SURAJIT GHOSH,HOWRAH vs. ITO, WARD 22(2),, KOLKATA

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ITA 435/KOL/2026Status: DisposedITAT Kolkata09 June 2026AY 2021-20226 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the 'record' for rectification under Section 154 includes all proceedings on which the assessment order is based, not just the assessment order itself. Since the evidence showed the assets were acquired before the specified date, the mistake in the return was apparent from the record and liable for rectification.

What were the facts?

The assessee made an inadvertent error in the return of income regarding the acquisition period of mutual funds for Long Term Capital Gains (LTCG). This led to an incorrect computation of LTCG. The Assessing Officer (AO) rejected the rectification application, stating it was beyond the scope of Section 154 as it would alter the total income.

What were the issues?

Whether an inadvertent error in the taxpayer's return of income, which leads to an incorrect computation of capital gains, can be rectified under Section 154 of the Income Tax Act, 1961, even if it alters the total income.

Which sections of the Income-tax Act were involved?

Section 154

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH AT KOLKATA

Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Addl/JCIT(A)-2, Gurugram [hereinafter referred to as Ld. ‘Addl/JCIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2021-22 dated 15.12.2025. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:

“1. That the order of the Ld. Addl/JCIT(A) confirming the erroneous order of the AO is bad in law and against the facts of the case.

2.

On the facts of the case and in law, the Ld. Addl/JCIT(A) erred in dismissal of appeal for rectification of mistake while the mistake was apparent and obvious in the return filed by the appellant and the mistake on merits the AO and Ld. Addl/JCIT(A) admitted to also.

3.

On the facts of the case and in law, the Ld. Addl/JCIT(A) erred in dismissing the appeal by observing that the scope of rectification is very limited to and thus can be carried out only to correct the mistake/errors that ITA No(s). 435/KOL/2026 Assessment Year(s) 2021-22 are obvious & patent from the existing record in an order or intimation passed by the A.O but not the Income Tax Return filled by the appellant.

4.

On the facts of the case and in law, the Ld. Addl/JCIT(A) erred in dismissal of appeal for rectification of mistake and thus uphold the decision of the below authority who denied to rectify the mistake in the Income Tax Return for an unlawful reason that after the impugned rectification total income of the appellant will be change that is not allowed under rectification - which is nothing but goes against the spirit of law and natural justice.

5.

On the facts of the case and in law, the Ld. Addl/JCIT(A) erred in dismissal of appeal and thus uphold the decision of the below authority who have not acted in accordance with his duty so laid down by the CBDT Circular No. 014(XL-35)/1955 dated 11th April 1955 that mandates the tax officers to responsible for ensuring the correct computation of income in accordance with the law and even advise the assessee as to its benefit.

6.

That the appellant craves leave to add and/or modify any ground(s) of this appeal at the time or before hearing.”

3.

Brief facts of the case are that the assessee had filed the return of income for AY 2021-22 on 23.11.2021. The return was processed with a demand of ₹14,380/- due to an inadvertent error in Schedule 112A, where the period of acquisition for Long Term Capital Gains (LTCG) arising from the redemption of mutual funds was selected as 'on or after 31.01.2018' instead of 'on or before 31.01.2018' and consequently, the LTCG was erroneously computed at ₹24,343/- instead of the actual taxable profit of ₹6,972/-. To correct this patent mistake, the assessee filed a rectification application u/s 154 of the Act, pointing out the error. The Ld. AO rejected the rectification application vide order dated 01.05.2024, by holding that the correction of such an error required a revision of the return, as the proposed rectification would alter the total income, which falls beyond the limited scope of section 154 of the Act. Aggrieved with the rejection of the rectification petition, the assessee filed an appeal before the Ld. Addl/JCIT(A), who observed that the rectification u/s 154 of the Act can only be carried out to correct a mistake apparent from the record in an order or intimation passed by the Ld. AO. Since the return was processed exactly as per the details furnished by the assessee in the ITR, there was no error committed by the Revenue authorities. The Ld. Addl/JCIT(A) held that the appropriate remedy to correct an omission or error made by a taxpayer in the original return is to file a revised return, as appellate proceedings examine the correctness of the Ld. AO's order and not the mistakes made by the taxpayer. Finding that the scope of rectification is limited to obvious and patent errors without requiring new facts, the Ld. Addl/JCIT(A) determined that the issue did not fall under the purview of a mistake apparent from the record. Accordingly, the Ld. Addl/JCIT(A) confirmed the action of the Ld. AO and dismissed the appeal of the assessee.

4.

Aggrieved with the order of the Ld. Addl/JCIT(A), the assessee has filed the appeal before the Tribunal.

5.

Rival contentions were heard and the submissions made have been examined. The assessee has furnished the required evidence before us in support of the claim that the asset was purchased prior to 31.01.2018 being the UTI Infrastructure Fund, UTI Hybrid Equity Fund and UTI Value Opportunity Fund (merged with Multicap Fund). In the course of the appeal before us, the assessee has also filed the bank statement for UTI Mutual Fund in support of the claim that these funds were appearing as on 31.01.2018 as well. It was requested that the directions may be issued to the Ld. AO to treat the assets as acquired before 31.01.2018 and to re-compute the capital gains of.

6.

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld.

Addl/JCIT(A). As per section 154 of the Act, a mistake apparent from record can be rectified. It has been held in the case of Maharana Mills (P.) Ltd. v. ITO [1959] 36 ITR 350 (SC) that The word 'record' contemplated by section 35 of the 1922 Act does not mean only the order of assessment but it comprises all proceedings on which the assessment order is based. In Ethel Rodrigues v. ACED [1963] 49 ITR (ED) 128 (Mys.) decided under the Estate Duty Act, it is held that the 'Record' means the record relating to assessment and not any other record. In CIT v. M.R.M. Plantations (P.) Ltd. [1999] 102 Taxman 1 (Mad.) it is held that the 'record' for purpose of section 154(1) is the record available to the authorities at the time of initiation of proceedings for rectification and not merely the record of the original proceeding sought to be rectified. Further, in Upasana Hospital & Nursing Home v. CIT [2002] 120 Taxman 545/253 ITR 507 (Ker.), it is also held that Power of rectification under section 154 is to be exercised with reference to the records of the assessee available with the Assessing Officer, and not with particular reference to the assessment alone. 'Record' cannot be said to be the record of one particular assessment, but the entire record of the assessee relating to all the assessment years. Since the details filed show that the assets were acquired before 31.01.2018, there was no reason not to correct the error in inadvertently made while filing the return of income as the mistake apparent from record had arisen in the return of income itself on account of incorrect filling of the relevant column and the same was liable to be rectified. The assessee is directed to furnish the required evidence filed before us in support of the claim that the assets were acquired prior to 31.01.2018 before the Ld. AO who is directed to re-compute the capital gains in view of the evidence filed that the assets were acquired prior to 31.01.2018. Hence, Hence, all the Grounds of appeal are partly allowed for statistical purpose

7.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 9th June, 2026. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 09.06.2026 Bidhan (Sr. P.S.)

Copy of the order forwarded to:

1.

Surajit Ghosh, 74, Sadar Baxi Lane, Howrah, West Bengal, 711101. 2. ITO, Ward-22(2), Kolkata, Bamboo Villa, 169, A.J.C. Bose Road, Kolkata, West Bengal, 700014. 3. Addl/JCIT(A)-2, Gurugram.

4.

CIT-

5.

CIT(DR), Kolkata Benches, Kolkata.

6.

Guard File. //// By order

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