PIYUSH GARG,AHMEDABAD vs. DCIT, CC-1(2), AHMEDABAD

ITA 1590/AHD/2025Status: DisposedITAT Ahmedabad09 December 2025AY 2022-23Bench: Dr. BRR Kumar (Vice President), Ms. Suchitra Kamble (Judicial Member)1 pages
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What did the Tribunal hold?

The Tribunal held that the rectification order under Section 154 was bad in law as it involved a debatable issue, which cannot be adjudicated under Section 154. The Tribunal noted that the AO's action was not a correction of a 'mistake apparent from record' but a fresh initiation of penalty, exceeding the AO's jurisdiction. The CIT(A)'s finding that no prejudice was caused was also found to be incorrect.

What were the facts?

The assessee filed a return of income for AY 2022-23, which was processed and later selected for scrutiny. During the assessment, the AO observed that the assessee offered income from seized cash under section 115BBE. The AO initiated penalty proceedings under Section 271AAB, but later rectified this to Section 271AAC via a Section 154 order, citing a typographical error.

What were the issues?

Whether the AO can rectify the initiation of penalty proceedings from Section 271AAB to Section 271AAC by invoking Section 154 when the issue is debatable and the original initiation was found unsustainable, thus amounting to a fresh initiation beyond jurisdiction.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 143(3),Section 132A,Section 115BBE,Section 271AAB,Section 271AAC,Section 154,Section 292B

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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH

Before: Dr. BRR Kumar & Ms. Suchitra Kamble

For Appellant: Shri Anurag Sinha, A.R
For Respondent: Shri Uday Kishanrao Kakne, Sr. D.R

Per Suchitra Kamble, Judicial Member:

This is an appeal filed against the order dated 30-06- 2025 passed by CIT(A)-11, Ahmedabad for assessment year 2022-23. 2. The grounds of appeal are as under:- “1. BECAUSE, the impugned order passed by the "AO' is liable to held void-ab- initio having been passed without any statutory Notice to the appellant thereby rendering the entire proceedings null in law.

2.

BECAUSE, the Ld. CIT(A) has erred in law and on facts in treating the wrongful initiation of penalty as a mere clerical error, overlooking the settled principle that initiation of penalty is not a ministerial OR mechanical act but a quasi-judicial function requiring the conscious satisfaction of the

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