Tax Appeal Dismissed: Assessee Challenges Rectification, Not Original Order

In a recent ruling that underscores the significance of following correct appellate procedures, the  ITAT Bangalore Bench has dismissed an appeal filed by an assessee challenging an addition on account of cash deposits. The Tribunal emphasized that an appeal against a rectification order cannot address substantive additions confirmed in the original appellate order, highlighting a crucial distinction between rectification proceedings and substantive appeals under the Income Tax Act.

Chronology of Orders:

The solitary issue raised by the assessee is that the CIT(A) erred in confirming the addition made by the AO amounting to ₹36,34,500 on account of cash deposits in the bank.  Tribunal noted that the order  under challenge before the ITAT is CIT(A)’s order dt 08.11.2024 which is an order passed by CIT(A) u/s 154 r.w.s.250. It is a known fact that the scope of dispute in the appeal against a rectification order is limited to the extent of apparent mistakes.

Assessee has originally challenged the addition made by the AO, which was confirmed by the CIT(A) in  order dt 12.06.2024 which has not been challenged by the assessee before the ITAT. Tribunal ruled that if the assessee is aggrieved, he should have preferred an appeal against the CIT(A)’s order dt 12.06.2024 wherein the addition made by the AO,  was confirmed by the CIT(A).  Therefore, the appeal filed by the assessee against the rectification order of CIT(A) dt 8.11.2024 is not maintainable.

Dismissing the appeal of the assessee, Tribunal thus clarified that the remedy for the assessee is not available against the CIT(A0’s rectification order dt 8.11.2024, but rather against the CIT()’s order dt 12.6.2024 and held that such, the assessee is at liberty to file an appeal with appropriate contentions as per the provisions of law.

Implication for Taxpayers:

This order underscores the importance of correctly identifying the proper remedial path when dealing with tax disputes. Rectification proceedings cannot be used to address substa ntive additions, and taxpayers must timely challenge the original appellate orders to preserve their rights.

FULL TEXT OF THE ORDER OF ITAT BANGALORE

This is an appeal filed by the assessee against the order passed by the NFAC, New Delhi dated 12/06/2024 in DIN No. ITBA/NFAC/S/250/ 2024-25/1065599748(1) for the assessment year 2017-18.

2. The solitary issue raised by the assessee is that the learned CIT(A) erred in confirming the addition made by the AO amounting to ₹36,34,500 on account of cash deposits in the bank.

3. Before addressing on the issue raised by the assessee in the grounds of appeal, it is pertinent to take note of the different dates when the orders were passed, which are detailed below:

3. All the above stated details are arising from the statement of facts filed by the assessee along with the memorandum of appeal which were not disputed by the ld. DR of the Revenue. Further, on perusal of Form 36 filed by the assessee, it is observed that the order under challenge is dated 8 November 2024, which is an order passed by the learned CIT(A) under section 154 read with section 250 of the Income Tax Act. It is a known fact that the scope of dispute in the appeal against a rectification order is limited to the extent of apparent mistakes.

4. Furthermore, upon examining the grounds of appeal raised by the assessee, we note that the assessee has challenged the addition made by the AO, which was confirmed by the learned CIT(A) vide order dated 12 June 2024. However, the said order dated 12 June 2024 has not been challenged by the assessee. Upon confronting the learned AR (Authorized Representative) appearing on behalf of the assessee with this fact, he could not controvert the same. As such, in the given facts and circumstances, we are of the view that if the assessee is aggrieved, he should have preferred an appeal against the order of the learned CIT(A) dated 12 June 2024. This, however, has not been done in the present case. Therefore, the appeal filed by the assessee against the rectification order of the learned CIT(A) dated 8-11-2024 is not maintainable. This position was also not disputed by the learned AR for the assessee. Accordingly, we hold that this appeal is not maintainable and is liable to be dismissed.

5. To avoid any ambiguity, we find it relevant to clarify that the remedy for the assessee is not available against the rectification order passed by the learned CIT(A) dated 8 November 2024, but rather against the order passed by the learned CIT(A) dated 12 June 2024. As such, the assessee is at liberty to file an appeal with appropriate contentions as per the provisions of law. Hence, the appeal filed by the assessee is hereby dismissed.

6. In the result, the appeal filed by the assessee is dismissed.

Order pronounced in court on 22^nd day of May, 2025