PAYONIDH PAREKH,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 42(2)(1), MUMBAI, MUMBAI

The grounds of appeal raised by the assessee are as under: “1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the adjustment made in the intimation issued under section 143(1), without appreciating that the said adjustment is beyond the scope of permissible adjustments under section 143(1) of the Act. 2. The learned CIT(A) failed to appreciate that the 2. issue involved reconciliation of capital gains figures and verification of entries in the return, which is not a prima facie adjustment and therefore could not have been made in proceedings under section 143(1). 3. On the facts and in the circumstances of the case, the addition confirmed by the learned CIT(A) results in taxation of income which has not arisen and is contrary to settled principles of real income. 4. On the facts and in the circumstances of the case and 4. in law, the learned CIT(A) erred in confirming the computation of Long-Term Capital Gains by CPC at 13,51,147 instead of the correct Long-Term Capital Loss of 26,41,015, without properly appreciating the computation of capital gains disclosed by the appellant. 5. The learned CIT(A) failed to appreciate that the appellant had 5 duly disclosed: (i) Long-term capital loss on shares and mutual funds of 290,10,906; and (ii) Long-term capital gain on sale of land and building of 83,72,679; and that the resultant net loss of ₹6,41,015 was evident from the records, and the alleged income arose only due to a clerical error in one field of the return.”

As per facts on record, the present appeal of assessee arises on account of certain mistakes committed by the assessee in filing the return, thereby a demand of Rs. 5,74,800/- was raised by the CPC, while processing the return under section 143(1) of the Act, under the head capital gains. The assessee filed an application u/s 154 before the Ld. AO for rectification of mistakes. However, the said application was rejected on the ground that the request involving afresh/revised claim and did not constitute a mistake apparent from record.

Being aggrieved with the aforesaid decision of Ld. CIT(A), assessee preferred an appeal before us, wherein the assessee tried to explain the reasons on account of a mistake, took place in filling of figures in the return.

Apparently, the Ld. CIT(A.) proceeded on the basis that the assessee had not filed any revised return under section 139(5) of the Act. However, before us, the assessee has furnished a copy of the revised return dated 31st March, 2021. Since the said document is stated to have been filed prior to the passing of the impugned order and its existence and contents have a bearing upon the factual position considered by the Ld. CIT(A.), the same would require examination in accordance with law. Accordingly, the issue may appropriately be considered afresh by the Ld. AO after verifying the revised return and other relevant material on record, and after affording the assessee a reasonable opportunity of being heard.

Having considered the facts of the case and the overall factual matrix, we deem it appropriate to restore the matter to the file of the Ld. AO for verification of the facts and figures furnished by the assessee in respect of the capital gains computed and the set-off of brought-forward losses. The Ld. AO is directed to verify the claim of the assessee with reference to the relevant return(s), computation of income and other material available on record and, thereafter, adjudicate the issue in accordance with law.

Needless to say, the assessee shall be afforded a reasonable opportunity of being heard and shall also be permitted to furnish such facts, documents and evidence as may be considered necessary for proper verification and adjudication of the issue.

In result, the appeal of assessee is allowed for statistical purposes, in above terms.