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Facts
The assessee filed Rectification Applications u/s.154 of the Income Tax Act for assessment years 2011-12, 2012-13, 2014-15, and 2015-16. These applications were belated and rejected by the Assessing Officer and CIT(A). The assessee contended that the delay was due to lack of proper advice from their tax consultant.
Held
The Tribunal held that while the rectification applications were belated, the delay deserved to be condoned in the interest of justice. The matter was restored to the Assessing Officer to entertain the applications and decide them, considering the rectification order passed for AY 2017-18 where a similar mistake was accepted.
Key Issues
Whether the delay in filing rectification applications u/s.154 of the Income Tax Act can be condoned due to the fault of the tax consultant, and whether the matter should be remanded to the Assessing Officer for fresh adjudication.
Sections Cited
154, 250, 161(1), 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeals at the instance of assessee pertaining to Assessment Years 2011-12, 2012-13, 2014-15 and 2015-16 are directed against the separate orders dated 26.03.2025 of National Faceless Appeal Centre, Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of the respective Rectification Orders passed u/s.154 of the Act.
2. Since common issues have been raised for the impugned assessment years, I proceed to dispose of these appeals by way of this consolidated order for the sake of convenience.
Facts in brief are that for the impugned assessment years the assessee has furnished returns of income and the same have been processed. Assessee has filed applications u/s.154 of the Act for rectification of mistake commonly stating that since shares of each Member are definite and the shares of respective beneficiary in the income of the trust being included in their respective returns of income nothing remains to be taxed in the hands of the trust. However, since the applications u/s.154 of the Act were barred by limitation same were rejected and even before ld.CIT(A) assessee failed to get any relief.
Before me, ld. Counsel for the assessee has submitted that similar rectification application was also filed for A.Y. 2017-18 but the same was within the permissible time limit and have been accepted by ld. Assessing Officer and necessary relief has been granted. He further submitted that due to lack of proper advice from the consultant who was looking after the Tax matters assessee could not file Rectification applications in time and for such mistake on the part of Tax Consultant assessee should not be deprived of justice and only the legitimate income should be subjected to tax.
On the other hand, ld. Departmental Representative submitted that the Rectification applications u/s.154 of the Act are belated and therefore ld.CIT(A) has rightly dismissed the assessee’s appeals.
I have heard the rival contentions and perused the record placed before me. Admittedly, Rectification Applications u/s.154 of the Act for the Assessment Years 2011-12, 2012- 13, 2014-15 and 2015-16 are belated. However, for A.Y. 2017- 18 Rectification Application u/s.154 of the Act was well within the permissible time limit and the similar grievance of the assessee has been addressed by ld. Assessing Officer and for the sake of convenience the extract of the Rectification Application u/s.154 filed by the assessee on 09.08.2023 for A.Y. 2017-18 reads as under :
“SHRIKANT HERWADE FAMILY TRUST 36, RUIKAR COLONY, KOLHAPUR 08/08/2023 To The Income Tax officer, Kolhapur 2(1), Kolhapur
Sub:-Reply to the your Issue Letter - Online service e of Orders - Letter dated 26/07/2023 having DIN & Letter No. ITBA/OM /F/17/2023-24/1054621824(1) for recovery of outstanding demand. We are in receipt of above mentioned letter wherein demand of Rs.2.22,640/- outstanding for the A.Y.2017-18. We wish to inform that, Shrikant Herwade Family Trust is a private trust settled on 4th April 1990. The trust is specific trust, having specific beneficiaries with specific shares in Incomes and corpus of the Trust. The income of the trust consists of income from House Property and Income from Other Sources (Interest on Deposit). The building owned by the trust is given on rental to the Branch of State Bank of India. The Trust income does not include any business income under section 161(1) of Income Tax Act. The shares of each member (beneficiaries) are definite (well-defined) Since the shares of respective beneficiary in the income of the trust being included in their respective return of Income, nothing remains to be taxed in the hands of the Trust. All the beneficiaries are submitting the Return of income in time and paying tax regularly on the share of income received from the trust the detail chart of the income shown of each beneficiary in their return are as follows also ITR acknowledgment, computation of income & 26AS are attached herewith for your reference. SHRIKANT HERWADE FAMILY TRUST 36, RUIKAR COLONY, KOLHAPUR
The difference income of Rs.71,182/- was not declared by beneficiaries in their return of income due to inadvertently mistake done at the time of filing income tax return hence the same will be taxed in the hands of the trust and we will pay the tax if any on difference income.
We hereby apply & request you to rectify the above mentioned outstanding demand & issue the refund adjusted with above demand. Also your honour the income Tax Return of Shrikant Herwade Family Trust processed and refund also received from FY2019-20 to FY 2021-22 the intimation of the same are attached herewith for your reference. Yours faithfully For Shrikant Herwade Family Trust.”
Further, I observe that ld. Assessing Officer after examining the contents of the Rectification Application has passed Rectification order dated 23.07.2024 giving necessary relief to the assessee. Finding of ld. Assessing Officer reads as follows :
“1. The assesse has submitted copy of return of income, order u/s. 143(1), Form 26AS, computation of total income, copy of trust deed and the detail of beneficiaries such as their acknowledgment of return of income, computation of total income and Form 26AS. The documents submitted by assesse is kept on record. On perusal of submission of assessee, it is observed that the assesse trust is a specific trust, having income from house property. In its application, the assessee has stated that the entire income of the assesse is distributed among all its beneficiaries whose shares are determined as per the deed of trust. No tax is payable by trust on its income except the portion of income which is not declared by any of the beneficiary. All the beneficiaries are submitted their return of income in time and paid taxes regularly on the share of income received from trust. During the year under consideration the trust has not declared of Rs.71.182/- in their return of income inadvertently. Hence, the same will be taxed in the hand of the trust and we will pay the tax on it.
I have considered the submission of the assesse. On perusal of assesse submission and documents it is noticed that the assesse trust admits in its application that, as against NIL tax liability as per ROI, there is certain tax liability in respect of share of income for which none of the beneficiary has offered to tax in their return of income. Therefore, it is clear that an amount of Rs. 71,182/- is not offered for taxation by the asessee trust and it is escapement of income. Hence the same is added to the total income.
1. In addition to above it is also observed that the beneficiaries of the trust has offered the share of amount which is received from the trust for taxation in their return of income. The documents are kept on records.”
Now the assessee for the impugned assessment year(s) has filed similar Rectification Applications but merely for the reason of delay they have not been admitted. Had these applications been presented in time then the fate of those applications would have been in favour of the assessee as was the case for A.Y.2017-18. It is an admitted fact that for the Tax matters assessee is dependent upon the Tax Consultant. It is also well known that due date of filing of return of income is normally known to the assessees but the time limit for filing Rectification Application u/s.154 of the Act and also whether the Rectification Application can be filed for certain apparent mistakes may not be known to all the assessees and it is the Tax Consultant who need to give advice to the assessee depending upon the facts of the case. Even though the time limit for filing Rectification Application u/s.154 of the Act is four years but then for the reasons beyond control of the assessee and for genuine hardship if such delay has occurred, then sympathetic and liberal approach needs to be taken. Coordinate Bench, Jaipur in the case of Bansal Propbuild Private Limited Vs. CIT in order dated 12.04.2022 has dealt with the very same issue and has condoned the delay in filing the Rectification Application u/s.154 of the Act and has observed as follows :
“8. We have considered the rival submissions and perused the material available on record. The Bench observed that the assessee is engaged in agriculture produce and the same was sold during the year under consideration. However the AO has not treated as agriculture income. The assessee has filed application under Section 154 of the Act on 10.01.2019 mentioning therein that the assessee company has shown income of Rs. 7,22,991/- which is exempt from tax. The prayer of the assessee is that application filed by the assessee under section 154 of the Act was not properly disposed off without providing adequate opportunity to the assessee. In the interest of equity and justice, the appeal of the assessee is remand to the file of the CIT (A) to decide it afresh by providing adequate opportunity of hearing to the assessee. We don't have any hesitation to condone the delay of 4 years for filing the application under section 154 of the IT Act due to reasonable cause and genuine in nature and we consider accordingly, it is a fit case for remand for proper adjudication of the case by following the established procedure laid down. under rules 46A(1), (2) and (3) of the Rules which we order accordingly. The impugned order passed by the Lower authority is hereby quashed and set aside. The appeal is remanded to the Commissioner of Income-tax,who shall make an endeavour to dispose of the entire appeal in accordance with law as indicated above as expeditiously as possible, The assessee is also directed to produce relevant additional evidences concerning the issue in question, where additional evidence in form of segmental audited results have been admitted which needs to be verified and examined by the Revenue authorities and in any case within a period of three months from the date of pronouncement of this order before him.”
Now considering the above decision of this Tribunal and also examining the facts of the instant case, I am of the considered view that in the larger interest of justice the delay in filing of Rectification applications u/s.154 of the Act for the years under appeal deserves to be condoned and accordingly the matter is restored to the file of ld. Jurisdictional Assessing Officer to entertain the Rectification Applications filed u/s.154 of the Act for the impugned assessment years and then decide in accordance with law keeping into consideration the Rectification order passed for A.Y. 2017-18 on 23.07.2024 in which the assessee’s claim of apparent mistake has been accepted. With these observations, I restore the issues raised in the instant appeals to the file of ld. JAO for necessary adjudication. Impugned orders are set aside and the grounds of appeal raised in all the years under appeal are allowed for statistical purposes.
In the result, all the appeals of the assessee are allowed for statistical purposes.
Order pronounced on this 09th day of July, 2025.