Section 14A disallowance cannot be increased through rectification where the return already contains a supported computation.

A further disallowance under Section 14A should not be introduced through rectification under Section 154 where the assessee has already made a supported disallowance in the return. The note records that the return contained a computation based on 1% of the annual average of monthly average opening and closing investment balances, with the supporting working forming part of the record. Because the computation's factual correctness was not disputed and no material justified an additional adjustment, the further disallowance resulted from overlooking existing documentary material rather than correcting a sustainable rectifiable mistake. The additional disallowance was therefore described as unjustified and deleted.

---

---

Issues: Whether a further disallowance under Section 14A of the Income-tax Act, 1961 could be made through rectification under Section 154 when the assessee had already made a suo motu disallowance in the return of income supported by computation on record.

Analysis: The assessee's return for AY 2021-22 had already included a disallowance under Section 14A quantified at Rs. 16,347 on the basis of 1% of the annual average of the monthly average opening and closing balances of investments. The working supporting that computation formed part of the record. The factual correctness of this working was not disputed, and no material was shown to justify an additional adjustment in rectification proceedings under Section 154. Since the original record itself reflected the disallowance already offered by the assessee, the further adjustment proceeded on a failure to appreciate the existing documentary material rather than on a sustainable rectifiable mistake.

Conclusion: The further disallowance made under Section 154 was not justified, and the deletion of the addition/disallowance was in favour of the assessee.

Ratio Decidendi: A rectification under Section 154 of the Income-tax Act, 1961 cannot be used to make an additional disallowance under Section 14A where the assessee has already made the appropriate disallowance in the return and the supporting computation is borne out from the record.

---