ROSHANIBEN TUSHARBHAI PATEL,PATAN vs. THE DCIT, CPC, BENGLORE

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ITA 96/AHD/2021Status: DisposedITAT Ahmedabad21 September 2022AY 2017-183 pages
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What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in rejecting the Section 154 application. The Assessing Officer should have considered the assessee's rectification application regarding the mistake in reporting business income.

What were the facts?

The assessee, engaged in share business, mistakenly reported business income at Rs. 9,56,570 instead of the correct Rs. 5,12,833 (6% of gross receipts under Section 44AD). An application under Section 154 to rectify this error was rejected by the CPC and subsequently by the CIT(A).

What were the issues?

Whether a bona fide mistake in reporting income in the return of income is rectifiable under Section 154 of the Income Tax Act, and whether the CIT(A) erred in dismissing the appeal against the rejection of such an application.

Which sections of the Income-tax Act were involved?

Section 154,Section 44AD

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Income Tax Appellate Tribunal, AHMEDABAD “SMC-3” BENCH, AHMEDABAD

Before: SHRI P.M. JAGTAP & Ms. SUCHITRA KAMBLE

For Appellant: Shri Mehul K. Patel, AR
For Respondent: Shri Atul Pandey, Sr. DR
Hearing: 29.07.2022Pronounced: 21.09.2022

PER SUCHITRA KAMBLE, JUDICIAL MEMBER :

1.

This appeal is filed by the assessee against the order dated 26.03.2021 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2017-18.

2.

Grounds of appeal raised by the assessee are as under :-

“1. That on facts, and in law, the learned CIT(A) has grievously erred in holding that the application u/s.154 of the Act is rightly rejected and that there was no mistake apparent from record.

2. That, on facts, and in law, it ought to have been held that the appellant ought to have been assessed only on the correct income liable to be taxed u/s. 44AD of the Act, and the appellant had rightly pointed out the error in filing the return of income through a bona fide mistake.”

3.

The assessee carried on business in shares during the year. The assessee filed return which was processed by the CPC, Banglore raising demand of Rs. 1,14,308/-. The assesse filed application under section 154 before the Assessing

Page 2 of 3 Officer thereby stating that in the return of income she had erroneously stated business income at Rs. 9,56,570 instead of Rs. 5,12,833. The said application seeking to rectify the said mistake was rejected by the CPC, Bangalore on 16.12.2019.

4.

Being aggrieved by the order under Section 154 of the Act, the assessee filed appeal before the CIT(A), NFAC. The CIT(A) dismissed the appeal of the assessee.

5.

The Ld. AR submitted that the assessee has net loss of Rs.44,435/- as per Profit & Loss account and she is eligible assessee for Section 44AD and hence opted to show income from business at 6% on the gross receipts of business. The assessee has gross receipts from business of Rs.85,47,216/- and 6% of the said receipts comes to Rs.5,12,833/- which is the admitted income under Section 44AD of the Act. However, at the time of filing income tax return the Ld. AR contented that by mistake the assessee has wrongly mentioned Rs.9,56,670/-. The Ld. AR submitted that as the mistake which is rectifiable under Section 154 of the Act the assessee has filed application before the CPC, Bangalore which should have been taken into consideration as the details of the income was properly filed but 6% of gross receipts were wrongly calculated under Section 44AD of the Act. Therefore, the CIT(A) should have considered the same.

6.

The Ld. DR submitted that Section 154 application cannot be taken into account in respect of rectifying the figures in return of income. Thus, the CIT(A) has rightly dismissed the appeal of the assessee.

7.

We have heard both the parties and perused all the relevant material available on record. The assessee at the time of hearing filed decision of Hon’ble Gujarat High Court in the case of S.R. Koshti vs. CIT, 276 ITR 165. From the perusal of the said case laws, it can be seen that the assessee filed revised return of income and Hon’ble Jurisdictional High Court observed that when the Assessing Officer has adopted one of the courses permissible in law and which has resulted in loss of revenue or where two views are possible and the Assessing Officer has taken one view with which the Commissioner does not agree, order cannot be treated to be erroneous and prejudicial to interest of revenue, unless view taken by the Assessing Officer is unsustainable in law. The facts of that case though are different from the present

Page 3 of 3 assessee’s case. Yet since the assesse has filed application for rectification in the figures of business income as the assesse has gross receipt of Rs. 85,47,216 and its 6% comes to Rs. 5,12,833, the same should have been taken into consideration by the Assessing Officer. In the present case, the assessee has filed rectification application under Section 154 of the Act thereby stating that there was mistake in filing return of income. When there is a mistake in filing of return of income the same was pointed out to the Assessing Officer and because of which application under Section 154 of the Act was filed by the assesse. Therefore, the CIT(A) should have looked into this aspect. Thus, the CIT(A) erred in holding that application u/s 154 of the Act was rightly rejected. Therefore, we direct the Assessing Officer to allow the rectification application of the assessee and assessed the correct income liable to be taxed under Section 44AD of the Act. The appeal of the assessee is partly allowed.

8.

In result, appeal of the assessee is partly allowed. Order pronounced in the open Court on this 21st day of September, 2022.

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