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Facts
The assessee's appeal is against an order confirming a rectification order that added Rs. 9,28,238/- to the salary income. The addition was based on a difference between the salary shown in the return and that reflected in Form 26AS, which the assessing officer considered a mistake apparent on record.
Held
The Tribunal found merit in the assessee's submission that there was a mistake in reporting correct salary income in Form 26AS vis-à-vis Form 16. Consequently, the matter was restored to the jurisdictional assessing officer to verify the facts and pass a fresh assessment order.
Key Issues
Whether the difference between salary income reported in the return/Form 16 and Form 26AS constitutes a 'mistake apparent from record' justifying addition under Section 143(1)(a)(vi) or if it requires verification by the Assessing Officer.
Sections Cited
143(1), 10, 143(1)(a)(vi), 14, 16, 154
AI-generated summary — verify with the full judgment below
PER PAWAN SINGH, JUDICIAL MEMBER;
This appeal by assessee is directed against the assessment order of ld. CIT(A) dated 03.08.2024 for A.Y. 2011-12. The assessee has raised the following grounds of appeal:
1. On the facts and circumstances of the case and in law, the National Faceless Appeal Centre/Commissioner of Income Tax (Appeals) ['the learned Commissioner (Appeals)) erred in dismissing the appeal of the Appellant and confirming the rectification order dated 08.04.2019 containing the addition of Rs 9.28.238/- Thus, the impugned order of the learned Commissioner (Appeals) may be reversed and the addition of Rs. 9,28,238/- may be deleted 2. On the facts and circumstances of the case and in law, the addition of Rs. 9,28,238/- as made by the learned Respondent and confirmed by the learned Commissioner (Appeals) under the head Income from salary merely on the basis of difference between the salary shown by appellant in the return and as per form 26AS being a mistake apparent on record and bad in law may be deleted.
3. On the facts and circumstances of the case and in law, the addition of Rs. 9,28,238/- under Section 143(1)(a) (vi) of the Act being incorrect and untenable in law may be deleted.
4. Without prejudice to the above, on the facts and circumstances of the case and in law, the impugned order dated 26.12.2024 as passed by the learned Commissioner (Appeals) is without jurisdiction and bad in law. Thus, the impugned order dated 26.12.2024 may be reversed and the matter may be remanded back to the learned first appellate authority for denovo consideration.
5. The appellant craves leave to add, delete, alter, modify any ground before the conclusion of the present appellant proceeding.”
Rival submissions of the learned Authorised Representative (ld. AR) of the assessee and learned Senior Departmental Representative (ld. Sr DR) for the revenue heard and record perused. The ld. AR of the assessee submits that while filing return of income, due to mistake exempt income was not reported in the return of income. However, it has no bearing as per the computation of income under the heard ‘salary’ was for the impugned assessment order.
Non-disclosure of income of assessee was a technical breach having no bearing on the computation of income. Had the assessee reported the same, it would not have consequences of assessment of income under section 143(1) as per limited scope of CPC. The CPC was under obligation for accepting exempt claim under section 10. The ld. CIT(A) ought to have considered the sum exempt mentioned in Form 16 and was not supposed to take the benefit of mistake of non-disclosure of exempt income. The CPC considered the salary of assessee at Rs. 21,32,204/- instead of Rs. 12,04,066/-. The ld. AR submits that as per Form 16, the chargeable income under the head salary as Rs. 12,04,072/- which is correctly disclosed as income taxable under the head salary as per assessee’s return of income. The CPC as well as ld. CIT(A) erred in not rectifying the same and not considering the income chargeable under the head salary. Perusal of Form 16, copy of which already placed on record, it is evident that sum of Rs. 8,34,456/- pertains to exemptions under section 10, which were not part of total income as per section 10 and could not be considered making adjustment under section 143(1)(a)(vi) of the Act. Since power under section 143(1)(a)(vi) is limited in the manner to determine the correct total income of assessee. As section 10 exemptions are not part of total income they cannot be considered for the purpose of making adjustment under section 143(1)(a)(vi) of the Act.
Thus, the adjustment made by CPC and confirmed by ld. CIT(A) is untenable in law and may be deleted. The ld. CIT(A) ought to have considered Form 16 and not merely figures reported by the employer and Form 26AS which the assessee has not control. It is evident from Form 16 that the tax of Rs. 88,240/- was deducted on the salary of Rs. 12,04,072/- after considering the exemption u/s 10 of the Act. The tax reported as deducted in Form 26AS is also same. Since the exempt allowance were paid to the assessee, they were reported by the employer as a salary credited / paid that too incorrect as there is a difference. Section 143 is a provisions pertaining to assessment of return and cannot expand the scope of income and not forming part of total income as per section 10 r.w.s. 14 & 16.
On the other hand, ld. Sr. DR for the Revenue submits that CPC made adjustment due to mismatch in return of income and Form 16. As there was no mistake apparent thus order made by CPC was not rectifiable.
We have considered the submission of both the parties and gone through the orders of lower authorities. We find that before making adjustment, the CPC issued notice to the assessee on 06.06.2018 pointing out that as per return of income assessee has shown salary income of Rs. 12,04,066/-. However, as
per Form 26AS, the salary was Rs. 21,32,304/-. Thus, there was difference of Rs. 9,28,238/-. Accordingly, intimation under section 143(1) was served on assessee on 25.09.2018 thereby increasing salary from Rs. 12,04,066/- to Rs.
21,32,304/-. The assessee filed rectification application before CPC. The CPC passed order on 08.04.2019 and kept the income as it is. Aggrieved by the order of adjustment as well as order under section 154, the assessee filed appeal before ld. CIT(A). Before ld. CIT(A), the assessee filed detailed written submission. The submission of assessee are recorded in para 5 and 7 of impugned order. The assessee explained that she has shown salary income as
per Form 16 issued by employer and TDS deducted and paid by employer.
There is mismatch as per salary income offered by assessee. If the actual salary is higher, employer would have deducted higher TDS. This fact proved that salary reported by employer is incorrect. Thus, the assessee stated that in Form AS-26 there is wrong reporting of gross salary income. The ld. CIT(A) after referring the provision of section 143(1) including of sub-clause (vi) of clause (a) held that assessee was given prior intimation regarding adjustment to be made in the income by issuing notice dated 06.06.2018. Further, there was variance in the income from salary as per Form 16 and Form 26AS, therefore, the contention raised by assessee is not acceptable and rejected the appeal of assessee. As per part B of Form 16, the salary of assessee is Rs. 20,38,528/-, but the assessee has claimed income of salary of Rs. 12,04,066/- which is not correct as per Form 16. Thus, the assessee was right in rejecting claim of assessee there was no mistake apparent from the record for seeking remedy under section 154. On the other contention of assessee about quantum of salary, the ld. CIT(A) held that employer has deducted TDS of Rs. 21,32,204/- not on Rs. 12,04,066/- as claimed by assessee.
Before me, the ld. AR of the assessee vehemently argued that there was mistake in non-disclosure of exempt income in the return of income which was technical mistake in reporting by correct income. It was also argued that the ld. CIT(A) ought to have considered the same exempt mentioned in column 16. On considering the fact of the case, I find merit in the submission of assessee that it was a mistake in reporting correct salary income in Form 26-AS vis-à-vis Form 16. Thus, the matter is restored back to the file of jurisdictional assessing officer to verify the fact and passed assessment order afresh. The assessee is directed to provide all details and explained the fact before assessing officer. Needless to direct that before passing the assessment order afresh, the assessing officer shall allow reasonable opportunity to the assessee and passed order in accordance with law.
In the result, the appeal of assesseeis allowed for statistical purpose.