MUKESH MITTAL,DELHI vs. ITO WARD-55(1), DELHI

The AO has made serious error in treating exempt income of Dividend income of Rs.63,105/- as his business income. 3. The AO has made serious error in taxing twice the business income from proprietorship concern M/s. M.M. Enterprises of Rs.4,27,875/- which has already been declared by the assessee as business income.

Briefly the facts are, the assessee is a resident individual. For the assessment year under dispute, the assessee filed his return of income on 22nd September, 2018 declaring income of Rs.8,87,707/-. While processing the return of income under section 143(1) of the Income-tax Act, 1961 (for short “the Act”), the Centralized Processing Centre (CPC), Bangalore, made certain adjustments to the income declared by adding back the following items of income:

Against the intimation issued under section 143(1)(a) of the Act, the assessee filed an application under section 154 of the Act for rectification of mistakes. However, the application filed by the assessee was rejected. Against the order passed under section 154 of the Act, though, the assessee preferred an appeal before learned Commissioner (Appeals), however, the order was upheld.

Before me, learned counsel appearing for the assessee, submitted that the profit from M/s. MM Enterprises has already been offered to tax separately in the computation of income. In this context, he drew my attention to the profit and loss account and the computation of income. Thus, he submitted, the further 2 | P a g e addition of Rs.4,27,875/- amounts to double addition of the same income. Further, he submitted, the interest on PPF and the dividend income were duly disclosed by the assessee in the return of income as exempt income. Hence, they should not have been added back to the income of the assessee.

Learned Departmental Representative relied upon the observations of learned Commissioner (Appeals).

I have considered rival submissions and perused the materials on record. On going through the materials placed before me, more particularly, the profit and loss account and the computation of income, I am convinced that the profits from M/s.

As regards dividend received and interest on PPF, undisputedly, they are credited to the profit and loss account of the 3 | P a g e assessee. However, in the computation of income, the assessee has reduced them from the profits, since, these two items of income are exempt. Without appreciating the correct factual position, learned Commissioner (Appeals) has confirmed the additions. Considering the fact that both interest on PPF and dividend received are exempt from taxation, I direct the Assessing Officer to delete the additions.

In the result, appeal is allowed.