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Facts
The assessee filed an appeal against a rectification order passed under Section 154 of the Income Tax Act, 1961, for Assessment Year 2017-18. The Assessing Officer had initially framed a Section 143(3) assessment and subsequently, through a Section 154 rectification, disallowed the assessee's ESI/PF claim of Rs. 29,26,971/-.
Held
The Tribunal held that rectification under Section 154 is not permissible when the Assessing Officer had already duly considered the ESI/PF issue during the regular assessment under Section 143(3). Relying on the Supreme Court's decision in T. S. Balaram, ITO vs. Volkart Bros., the Tribunal reversed the impugned rectification order.
Key Issues
Whether the rectification of an assessment under Section 154 of the Income Tax Act, 1961, is permissible to disallow an ESI/PF claim when the issue was already considered during the original assessment under Section 143(3).
Sections Cited
154, 143(3)
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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: Sh. Satbeer Singh Godara
Asstt. Year: 2017-18 Mahesh Sunny Enterprises Pvt. Ltd. Vs DCIT, L-322, Mahipalpur Extension, South Circle-16(1), Delhi, New Delhi-110037 New Delhi-110002 (APPELLANT) (RESPONDENT) PAN No. AACCM9502A Assessee by: Sh. Ravi Pratap Mal, Adv. & Sh. Uma Shankar, Adv. Revenue by : Sh. Amit Shukla, Sr. DR Date of Hearing: 23.12.2025 Date of Pronouncement: 23.12.2025 ORDER This assessee’s appeal for Assessment Year 2017-18 arises against the Addl./JCIT(A)-1, Bengaluru’s DIN & order No. ITBA/APL/S/250/2025-26/1082129793(1) dated 30.10.2025, in proceedings u/s 154 of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties at length. Case file perused.
It is noticed at the outset during the course of hearing that the learned Assessing Officer had framed his section 143(3) assessment on 12.12.2019; and, thereafter, he invoked his section 154 rectification jurisdiction to disallow the assessee’s ESI/PF claim of Rs.29,26,971/- by issuing notice dated 06.06.2022 culminating in the final rectification order in issue dated 26.09.2022 in issue.
Mahesh Sunny Enterprises Pvt. Ltd. 4. The Revenue vehemently argues that once the assessee has been found to have not complied with the due date in the corresponding statute, both the learned lower authorities’ impugned action invoking section 154 rectification deserves to be upheld.
This tribunal finds no merit in the Revenue’s foregoing vehement contentions. This is for the precise reason that given the fact that the learned Assessing Officer had duly considered the instant ESI/PF issue in his regular assessment, revisiting the very binding by way of section 154 rectification is no more permissible going by T. S. Balaram, ITO vs. Volkart Bros. (1971) 82 ITR 40 (SC). The impugned rectification order dated 26.09.2022 is hereby reversed therefore.