Rectification Under Section 154 Cannot Substitute Regular Appeals for Merits-Based Additions: ITAT Indore Ruling

The Income Tax Appellate Tribunal (ITAT), Indore Bench, has delivered a significant ruling clarifying the boundaries of rectification proceedings under the Income Tax Act, 1961. In the case of Vaibhav Mittal Vs DCIT/ACIT, the Tribunal held that an assessee cannot utilize Section 154 to challenge additions made on merits, particularly when they failed to file a statutory appeal against the original assessment order within the prescribed limitation period.

Factual Background of the Case

The dispute arose from the Assessment Year (AY) 2012-13. The assessee, a salaried individual employed by a private limited company, failed to furnish a return of income despite earning taxable income significantly above the exemption threshold. Consequently, the Assessing Officer (AO) initiated proceedings under Section 147.

Despite multiple notices issued under Section 142(1) and Section 148, the assessee remained non-compliant. This compelled the AO to finalize the assessment to the best of their judgment under Section 144. The final order, dated November 25, 2019, assessed the total income at Rs. 12,27,885/-. This computation included:

• Salary income amounting to Rs. 11,01,848/-.
• An addition of Rs. 1,26,037/- under Section 69A regarding unexplained bank deposits.