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Facts
The assessee's tax consultant failed to file the income tax return by the due date. The return was filed late with incorrect figures for income and TDS. The assessee's subsequent attempt to rectify or revise the return was unsuccessful due to the absence of a mechanism for revision.
Held
The Tribunal held that the assessee should not be penalized due to the lack of a revision mechanism, especially when the mistake was due to the consultant. The case was restored to the Assessing Officer for a denovo assessment.
Key Issues
Whether the return filed with incorrect figures, due to the consultant's error and without a revision mechanism, should be treated as invalid or if the assessee should be penalized for tax on unearned income.
Sections Cited
250, 140B, 139(9), 139(1), 139(8A), 143(1)(a), 154, 80TTA, 265
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE “SMC” BENCH : PUNE
Before: DR. MANISH BORAD
I.T.A.No.1530/PUN/2025 (Assessment Year 2022-2023) Nararshabh Sharma, Assessing Officer, Gate No. 927, Row House Ward-7(3), Pune. No.E-9, Pam Nest Phase-I, Kesnand Road, Wagholi, Pune, Maharashtra. vs. PAN : BFJPS 8681 A (Appellant) (Respondent) For Assessee : Shri Rajkumar Doshi, CA For Revenue : Shri Deepak Kumar Kedia-JCIT Date of Hearing : 07.07.2025 Date of Pronouncement : 09.09.2025 ORDER
This appeal at the instance of the assessee is directed against the order of ADDL/JCIT (Appeals)-2, Delhi [“CIT(A)”] dated 29/05/2025 framed under section 250 of the Income Tax Act, 1961 (“Act”) for the Assessment Year (AY) 2022-23.
The sole ground of appeal raised by the assessee is that Ld.CIT(A) erred both on facts as well as in law in not declaring the income tax return as invalid since the payment of tax as required u/s. 140B was not made and return was defective return as per clause (ca) of explanation to section 139(9) of the Act.
2 ITA.No.1530/PUN./2025 (Nararshabh Sharma) 3. Brief facts of the case are that assessee is an individual carrying on the business of advertising and servicing contracts. For filing of return of income for the A.Y. 2022-23, the assessee handed-over the documents to his Income-tax Consultant, who failed to file the return within due date prescribed u/s. 139(1) of the Act. Subsequently, the return filed u/s. 139(8A) of the Act on 07/09/2023 declaring income of Rs. 31,66,540/- and showing tax payable at Rs. 7,18,749/- and late return filing fee at Rs. 5,000/-. In the income tax return, tax deducted at source (TDS) is shown at Rs. 7,23,740/-, however, as per Form 26AS, assessee was entitled TDS credit of Rs. 23,830/- only. The return was processed u/s.143(1)(a) of the Act determining tax liability at Rs.13,13,154/-. Though, the assessee filed application u/s. 154 of the Act stating that the correct income of the assessee is only Rs. 17,56,800/- and that the wrong figures of income and tax deducted at source have been mentioned in the income tax return, but the assessee failed to get any relief.
Before Ld.CIT(A), the assessee raised the ground praying for holding the return as invalid and to tax the assessee for the correct income, however, Ld.CIT(A) referring to the provision to section 139(9) of the Act observed that Ld.AO is empowered to condone the delay and treat the return as valid return even after the lapse of permitted time, but before completion of assessment. Therefore, the order of the CPC cannot be held to 3 ITA.No.1530/PUN./2025 (Nararshabh Sharma) be unlawful to that extent. The Ld.CIT(A) further held that assessee has submitted its computation and to treat the return as valid/invalid as per law and take necessary corrective steps to bring the computed/assessed income to tax. The Ld.CIT(A), however, rejected the ground of the assessee praying to hold the return as invalid.
Aggrieved, the assessee is now in appeal before this Tribunal. Learned counsel for the assessee vehemently argued referring to the written submissions placed at page Nos. 1 to 11 of the paper book and also made reference to various details filed at page Nos. 12 to 195 of the paper book including the correct computation of income for A.Y. 2022-23.
On the other hand, ld.DR vehemently argued supporting the order of the Ld.CIT(A).
I have heard rival contentions and perused the records placed before me. A very interesting issue has been raised before this Tribunal. The assessee, who is running the business of advertising and servicing contracts, is regularly filing his income tax returns. Documents for preparation of income tax return for the A.Y. 2022-23 have been handed-over by the assessee to his tax consultant. The papers given by the assessee to the tax consultant indicated that there is a TDS of Rs. 23,830/-. As per revised computation of income filed by the assessee before this Tribunal placed at page Nos. 139-193
4 ITA.No.1530/PUN./2025 (Nararshabh Sharma) of the paper book, the total taxable income is shown at Rs. 17,56,797/- which comprises of profits and grains of business or profession at Rs. 4,09,184/-; capital gains at Rs. 12,62,869/-; and income from other sources at Rs. 94,744/- and after claiming deduction u/s. 80TTA, the total income is worked out to Rs. 17,56,800/- and TDS shown at Rs. 23,830/-. However, in the income tax return furnished by the tax consultant, though validly updated with the help of the assessee, the business income has been shown at Rs. 27,26,566/-; capital gains at Rs. 4,75,715/-; and income from other sources at Rs. 1,24,257/- and deduction under Chapter- VIA claimed at Rs. 1,60,000/-, the total taxable income is shown at Rs. 31,66,540/- and the tax credit for TDS has been claimed at Rs. 7,23,740/-. This return has been filed on 07/09/2023 after due date and the same could not be revised.
Now, the situation is that the assessee in spite of knowing that incorrect income and incorrect claim of TDS has been filed in the income tax return by the tax consultant, but there is no mechanism for revising it. Due to the provisions of the income tax Act which do not provide any mechanism to revise the return after a particular time period, this situation has arisen. Now, on one hand, department cannot treat the return as invalid because it has been filed validly by the assessee and there being wrong claim of TDS made in the return, and on the other hand, the assessee is facing hardship
5 ITA.No.1530/PUN./2025 (Nararshabh Sharma) due to mistake advertently or inadvertently committed by the tax consultant. The assessee has also filed a police complaint on 15/01/2025 (copy of the same is placed at page Nos. 93 to 106 of the paper book) which indicates that the assessee has been subjected to face the alleged tax liability due to punching of wrong figures and details in the income tax return by the tax consultant. At this juncture, I take note of the Article 265 of the Constitution of India which states that no tax shall be levied or collected except by authority of law. This fundamental principle ensures that taxes can only be imposed and collected if there is a specific law enacted by the appropriate legislative authority allowing such actions. The article sees that taxation is not arbitrary and is backed by legislation passed by either Parliament or state legislatures, depending on the subject matter. The article serves as a check against unauthorized taxation reinforcing the principle that all fiscal impositions must have legal backing. In the light of the Article 265 of the Indian Constitution, I note that in the instant case, the contentions of the assessee are correct and the income of the assessee is not the income as stated in the income tax return and the assessee is been heavily burdened for the extra tax liability on the income not earned by him. Merely because there is no mechanism to revise such return, the assessee should not be penalized.
6 ITA.No.1530/PUN./2025 (Nararshabh Sharma) 9. Under these given facts and circumstances, I am of the considered view that the matter needs to be restored to the learned Jurisdictional Assessing Officer (JAO), who shall either provide a window to the assessee to file correct return of income or in alternative provide opportunity to the assessee to file the correct computation of income along with relevant details and documents. The JAO shall examine these details and carryout necessary investigation and then assess correct income of the assessee. Accordingly, the matter is restored to the file of JAO for denovo assessment to be carried-out strictly as per the directions given herein above. The effective grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, appeal of the Assessee is allowed for statistical purposes.
Order pronounced in the open Court on 09.09.2025.