SHABBIR TAHER KACHWALA,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, CPC, BANGALORE
Income Tax Appellate Tribunal, Mumbai “SMC” Bench, Mumbai.
Per Omkareshwar Chidara (AM) :-
In this above captioned appeal, the appellant filed an appeal with the following grounds :-
1. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in dismissing the appeal on the grounds that appeal is filed beyond time limits prescribed u/s. 249 of income tax act, 1961. 2. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in dismissing the appeal without appreciating the fact that the total income of the appellant was Rs.10,82,573, however on account of an inadvertent error, the expenses disallowed in Schedule BP of the ITR was entered at Rs.
6,12,545 instead of correct figure of Rs. 1,12,545, resulting in the erroneous returning of income at Rs. 15,82,573 instead of Rs. 10,82,573. The ITR was also processed u/s. 143(1) accepting the erroneous income of Rs. 15,82,573. 3. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in not taking into the account books of accounts, the balance sheet,
Bank Accounts and all other primary documents which clearly reveals typo error done by the appellant and is rectifiable.
On the facts and circumstances of the case and in law the Ld. CIT (A) erred in dismissing the appeal not appreciating facts that above typo error is rectifiable u/s. 154 before AO as held by various case laws.
Shabbir Taher Kachwala
2
5. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in dismissing the appeal not appreciating facts appellant has filed various rectification application, which were never disposed by the juri ictional AO.
On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in dismissing the appeal by not appreciating the fact that typo error would lead to enhancement of income by 5 lacs which the appellant has never earned and therefore it is against the principles of natural justice and bad in law.
The sum and substance in this appeal is that there was an inadvertent error on the part of the appellant while uploading the accounts/profit and loss account and an amount of Rs. 5 lakhs which was not debited to profit and loss account was added in “computation of Income” with the effect that an additional income of Rs. 5 lakhs was offered. From the statement of facts and grounds of appeal, it is observed that there is a long history for a simple rectification which ought to have solved the grievance of appellant. It is a simple arithmetic and the appellant had really ran from pillar to post, right from CPC/AO to PCIT, CIT(A). Grievance cell, which is totally unwarranted.
During the appeal proceedings before the Bench, the Ld. AR of the appellant has narrated the long ordeal of measures taken by the appellant before almost all authorities of Income Tax. It was argued before the ITAT that the reason for delay in filing of appeal before Ld. CIT(A) is that he exhausted all the remedies like 154 petition, filing petition before the AO, PCIT, Grievance Cell and then finally filed an appeal, before Ld. CIT(A) and this is a reason for delay. The Ld. AR of appellant filed written submission before the Bench which is reproduced below :- 1) The appellant is an individual senior citizen having income from business and other sources. For AY 2016-17, the actual taxable income earned by the appellant was Rs. 10,82,573. However, at the time of filing the ITR on 17.10.2016, there was inadvertent error on the part of the appellant due to which an excess income of Rs. 5,00,000 was offered. The expenses disallowed in Schedule BP of the ITR was erroneously entered at Rs. 6,12,545 instead of the correct figure of Rs. 1,12,545, resulting in the returning of income at Rs. 15,82,573 instead of Rs. 10,82,573. The original computation of income and the rectified computation are both enclosed herewith as Annexure 1 & 2 respectively.
Shabbir Taher Kachwala
2) The error of Rs. 5,00,000 as mentioned above was in respect of sum of Rs. 5,00,000 given by the appellant as gift to his son. The said amount was initially debited in the P & L Account and was sought to be disallowed in the computation as the same is not an allowable expenditure.
Subsequently, before the ITR was filed, the appellant removed the said entry from his P & L account and debited the same directly to his capital account thereby increasing the profits. Since the gift was no longer debited to the P & L Account, there was no need for the disallowance as the profit had already increased by virtue of removal of the said item from the P & L
Account. However, while filing the ITR, the said amount of Rs. 5,00,000
inadvertently remained to be deleted by the appellant. As a result, an excess income of Rs. 5,00,000 was offered to tax by the appellant.
3) Even though the income was offered in excess, the ITR was filed after payment of taxes due as per the correct income of Rs. 10,82,573. Therefore, when the return was processed by the CPC on 04.12.2016 a demand of Rs. 1,59,553 (including interest) was raised on the appellant for .the alleged short payment of tax. It was then that the appellant realised about the error committed.
4) As the same was a mistake apparent from records, due to an inadvertent error, an application u/s 154 was filed by the appellant on 14th December 2016 before the CPC. The appellant also filed a revised
XML of the ITR after correcting the inadvertent error.
5) The appellant's request for rectification was however not considered by the CPC and vide order dated 18th December 2016, it transferred the rights of rectification to the juri ictional AO.
6) In view of the directions of the CPC, the Appellant approached the Juri ictional AO [ Ward 17(3)(3)] (hereinafter referred to as the JAO) and filed a rectification request on 17th March 2017 and again on 06th August
2018. The request dated 06.08.2016 before the JAO was duly accompanied by all the documents evidencing the mistake such as the original and the rectified computation of income, P &L Account, Capital
Account and the balance sheet.
7) As no response was received from the JAO, the appellant filed a grievance application through e-Nivaran on 11th February 2019. The same was responded to by the Authorities vide communication dated
15.02.2019 wherein the appellant was once again informed that the rectification application was transferred to the JAO and the e-Nivaran was accordingly closed.
8) Thereafter, the appellant followed up with the AO regarding the applications filed before him earlier and as no response was received, the appellant approached CIT-17, being the Juri ictional CIT, vide letter dated 29th May 2019 and followed up with another letter dated 11th August
2021 with a prayer to direct the JAO to rectify the inadvertent error.
Shabbir Taher Kachwala
4
Unfortunately, no response was received by the appellant from the Juri ictional CIT as well.
9) The appellant being aggrieved and disappointed reached out to the Pr. CIT-17 vide letter dated 14th September 2021 and 04th February 2022
& 3rd January 2023. Before the Pr. CIT-17, the appellant also, the appellant narrated his ordeal and also made a request allowing him to file a revised return u/s 139(5) after condoning the delay.
10) The Pr. CIT-17 finally responded to the appellant vide letter dated
31.03.2023. In the said letter the Pr. CIT refused permission to the appellant for filing of revised return citing that the powers for the same were with CBDT and not with him.
11) Finally after having left with no choice whatsoever, the appellant filed an appeal before the CIT(A) on 28.03.2024. The CIT (A) however dismissed the Appeal of the appellant vide order dated 06.05.2024 on the ground that there was a delay of almost 7 years in filing the appeal which the appellant allegedly did not justify.
12) The appellant submits that the above mentioned inadvertent error is typographical error which has led to enhancement of income by Rs. 5 lacs which the appellant has never earned. The Appellant further submits that such an error is rectifiable u/s 154 as held in the various judicial pronouncements submitted herewith.
13) In view of the above, appellant prays before Your Honour to direct the AO to kindly carry out the rectification. The appellant undertakes to appear before the AO and duly justify his claim along with documentary evidences.
14) Alternatively, the Appellant requests Your Honours to set aside the matter to CIT (A) directing him to decide the appeal on merits.
The Ld. DR has supported the orders of lower authorities.
After hearing both parties, the Bench has decided to put a full stop to the ordeal of appellant. It is observed that the appellant has moved all authorities of Income Tax Department for an amount of Rs. 5 lakhs legitimate relief. That itself is a “sufficient reason” for filing an appeal with delay before Ld. CIT(A) who ought to have condoned the delay and decided the issue on merits. Anyhow, the Ld. CIT(A) does not have the power to dismiss the appeal because of delay and the issue should have been Shabbir Taher Kachwala
5
adjudicated on merits as held by Hon'ble Bombay High Court in the case of Premkumar Arjundas Luthra HUF (69 Taxman.com 407)(Bom)
After going through the written submissions of Ld. AR of the appellant and orders of the lower authorities, the Bench directs the Ld. AO to pass the rectification order pending before him. Prima facie, it appears that the appellant is entitled to relief. Anyhow, the Ld. AO is directed to take action on the rectification which is pending before him for a long. The Ld. AO is further directed to complete the action of disposing off the petition of appellant under section 154 of the Act within one month of receipt of this order.
The appeal of the appellant is allowed for statistical purposes. Order pronounced in the open Court on 17/03/2025. (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER Mumbai; Dated: 17/03/2025
Copy of the Order forwarded to :
The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file.
BY ORDER,
////
(