Bhavsagar Dealers Pvt. Ltd. Vs ITO (ITAT Delhi)
154 Rectification Can’t Run Ahead of Pending Quantum Appeal: Form 26QB vs 26AS Mismatch: ITAT Sends 50C & 154 Issues Back for Unified Adjudication- When Quantum Is Remanded, Consequential 154 Order Can’t Stand Alone
Delhi ITAT ‘A’ Bench in Bhavsagar Dealers Pvt Ltd vs ITO, Ward-4(1), Delhi (ITA No.2445/Del/2025, AY 2017-18, order dated 24-12-2025) set aside the rectification order u/s 154 and restored the matter to CIT(A), holding that where the very quantum addition is already remanded for fresh adjudication, the consequential rectification proceedings cannot be decided in isolation.
Assessee had filed ROI declaring income of ₹56.26 lakh. Ex-parte assessment u/s 144 resulted in addition of ₹5.45 crore u/s 50C, based on Form 26QB data, alleging understatement of sale consideration vis-à-vis receipts shown by the assessee. Assessee filed rectification u/s 154 pointing out apparent mistake, contending that Form 26AS did not support the alleged difference. Instead of rectifying, AO passed an order u/s 154 disallowing indexed cost and raised a fresh demand of ₹79.19 lakh, which was upheld by CIT(A).
ITAT noted that the very quantum addition of ₹5.45 crore u/s 50C had already been set aside by a co-ordinate bench in ITA No.594/Del/2025 and restored to CIT(A) for fresh adjudication after admitting additional evidence. In such circumstances, deciding the 154 appeal separately would lead to multiplicity and inconsistent findings.
Tribunal held that the CIT(A) now seized of the quantum appeal must also examine all rectification-related grounds, including limitation, jurisdiction, denial of indexed cost and natural justice, while disposing of the matter in accordance with section 250(6) by passing a reasoned order.
Accordingly, ITAT allowed the appeal for statistical purposes and restored the entire controversy to CIT(A) for consolidated adjudication.
Rectification cannot outlive or outrun the quantum. When the main addition is already remanded, all consequential 154 issues must travel together—piecemeal adjudication is impermissible.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. This appeal is filed by the assessee /appellant against the order of Learned Commissioner of Income Tax (Appeals)/ NFAC, Delhi [hereinafter referred to as the “CIT(A)”], passed under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] dated 13.02.2025 for the A.Y. 2017-18 wherein the assessment order dated 23.12.2019 was upheld and addition of Rs. 5,45,00,000/- was confirmed.
