SHIVANAGOUDA PANCHANGOUDA HUDED,DHARWAD vs. INCOME TAX OFFICER, WARD-2(1), HUBLI

This appeal is filed by the assessee against the DIN & Order No.ITBA/APL/S/250/2023-24/1057928902(1) dated 14.11.2023 of the CIT(Appeals), Addl/JCIT(A)-9, Mumbai for the AY 2017-18.

The brief facts of the case are that the assessee filed return of income on 29.03.2018 declaring income from business or profession of Rs.9,48,465, income from other sources of Rs.1,10,135 and claimed deduction under Chapter VIA of Rs.1,72,835. Accordingly total taxable income was declared at Rs.8,85,770 and assessee claimed refund of Rs.1,27,010.

The CPC processed return u/s. 143(1) of the Act on 14.03.2019 and determined total income at Rs.24,23,030 adding income from salary of Rs.15,37,268. The assessee is a pygmy agent of Karnataka Vikas Grameen Bank, Dharwad. Assessee visits and collects money and deposits in the bank customers account regularly. For this, the assessee gets commission on the total deposits collected by the assessee during the month. The bank deducted TDS u/s. 192B and it was reported in Form 26AS. The entire amount received as per Form 26AS was treated as income from salary by the CPC and processed the return on 14.03.2019.

Against the processing of return u/s. 143(1), the assessee filed rectification application u/s. 154 on 06.11.2019 which was rejected by the CPC by rectification order dated 20.11.2019. The assessee filed appeal before the CIT(Appeals).

The CIT(Appeals) issued notices to the assessee against which the assessee submitted reply on 08.11.2023 stating that there is a mistake in Form 35 mentioned the order u/s. 143(1) and the correct order is the rectification order u/s. 154 and the date of the order was also informed by the assessee. However, the CIT(Appeals) did not accept the submission of the assessee and stated that the content submitted in Form 35 is of order passed u/s. 143(1) therefore it cannot be rectified and accordingly there is a delay of 201 days in filing the appeal before the CIT(Appeals) and he rejected the appeal of the assessee.

Aggrieved from the above order, the assessee filed appeal before the ITAT. The ld. AR submitted that the assessee is not an employee of the Karnataka Vikas Grameen Bank and he is a pygmy agent and getting commission. The assessee has been appointed as pygmy agent on 2.12.1998 by Malprabha Grameen Bank (now Karnataka Vikas Grameen Bank for Kalpataru deposit. Initially it was agreed by the bank that 2.5% commission will be paid on the collection made by the assessee and Rs.5,000 shall be deposited as security deposit. Now the assessee is receiving 3% commission and in this regard he submitted Identity card issued by the erstwhile bank dated 24.12.1998 and memorandum of agreement which is placed on record. He further submitted that the bank has wrongly deducted TDS u/s. 192B and entire amount has been added by CPC. The assessee has no other income except the income shown in the income tax return. Accordingly, the CPC made the addition twice, one under the head income from salary and the same amount on which the assessee has calculated income from profits & gains of business or profession, which is totally wrong. While filing Form 35 due to lack of knowledge, the assessee could file properly col. 2(a)(b)(c). During the course of appellate proceedings before the CIT(Appeals), the assessee has stated the correct facts which has not been accepted by the CIT(Appeals). When the assessee received order u/s. 154 on 20.11.2019, immediately he instituted appeal on 25.11.2019, therefore there is no delay which ought to have been considered by the CIT(Appeals). However, the CIT(Appeals) has not accepted the prayer of the assessee.

On the other hand, the ld. DR relied on the order of AO and submitted that the entire details submitted by the assessee in Form 35 relates to order passed u/s. 143(1), therefore there is a delay of 201 days. Therefore the order of CIT(Appeals) is justified.

After hearing both the sides, perusing the entire material on record and the orders of the lower authorities and the facts narrated above we note that CPC has added income from salary of Rs.15,37,268 and the assessee is a pygmy agent and getting commission as per the memorandum of agreement to which the assessee has shown income from business or profession. The payer has deducted tax u/s. 192B under the head income from salary. The return was processed by the CPC on 14.11.2019. The assessee sough rectification u/s. 154 which was rejected by the CPC. The assessee filed appeal before the CIT(Appeals) wrongly mentioning in Form 35 the details in col. 2(a)(b)&(c) which was rectified in the appellate proceedings. The CIT(Appeals) has not considered the submissions of the assessee. We also note from para 4.2 of the CIT(Appeals) order that reference of order u/s. 154 has been given. Accordingly there is no delay in filing the appeal before the CIT(Appeals). Therefore, the issue is remitted back to the CIT(Appeals) considering that the appeal has been filed u/s. 154 for fresh decision as per law. The assessee is directed to produce necessary documents for substantiating its case and not seek unnecessary adjournment for early disposal of the case.

In the result, the appeal is allowed for statistical purposes.