Is rejection of rectification petition justified ?

Dipjyoti Majumdar (CA in service & CS. dipmaj@ )   (3466 Points)

20 March 2023  

1) Assessee (domestic company) filed return u/s 139(1) of the I T Act in the month of October 2022 for the assessment year 2022-2023 declaring a total income of NIL and claiming TDS Refund of Rs.3.00 lakhs.

 2) The return was processed under 143(1) wherein certain expenses amounting to Rs. 50000.00 were disallowed u/s 43B and worked out tax payable thereon  @ 26% amounting to be Rs.13000.00

 3) As a result of this, net amount refunded was (Rs.3.00 lakhs - Rs.0.13 lakh), i.e. Rs.2.87 lakhs along with interest u/s 244A.

 4) The fact is that the assessee was having brought forward business losses of Rs.60.00 lakhs pertaining to Asst Year 2016-2017.

 5) The assessee was having total income of Rs.40.00 lakhs during the financial year 2021-2022 which it had set-off from brought forward business losses of Rs.60.00 lakhs and carried forward the remaining business losses of Rs.20.00 lakhs to the subsequent year.

 6) Having received income tax refund lesser by Rs.13000.00 due to disallowance of Rs.50000.00, the assessee sought to file rectification u/s 154 of the I T Act by adjusting Rs.50000.00 from the remaining carry forward business losses of Rs.20.00 lakhs resulting into carry forward of business losses of Rs.19.50 lakhs to subsequent year.

 7) Rectification petition u/s 154 was rejected by CPC stating that there is no mistake apparent from record since fresh claims of BFLA is being made in the rectification petition. 

 Is the action to reject section 154 petition correct ?

8) Is appeal u/s 246A the only recourse available?