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Judgment
PER RENU JAUHRI, ACCOUNTANT MEMBER
This appeal by the assessee is directed against the order dated 19.03.2026 of the Commissioner of Income Tax (Appeals), Addl/JCIT(A)-2, Vadodara (hereinafter referred to as the ‘Ld. CIT(A)’] arising out of the rectification order dated 17.06.2025 passed under section 154 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the AO, CPC, Bengaluru (hereinafter referred to as the ‘AO’) pertaining to Assessment Year (A.Y.) 2024-25.
The assessee has raised the following grounds of appeal:
1.“That on the facts and in the circumstances of the case and in law, the Learned CIT(A) has grossly erred in upholding and/or failing to adjudicate properly the action of the Learned Assessing Officer, Deputy Director of Income Tax, CPC, Bengaluru, in treating the GST Input Refund amounting to Rs. 6,21,267/- as income of the Appellant. The said adjustment has been made mechanically and without proper application of mind, ignoring the facts on record and settled legal position. The addition so made is unjustified, arbitrary, and liable to be deleted, and consequently, the demand raised thereon also deserves to be deleted.
2.That on the facts and in the circumstances of the case and in law, the Learned CIT(A) has grossly erred in upholding and/or failing to adjudicate the validity of the order passed under section 154 of the Income-tax Act, 1961, wherein the Learned Assessing Officer rejected the rectification application without duly considering the mistake apparent from the record as specifically pointed out by the Appellant and without granting the opportunity of virtual hearing as requested. The impugned order has thus been passed in violation of the principles of natural justice and is arbitrary, unlawful, and liable to be quashed.
3.That on the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in dismissing the appeal as non-maintainable, without appreciating that the order passed under section 154 rejecting the rectification application is an appealable order under section 246A of the Income-tax Act, 1961, and therefore the Learned CIT(A) ought to have adjudicated the appeal on merits; the impugned order is arbitrary, contrary to law, and liable to be set aside.
4.That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”
Brief facts of the case are that the assessee filed his return for A.Y. 2024-25 on 11.11.2024 declaring income of Rs. 3,38,610/- from his proprietary business. Return was processed u/s 143(1)(a) wherein adjustment was made on account of GST input refund of Rs. 6,21,627/-, received by the assessee by adding the same to his income. The assessee filed an application for rectification u/s 154 which was also rejected.
Aggrieved, the assessee preferred an appeal before the CIT(A), who also dismissed. The same vide order dated 19.03.2026 on a hyper technical and erroneous ground that order u/s 154 is appealable only when it seeks to amend any of the specified order and intimation u/s 143(1)(a) is not covered therein. Further, aggrieved, the assessee is in appeal before the Tribunal,
We have heard the rival submissions and perused the material available on record as well as the decisions of the coordinate benches relied upon by the assessee. At the outset, we note that the adjustment on account of GST input refund was outside the scope of adjustments permitted u/s 143(1)(a) of the Act. Therefore, the adjustment made u/s 143(1)(a), that too without giving the assessee any opportunity was not justified. Subsequently, rejection of assessee’s application u/s 154 and also dismissal of appeal by the CIT(A) was also incorrect justified. We, therefore, have no hesitation in directing the AO to rectify the order and delete the addition of Rs. 6,41,267/- made on account of GST input refund.
In the result, appeal of the assessee is allowed.