Section 154 rectification applications require reasoned consideration of material return-reporting errors.

The petitioner, a doctor, challenged the rejection of his rectification request concerning his income-tax return for assessment year 2021–22.

He said that, due to a bona fide error by his Chartered Accountant, a sum of ₹12,12,68,334—claimed to be a capital receipt—was reported as “any other item of income” in Part A-OI rather than as a capital receipt.

The petitioner sought correction through the Return Data Correction Module and filed a rectified return; that application was rejected on 11 September 2024, with the stated reason that the amount should have been aggregated in Schedule BP.

His subsequent applications to the jurisdictional Assessing Officer remained unaddressed.

He sought a direction for consideration of those applications.

1. Whether the rejection of the petitioner’s rectification application under Section 154 should be set aside where the application and rectified return allegedly disclosed a bona fide reporting error that was not considered

2. Whether the jurisdictional Assessing Officer should reconsider the rectification application and process the return after considering the petitioner’s representations

Section 154 of the Income Tax Act, 1961 provides for rectification of mistakes apparent from the record.

The Court also exercised its jurisdiction under Articles 226 and 227 of the Constitution, as invoked in the petition, to review the rejection and grant appropriate relief.

The judgment cites no precedent and does not determine whether the claimed capital receipt is exempt or whether the alleged error ultimately qualifies for rectification; it directs reconsideration in accordance with law.

The Court noted that the petitioner had filed a rectified return showing the amount as a capital receipt and that the rejection order did not consider the circumstances advanced in support of the claimed bona fide error.

It found an infirmity in that rejection and observed that the second respondent could examine the matter and process the return.

Because the petitioner’s other applications to that respondent also remained undecided, the Court considered reasoned reconsideration appropriate rather than merely reiterating the earlier rejection.

The Court quashed the order dated 11 September 2024 and restored the petitioner’s rectification application dated 27 July 2024 for reconsideration by the second respondent.

The petitioner was permitted to file a detailed response, enclosing earlier representations, by 12 October 2026; the second respondent was to process the return and pass orders in accordance with law.

The Court further directed that there be no precipitation concerning the claimed exemption of the capital receipt until a decision on the restored application.