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Facts
The assessee filed his return of income without claiming exemption under Section 10(10AA). Later, he filed a rectification application under Section 154 to claim exemption on leave encashment, which was dismissed by the AO as a fresh claim should be made through a revised return. The CIT(A) upheld this, also noting the application was beyond the limitation period.
Held
The Appellate Tribunal held that the assessee's application under Section 154 was barred by limitation. It was also observed that on the date of processing the return, there was no mistake apparent from the record that could be rectified under Section 154. The decisions relied upon by the assessee were distinguished on facts.
Key Issues
Whether the assessee's application for rectification of mistake apparent from record under Section 154 for claiming exemption under Section 10(10AA) was valid and within the period of limitation.
Sections Cited
10(10AA), 154, 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘C’: NEW DELHI
Before: SHRI N.K. BILLAIYA & SHRI YOGESH KUMAR US
PER N.K. BILLAIYA, AM
This appeal by the Assessee is preferred against the order dated
12.01.2023 by NFAC, Delhi, pertaining to A.Y. 2010-11. The grievance of
the assessee reads as under:
“1. On the facts and in the circumstances of the case and in law the Ld. CIT (A), National Faceless Appeal Centre, Delhi erred in:
ITA No.-661/Del/2023 Jaipal Singh Dendsay 1. Upholding the validity of order dated 13-11-2020, u/s 154 of the Act, which s without jurisdiction; 2. confirming the order u/s 154 of the Act passed by Ld. AO W-1, Kamal regarding rejection of application u/s 154 of the Act for claim of gratuity amount exempt u/s 10(10)(i) of the Act, submitted by the appellant. 3. Confirming the order u/s 154 of the Act, passed by Ld. AO, Ward-1. Kamal without affording proper opportunity and without considering the written submissions. The above actions being arbitrary, erroneous and unlawful must be quashed with directions for appropriate relief.”
The peculiar facts of the case are that the assessee filed his return of
income on 29.07.2010 declaring income of Rs. 12,11,990/- without claiming
any exemption u/s 10(10AA) of the Act. The return was processed u/s
143(1) of the Act on 31.03.2012.
Subsequently, the assessee filed an application u/s 154 of the Act
claiming exemption u/s 10(10AA) of the Act on account of leave
encashment amounting to Rs. 6,50,000/-. This application was dismissed
by the AO who was of the opinion that a fresh claim can only be made
through a revised return of income.
The assessee challenged the order of the AO before the CIT(A) and
vehemently contended that pursuant to the decision in the case of Ram
Kanwar Rana vs. ITO in ITA No.-1307/Del/2016. The assessee
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ITA No.-661/Del/2023 Jaipal Singh Dendsay became aware of the eligibility of exemption in respect to gratuity
amounting to Rs. 6,50,000/- u/s 10(10AA) of the Act and hence moved a
rectification application to rectify the mistake apparent from record.
The contention of the assessee did not find any favour with the
CIT(A) who was of the firm belief that the claim can only be made through
a revised return of income. The CIT(A) further observed that the intimation
u/s 143(1) was passed on 31.03.2012 and the assessee has moved the
rectification application on 28.07.2020 which is beyond the period of
limitation as provided in section 154 of the Act.
Before us, the Counsel for the assessee reiterated the claim saying
that pursuant to the decision of the Tribunal in the case of Ram Kanwar
Rana (supra), the assessee became eligible for the deduction u/s 10(10AA)
of the Act and since the assessee had not claimed any deduction in his
return of income. The mistake should have been rectified by the CIT(A).
Strong reliance is placed on several judicial decisions placed in the paper
book.
Per contra, the DR strongly supported the finding of the CIT(A) and
stated that on the date of the processing of return there was no mistake
apparent from record which needs rectification u/s 154 of the Act. Page 3 of 6
ITA No.-661/Del/2023 Jaipal Singh Dendsay 9. We have given a thoughtful consideration to the orders of the
authorities below and have carefully considered the submission of the
assessee. The fact that the assessee did not make any claim in his return
of income is undisputed. It is true that after the judgment of the Tribunal
in the case of Ram Kanwar Rana (supra) the assessee became aware of the
eligibility of the deduction available u/s 10(10AA) of the Act but that was on
16.06.2016 and the rectification application has been moved on 28.07.2020.
Considering from all possible angles the application of the assessee is
barred by limitation u/s 154 of the Act. Most importantly on the date of the
processing of the return, there was no mistake apparent from record which
could be rectified u/s 154 of the Act. The decisions relied upon by the
Counsel are on a different set of facts mostly on the eligibility of the claim
of deduction u/s 10(10AA) of the Act but the case of the assessee is the
claim u/s 154 of the Act which according to our considered opinion is barred
by limitation. We decline to interfere with the finding of the CIT(A).
In the result, appeal of the assessee is dismissed.
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ITA No.-661/Del/2023 Jaipal Singh Dendsay Order pronounced in the Open Court on 03.01.2024
Sd/- Sd/- (YOGESH KUMAR US) (N.K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 03/01/2024. Pooja/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT
ASSISTANT REGISTRAR ITAT NEW DELHI
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ITA No.-661/Del/2023 Jaipal Singh Dendsay
Date of dictation 02.01.24 Date on which the typed draft is placed before the dictating Member 02.01.24 Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr. PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr. PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order
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