Ratanben Hargovandas Patel Vs DCIT (ITAT Ahmedabad)
A deduction omitted from the original return cannot ordinarily be introduced through rectification under Section 154 when there is no apparent mistake; however, where the assessee has evidence of an otherwise eligible claim, relief may be pursued by seeking condonation for filing a revised return under Section 119(2)(b).
Summary: ITAT Ahmedabad disposed of the assessee’s appeal for AY 2020-21 by directing her to approach the Principal Commissioner under Section 119(2)(b) for permission to file a revised return and claim a ₹1,50,000 deduction under Section 80C. The assessee had filed her return on 30.12.2020 declaring total income of ₹63,98,501, which was processed under Section 143(1) by the CPC on 25.11.2021, resulting in a demand of ₹9,81,370. She subsequently filed a rectification application under Section 154 on 08.08.2022, pointing out that deduction under Section 80C for an investment of ₹1,50,000 in a Fixed Deposit had not been allowed. The CPC passed a rectification order on 25.07.2025 determining income at ₹63,98,500, but did not allow the deduction because no such claim had been made in the original return. The CIT(A) dismissed the assessee’s appeal. Before the Tribunal, the assessee submitted that the omission was inadvertent, that the ₹1,50,000 investment had actually been made during the year and was eligible for Section 80C deduction, and requested either restoration to the Assessing Officer for verification or permission to pursue relief under Section 119(2)(b). The Tribunal held that, since the deduction had admittedly not been claimed in the return, the Section 143(1) intimation and CPC rectification order could not be faulted. At the same time, the assessee had produced evidence of the eligible investment. In the interest of justice, the Tribunal directed that an application under Section 119(2)(b) be filed and sympathetically considered by the PCIT, with permission to file a revised return and claim the Section 80C deduction as per law. The appeal was dismissed for statistical purposes.
Core Issue: The core issue before the Tribunal was whether deduction under Section 80C in respect of an eligible fixed-deposit investment, which had inadvertently not been claimed in the original return of income, could subsequently be allowed through rectification proceedings under Section 154.
Facts: The assessee filed the return of income for AY 2020-21 on 30 December 2020, declaring total income of ₹63,98,501. The return was processed under Section 143(1), resulting in a demand of ₹9,81,370. Subsequently, the assessee filed a rectification application under Section 154, contending that deduction of ₹1,50,000 under Section 80C in respect of investment in a fixed deposit had not been allowed. The CPC rejected the claim on the ground that no deduction under Section 80C had been claimed in the original return. The assessee contended that the omission was inadvertent and that the investment was otherwise eligible for deduction.
AO/CIT(A) Finding: The CPC, while passing the rectification order under Section 154, declined to allow the deduction because the claim had never been made in the return of income. The Addl./JCIT(A) upheld the rectification order and dismissed the assessee’s appeal.
ITAT Finding: The Tribunal held that since no deduction under Section 80C had been claimed in the original return, neither the intimation under Section 143(1) nor the rectification order under Section 154 could be considered erroneous for not allowing such deduction. A new claim requiring examination could not be introduced merely through rectification proceedings. However, the Tribunal took note of the evidence produced by the assessee showing investment of ₹1,50,000, which was otherwise eligible for deduction under Section 80C. In the interest of justice, the Tribunal granted liberty to the assessee to seek condonation under Section 119(2)(b) for filing a revised return and directed that such application be considered sympathetically in accordance with law.
Cases Relied Upon: The decision was primarily based on the statutory scheme governing rectification under Section 154 and condonation of delay under Section 119(2)(b). The Tribunal recognized the distinction between correcting an apparent mistake and making a fresh claim that had not been made in the original return.
Outcome: The rectification claim was not allowed, and the appeal was dismissed for statistical purposes. However, the assessee was granted liberty to file an application under Section 119(2)(b) seeking condonation for filing a revised return and to claim the eligible deduction under Section 80C therein, in accordance with law.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal is filed by the Assessee against the order of Addl/JCIT (Appeal), Thane, [hereinafter referred to as “Addl. CIT(A)”] dated 12.03.2026 for the Assessment Year (A.Y.) 2020-21 in the proceeding u/s 154 of the Income Tax Act [hereinafter referred as “the Act”].
2. The brief facts of the case are that the assessee had filed his return of income for A.Y. 2020-21 on 30.12.2020 declaring total income of Rs. 63,98,501/-, which was processed u/s. 143(1) of the Act by the CPC on 25.11.2021 resulting in demand of Rs.9,81,370/-. Thereafter, the assessee had filed a rectification application u/s. 154 of the Act on 08.08.2022 against the said intimation pointing out that deduction u/s. 80C of the Act in respect of investment of Rs.1,50,000/- in the Fixed Deposit was not allowed. The CPC had passed a rectification order u/s. 154 of the Act on 25.07.2025 determining income at Rs. 63,98,500/- as per return. The deduction u/s. 80C of the Act was not allowed for the reason that no such claim was made by the assessee in the return of income.
3. Aggrieved with the rectification order passed by the CPC, the assessee had filed an appeal before the first appellate authority which was decided by the Ld. Addl. CIT(A) vide the impugned order and the appeal of the assessee was dismissed.pa
4. Now, the assessee is in second appeal before us. The following grounds have been taken in this appeal:
1. In law and in facts and circumstances of the Appellant case, the learned Addl/Jt. Commissioner of Income tax (Appeals) has grossly erred in points of law and facts.
2. In law and in facts and circumstances of the Appellants case, the learned Addl/Jt. Commissioner of Income Tax (Appeals) has grossly erred in dismissing the grounds regarding not allowing deduction u/s. 80C of I.T. Act of Rs. 1,50,000/- on account of Fixed Deposit with the KCCB Ltd.
3. Your appellant reserves the right to add, alter, amend all or any of the above grounds of appeal as may be advised from time to time.
5. Shri Hemanshu Shah, CA and Ld. AR of the assessee submitted that there was an inadvertent error made by the assessee while filing the return and deduction u/s. 80C of the Act was not claimed in the ITR. He further submitted that the assessee had made investment of Rs. 1,50,000/- during the year and was eligible for deduction u/s. 80C of the Act. He, therefore, requested that the matter may be set aside to the file of the AO with a direction to verify the claim of the assessee and, thereafter, allow the deduction u/s. 80C of the Act. In the alternative, the Ld. AR submitted that the assessee may be allowed permission to file an application u/s. 119(2)(b) of the Act, for filing a revised return claiming the deduction u/s. 80C of the Act. On the other hand, Shri Arvind Kumar Namdeo, the Ld. SR-DR submitted that there was no mistake in the intimation issued by the CPC.
6. We have considered the rival submissions. The admitted fact is that no deduction u/s. 80C of the Act was claimed by the assessee in the return of income. Therefore, the intimation u/s. 143(1) of the Act and the rectification order passed by the CPC cannot be faulted. At the same time, the assessee has brought on record the evidence for investment of Rs. 1,50,000/- during the year which was eligible for deduction u/s. 80C of the Act. In the interest of justice, therefore, we direct that the assessee may file an application u/s. 119(2)(b) of the Act, which should be sympathetically considered by the Ld. PCIT and the assessee should be allowed permission to file revised return. The assessee will be free to claim the deduction u/s 80C of the Act in the revised return as per law. The present appeal is treated as dismissed for statistical purpose.
7. In the result, the appeal of the assessee is dismissed.
Order pronounced in the Court on 01/09/2026 at Ahmedabad.
