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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
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.
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
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.
ITA No.-661/Del/2023 Jaipal Singh Dendsay Order pronounced in the Open Court on 03.01.2024