakrishna Reddy Makireddy, filed an appeal against the order of the Learned Addl./JCIT (A)-1, Ahmedabad, dated 18.11.2025, for Assessment Year 2007-08. The Assessing Officer (AO) had passed an assessment order under section 154 read with section 254 of the Income Tax Act, 1961, on 30.03.2023, determining the total income at Rs. 66,49,669/-. The assessee had previously appealed to the First Appellate Authority, who upheld the AO's order. The current appeal before the ITAT challenges the validity of the original rectification order passed by the AO under section 154 on 24.03.2014, which dealt with the admissibility of deduction under section 54F or section 54EC.

What were the issues?

1. Whether the original rectification order passed by the AO under section 154 of the Act dated 24.03.2014, concerning the admissibility of deduction under section 54F or section 54EC of the Act, was within the permissible scope of rectification. 2. Consequently, whether the subsequent order dated 30.03.2023, passed under section 154 read with section 254 of the Act, can be sustained in law. Assessee's Contentions: The assessee argued that the AO wrongly invoked section 154 for a debatable issue regarding the admissibility of deduction under section 54F or 54EC. The scope of section 154 is limited to mistakes apparent from the record, not debatable issues requiring interpretation. The assessee referred to a previous ITAT order (ITA No. 316/Hyd/2017) where the issue was restored to the AO for de novo consideration, indicating its debatable nature. Therefore, the original rectification order was without jurisdiction and liable to be quashed, making the subsequent order also invalid. Revenue's Contentions: The revenue relied on the orders of the lower authorities and supported the validity of the impugned order.

Which sections of the Income-tax Act were involved?

Section 154,Section 254,Section 54F,Section 54EC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘B‘ Bench, Hyderabad

Before: Shri Ravish SoodShri Madhusudan Sawdia

Hearing: 17/09/2026

Per Madhusudhan Sawdia, A.M.: This appeal is filed by Shri Ramakrishna Reddy Makireddy (“the assessee”), feeling aggrieved by the order passed by the Learned Addl./JCIT (A)-1, Ahmedabad (“Ld.

First Appellate Authority ”) dated 18.11.2025 for the A.Y. 2007-08. 2. The assessee has raised the following grounds of appeal: 3. The brief facts of the case are that th

The order continues below.

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