Rectification under section 154 over addition under section 69A: AO's addition on unexplained bank credits upheld; appeal required

Rectification under section 154 is confined to correcting obvious, patent mistakes apparent from the record and does not permit re-evaluation, investigation or review of factual findings; accordingly additions made by the assessing officer on unexplained bank credits were not rectifiable as they arose from assessment-stage materials and required substantive proof of source by the taxpayer, which was not provided, and therefore the assessing officers addition stood justified; the appropriate remedy for challenging such an addition is an appeal against the assessment order rather than proceedings under section 154.

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Issues: Whether the rectification jurisdiction under Section 154 of the Income-tax Act, 1961 is available to grant relief against an addition of Rs. 1,26,037/- made under Section 69A in a best-judgement assessment for AY 2012-13.

Analysis: The Tribunal examined the limited scope of Section 154 which is confined to correcting an obvious or patent mistake apparent from the record and does not permit re-opening of questions of fact or re-evaluation of material which could give rise to two opinions. The assessment was completed under Section 144 on the basis of unexplained bank credits supported by material available to the Assessing Officer and by information obtained under Section 133(6). The Tribunal noted that challenging an addition under Section 69A requires adducing evidence to explain the source of deposits, which involves factual inquiry beyond the remedial scope of Section 154. The Tribunal also observed that the proper remedy for disputing such an addition is an appeal against the assessment order within the statutory time limits, and that rectification cannot be used as a substitute for appeal or review of the merits.

Conclusion: Rectification under Section 154 is not available to set aside the addition of Rs. 1,26,037/- made under Section 69A; the rectification application and the subsequent appeal are dismissed (decision is against the assessee and in favour of the Revenue).

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