Directors’ Bonus Disallowance Cannot Be Made Through Section 154: ITAT Delhi

Surlon India Private Limited Vs DCIT (ITAT Delhi) The appeal concerned the validity of rectification proceedings initiated under Section 154 of the Income-tax Act for Assessment Year 2017-18. The Assessing Officer had originally completed the assessment under Section 143(3) on 12.12.2019. Subsequently, relying on certain observations from the assessee’s Form 3CD tax audit report, the Assessing Officer initiated proceedings under Section 154 to invoke Section 36(1)(ii) and disallow bonus paid to the directors. A rectification order dated 30.03.2024 was passed, which was upheld by the Commissi...