2025 (4) TMI 605 - AT - Income Tax

Rectification u/s 154 - addition of rent payable credited to the capital account of the appellant - HELD THAT - There is no material on record to suggest that the amount of rent payable calls for addition. I do not find any mistake apparent from record which is being capable of being rectified u/s. 154 of the Act. Therefore the AO ought not have exercised jurisdiction u/s. 154 of the Act. Accordingly the order passed u/s. 154 of the Act is hereby quashed. Appeal filed by the assessee stands allowed.

Summary

The Appellate Tribunal ITAT Cochin, in the case concerning the appellant, an individual engaged in the business of dealing in cement, iron & steel, and roofing material, reviewed an appeal against the National Faceless Appeal Centre (NFAC), Delhi's order dated 08.08.2024 for the Assessment Year 2017-18. The appellant initially declared a total income of Rs. 7,13,040, which the Assessing Officer (AO) adjusted to Rs. 10,13,040 by disallowing Rs. 3,00,000 of claimed expenditure.Subsequently, the AO issued a notice under section 154 of the Income Tax Act on 16.07.2021, proposing an addition of Rs. 2,76,000, arguing it was rent credited to the appellant's capital account. The appellant contended this amount was rent payable to his grandmother, stemming from inherited property, and not a revenue receipt. Disagreeing, the AO made the addition under section 154.The CIT(A) dismissed the appellant's challenge to this rectification order with a "cryptic order" that failed to address the grounds of appeal. On further appeal, the Tribunal found no evidence justifying the addition of Rs. 2,76,000 as rent payable, nor any "mistake apparent from record" warranting rectification under section 154. Consequently, the Tribunal quashed the AO's order under section 154, allowing the appellant's appeal. The decision was pronounced in open court on 9th April 2025.