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Facts
The assessee, a partner in a firm, received interest income. There was a mistake in the initial return where the interest income was punched at Rs. 12,94,100 instead of Rs. 1,29,100. The assessee corrected the return, but the CPC processed it based on the original incorrect return. A rectification application was filed and rejected.
Held
The Tribunal held that the mistake was apparent from the record and the assessee's rectification application should have been adjudicated on merit. The lower authorities erred in not considering the corrected return and rejecting the rectification without proper inquiry.
Key Issues
Whether the assessee was justified in seeking rectification of a mistake apparent from the record, specifically regarding the interest income calculation, and whether the lower authorities correctly rejected the rectification application.
Sections Cited
143(1), 154, 139(4), 265
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Income Tax Appellate Tribunal, JAIPUR BENCHES, “SMC” JAIPUR
Before: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 07/JP/2024
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AHCPA 4339 F vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Dinesh Kumar, Adv. jktLo dh vksj ls@ Revenue by : Sh. Monisha Choudhary (Addl.CIT) lquokbZ dh rkjh[k@ Date of Hearing : 03/04/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 30/05/2024 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, A.M. This appeal is filed by the assessee aggrieved from the order of the Addl./Jt Commissioner of Income Tax, Appeal-3, Mumbai [Here in after referred as (CIT(A)] for the assessment year 2011-12 dated 08/11/2023, which in turn arises from the order passed by the AO passed under Section 143(1)/154 of the Income tax Act, 1961 (in short 'the Act') dated 22.04.2014. grounds;
“1. Whether in the facts and circumstances of the case, the Learned CIT (Appeals) is justified in confirming the order of Learned Assessing Officer in rejecting the rectification application?
Whether in the facts and circumstances of the case, the Learned CIT (Appeals) is justified in confirming addition of Rs. 11,65,000/- on account of interest from firm in which assessee is partner ignoring that interest received from firm is only Rs. 1,29,100/-and not Rs. 12,94,100/-?
3. Whether in the facts and circumstances of the case, even if return filed by the Appellant is under the provisions of Section 139(4) of the Act, then also Section 154 of the Act permits rectification of mistake apparent on the face of the record as the amount was wrongly punched as apparent from the statutory audit report ?
Whether when there is a mistake apparent on the face of the intimation under Section 143(1) of the Act, if not permitted to be rectified shall be against the principle of Article 265 of the Constitution of India where no tax can be retained without authority of law?
Whether in the facts and circumstances of the case, the learned CIT(Appeals) is justified in not appreciating that it is a case of filing of corrected return rather a case of revised return?
6. That the appellant craves leave to add, amend or alter all or any of grounds of appeal and relief claimed before or at the time of hearing.”
The fact as culled out from the records is that the assessee is a Partner of M/s. Mahaveer Oil Industries, Niwai District Tonk.
Assessee received interest of Rs. 1,29,100/- and remuneration of Rs. 84,000/- totaling to Rs. 2,13,100/- from the Partnership Firm firm along with audited accounts were submitted. Assessee e-filed its return for the Assessment Year 2011-12 declaring total income of Rs. 14,09,550/- on 10/02/2012 having acknowledgement No. 339020280100212. In the return of income filed by mistake in punching, interest income was punched as Rs. 12,94,100/- in place of Rs.1,29,100/- Thus, income was computed at 14,09,550/- as shown in return. The signed hard copy of the acknowledgement was not sent and immediately on having knowledge of the mistake on 7/3/2012 corrected his return and declared his correct total income at Rs. 2,44,550/- having acknowledgement No. 348435310070312. Hard Copy of both the returns original & corrected were sent to CPC simultaneously in the same envelop.
Copy of both the returns are submitted and placed on record. The Centralized Processing Center, Income Tax Department passed its Order on 11/06/2012 under Section 143(1) on the basis of original return filed on 10/02/2012 without considering the fact that the Original Return has already been corrected on 7/3/2012. Assessee then filed rectification application before CPC, Income Tax Department who vide its communication dated 15/11/2012 Assessing Officer and further proceedings shall be taken by the Jurisdictional Assessing Officer. Assessee then filed an application dated 24.10.2013 before Income Tax Officer, Tonk under Section 154 of the Act for rectification of mistake in order dated 11.6.2012.
Income Tax Officer, Tonk rejected the rectification application vide its order dated 22/4/2014.
4. Aggrieved from the said action of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A)/NFAC. Apropos to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below:-
“Decision “Assessee submission has been considered carefully. In this case for AY 2011-12 due date for filing return u/s 139(1) was 31 July 2011, whereas assessee has filed return on 10.02.2012 of Rs. 1409550/-. Furthermore, assessee has also sent ITR V of return filed on 10.02.2012 to CPC for verification, which CPC has correctly processed as held clearly by the Hon'ble Supreme Court of India in the case of Goetze (India) Ltd. V. Commissioner of Income Tax that assessee cannot amend return filed by him for claiming deduction or other than by filing a revised return.
In this case Assessee has not filed any revised return for the relief, he is claiming. Accordingly, assessess's case has been dismissed and no relief can be given. It is not a mistake apparent from record.” ld. CIT(A), the assessee preferred the present appeal on the ground as reproduced hereinabove. To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions:
S. No. Particulars Page No. 1 Copy of ITR-V (Original) Dt 10.2.2012 1-2 Along with computation of income 2 Copy of ITR-V (Revised) Dt 7.3.2012 3 3 Copy of Intimation u/s 143 4-6 4 Copy of Application Dt. 24.10.2013 along with audit 7-22 report 5 Copy of written submissions before CIT (Appeals) 23-30 along with e-proceedings acknowledgment Decisions: • ITO, Mumbai vs. Vikunj Enterprises Private, Mumbai in dated 30/04/2019 • Goetze (India) Ltd. vs. CIT (2006) 204CTR (SC) 182 • M/s Craftsman Automation P. Ltd. vs. CIT on 30 September, 2015 in Tax Case Appeal No. 1177 of 2005 • Chandrashekhar Bahirwani, Mumbai vs. ACIT in ITA No. 7810/Mum/2010 & 6599/Mum/2012 dated 17.06.2015 • Yogita Dhiren Goradia, Mumbai vs. CIT(A), NFAC, Delhi on 31 January, 2023
6 Prem Chand Agrawal vs. ITO • Madhabi Nag, Bankura vs. ACIT in ITA No. 512/Kol/2015 dated 09.12.2015 • Shrikant Real Estates (P) Ltd. vs. ITO in ITA No. 4304/Mum/2012 dated 19th October, 2012 • Sumanchandra G. Mehta vs. ITO in ITA Nos. 564/Mum/2012 & 565/Mum/2012 dated 24th Jan, 2013
The ld. AR of the assessee in addition to the above written submission, the ld. AR appearing on behalf of the assessee submitted that the tax should be charged correctly in the hands of the assessee. The ld. JAO has not made any inquiry as to the factual error available on record and therefore, the assessee should be charged on the correct income and accordingly, the tax is required to be levied. To support his contention he has relied upon the various case laws as cited here in above.
The ld DR representing the revenue submitted that the correct action should be followed by the assessee by filing the revised return which the assessee has not filed. The case laws cited all are related to the fact that the assessee filed the revised return and in this case the assessee has already filed the return after the due date there are not provisions to revise that return. Thus, there is no merit in the arguments of the ld. AR of the assessee. Based on orders of the lower authority.
We have heard the rival contentions and perused the material placed on record. The apple of discord in this case is that whether the assessee has received interest from the partnership firm at Rs.1,29,100/- or Rs. 12,94,100/-. This appears to be mistake apparent from the record and therefore, the application filed by the assessee u/s 154 of the Act is required to be adjudicated on merit and therefore, considering that aspect of the matter, we set aside the matter with a direction to the ld. AO to make necessary inquiry and obtained evidence from the assessee and considered the plea of the assessee on merits and charged the tax in accordance with law based on the correct income. We get strength to support of our wherein on the similar circumstances the co ordinate bench of Mumbai has considered the plea of the assessee. Out of the judgment so relied upon by the ld. AR of the assessee we find that on the similar circumstances as that of the assessee was in the case of Shri Sumanchandra G. Mehta Vs. ITO in wherein the co-ordinate bench observed that;
8 Prem Chand Agrawal vs. ITO “7. The present case is a perfect example of such ignorance. The assessee has shown interest income earned as well as interest paid under the head" income from other sources". Not realizing that a negative figure is not accepted by the server and therefore the interest paid shown as Rs. 2,33,535/- was rejected by the server while processing the return.
8. No doubt the CBDT has the powers to frame the rules but, at the same time, it cannot benefit from the ignorance of the taxpayers using the latest technology. We do not find any reason why such error should not be rectified by the AO. This is not Ignorance of law but ignorance of the usage of the latest technology.
Therefore in the interest of justice and fair play to the taxpayer, we restore this issue back to the files of AO. The AO is directed to examine the claim of the assessee of interest paid at Rs. 2,33,535/- and if satisfied with the claim, the AO is directed to deduct the same from the positive interest figure of Rs. 3,38,345/- meaning thereby that only Rs. 1,04,810/-should be added to the taxable income.
Before parting, a similar issue came up for hearing before the Tribunal in the case of Srikant Real Estate Pvt. Ltd. 140 ITD 155 wherein one of us (AM) is the author of the decision where also the Tribunal has taken a similar view and directed the AO to rectify the error. Drawing support from the findings given in the aforesaid case, this appeal is also restored back to the files of the AO with the above direction.
In the result, the appeal filed by the assessee is allowed for statistical purposes.”