HETIKA MAYANKKUMAR PATEL,AHMEDABAD vs. THE ITO, WARD-5(2)(2), AHMEDABAD

1 The order uls 250 passed on 06.08.2024 by NFACICIT(A)], Delhi (for short "CIT(A) for A.Y. 2017-18 confirming prima facie adjustment by way of addition of Rs. 43,76,770/- being the difference in interest income between the amount shown in Form 26AS and return of income is wholly illegal, unlawful and against the principles of natural justice. Asst.Year –2017-18 - 2– 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the explanations furnished and the evidence submitted by the appellant.

1 The Ld. CIT(A) has grievously erred in law and or on facts in confirming the addition of Rs. 43,76,770/- being the difference in interest income between the amount shown in Form 26AS and return of income is ex-facie illegal and unlawful.

2 That in the facts and circumstances of the case as well as in law, the Ld. AD ought to have appreciated that there was no discrepancy between interest receipts between return of income and Form 26AS of Rs. 43,78,770/-

3 The Id. CIT(A) has failed to appreciate that the impugned adjustment made u/s 143(1)(a) by AO was wholly illegal and unlawful.

The assessee is an individual and derives income by way of share from firm of M/s. Superstar Cable Industries., capital gain and other sources etc. The assessee had filed her return of income for A.Y.2017-18 on 29.08.2017 declaring total income of Rs. 34,07,250/-. It was processed u/s 143(1) on 27.03.2019 whereby the prima facie adjustment was made in respect of “Income from other sources” in as much as it was shown at Rs.10,70,126/- in the return of income whereas it was taken at Rs.54,46,896/- and the total income was recomputed at Rs.77,84,020/- by the CPC. Aggrieved, the Assessee filed application for rectification u/s 154 on the ITBA. However, it was rejected without assigning any reason and income under the head “Income from other sources” was determined at Rs.27,76,297/- as against Rs.3,68,937/- as shown in return.

The assessee submitted that the AO has made addition of Rs.43,76,770/- on account of the mismatch between the income as per return and the amount as per form-26AS. The assessee had furnished the clarification with regard to the discrepancy and reconciled the difference. It was pointed out that the interest on Bank of India capital gain scheme Asst.Year –2017-18 - 3– account was Rs.23,62,375/- which was duly disclosed in the return of income but the bank had made TDS at 20% of Rs.27,75,995/- thereof instead of the prescribed rate of 10% and thus TDS made was Rs.5,55,199/- as per Form-26AS. The revenue determined that the gross amount of Rs.55,51,990/- shown in Form-26AS by reverse calculation of 10 times the said TDS amount. The assessee had approached bank authorities and explained this mistake with the entries recorded in the passbook which also show interest of Rs.27,75,995/-. The assessee had also explained the discrepancy with regard to the other interest income. The assessee was informed vide adjustment dated 25.09.2018 by CPC that the said reconciliation was not acceptable.

Aggrieved, the assessee filed appeal before the Ld.CIT(A), who affirmed the order of the CPC on the grounds that the certificate issued by the bank authorities about the mistake cannot be accepted in the absence of latest 26AS.

Aggrieved, the assessee filed appeal before the Tribunal

Before us, the Ld.AR has taken us through the return of income, order u/s.143(1), rectification order u/s.154 passed by the CPC, 26AS and the certificate issued by the Chief Manager, Bank of India. On the other hand, the Ld.AR submitted that unless the bank files a revised TDS return, no credence could be given to letter issued by the bank authorities

We have gone through the order u/s.154 of the Income Tax Act, passed by the CPC also form 26AS available on record. The deductive bank Asst.Year –2017-18 - 4– has given certificate clarifying that there were holding CGAS saving account as per above mentioned of Ms. Hetika Mayankkumar Patel upon receipt of Form- D for closure of account in September 2016 and had transferred total amount from her CGAS account to regular saving account after deduction of 20% TDS. The letter issued by the bank authorities clearly mentioned the mistake shown in section 194A. For the sake of ready reference, the relevant part of the letter issued by the bank is reproduced below.

The bank also confirmed that the amount deducted was wrongly reflected u/s.194A as showing interest payment made while actually, they have deducted amount on their balance amount lying during the closure of the CGAS saving account. Thus, the BOI Branch Manager has given a letter categorically admitting wrongly deducted TDS. The bank statement of the assessee and also capital gain account statement of the assessee have been perused and the facts are found to be correct and without any dispute.

We find that the inability of the system to rectify an apparent error cannot prejudice the assessee and force her to pay tax which is not at all payable. The bank authorities have given categorical findings that TDS has been wrongly deducted and interest paid by the bank has been rightly shown in the capital gain account as well as in the bank account statement of the assessee. We find that the capital gain account closure and the bank account Asst.Year –2017-18 - 5– deposits are in tune with each other. Hence, we feel that the assessee cannot be burden and force to pay unjust amount to tax by refraining to undertake rectification which could not be taken up by revenue authorities. The inability of the systems used by the revenue authorities cannot be an impediment to rectify a genuine error committed by a third party against the interests of the genuine tax payer. Hence, the Juri ictional Assessing Officer (JAO) is hereby directed to carry out rectification u/s.154 of the Act, based on the record and delete the demand raised on the assessee.

In the result, the appeal of the assessee is allowed.