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Income Tax Appellate Tribunal, Kolkata Bench, KOLKATA
Before: SHRI N. V. VASUDEVAN & SHRI M. BALAGANESH,
ORDER Per M. BALAGANESH, AM
This is appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-XIX (hereinafter referred to as the “ld.. CIT(A))”, Kolkata, dt. 31.01.2014, passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) relating to Assessment Year 2009-10.
The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in upholding the determination of total income at Rs.80,54,878/- u/s 143(1) of the Act in the facts and circumstances of the case.
3. The brief facts of this issue is that the assessee is a partnership firm and filed its return of income for the Asst Year 2009-10 electronically on 29.9.2009 showing total income of Rs 86,96,990/- and the same was processed u/s 143(1) of the Act by the Central Processing Centre (CPC) and demand was raised thereon. The assessee on receipt of the same came to know that some error had crept in the electronic return filed by it. Accordingly it came to understand that the correct income of the assessee firm was only Rs 10,79,809/- and tax thereon was duly paid along with the return of income. In fact the tax paid by the assessee would. work out only for the income of Rs 10,79,809/- . It was pleaded that if the income which was filed electronically is considered i.e. Rs 86,96,990/- , then there would. be substantial increase in tax liability of the assessee which was not the case as could. be evident from the ITR V Acknowledgement, wherein the income was reflected at Rs 86,96,990/- , whereas the tax payable was reflected only at Rs 3,33,661/-. The assessee understood that this was clearly an error in the return which was filed electronically. The ld. AO determined the total income at Rs 86,96,990/- u/s 143(1) of the Act as per the return filed electronically by the assessee ignoring the mistake committed by the assessee as stated supra and raised a demand accordingly. The assessee preferred a rectification petition u/s 154 of the Act on 9.7.2013 before the ld. AO which was not acted upon by the ld. AO. The assessee also preferred an appeal before the ld. CIT(A) against the order u/s 143(1) of the Act. The ld. CIT(A) however upheld the action of the ld. AO . Aggrieved, the assessee is in appeal before us on the following grounds:- “
1. For that the intimation u/s. 143(1)(a) dated 1.10.2010 determining business income at Rs.80,54,878 and consequent determination of total income, tax and interest payable are wrong, erroneous, excessive, unjust, unlawful and deserves to be cancelled/rectified.
2. For that the impugned intimation u/s 143(1)(a) dated 11.10.2010 is otherwise wrong, erroneous, time-barred, illegal, ab-initio void and ineffective.
For that the assessee craves leave to amend, alter, rescind, substitute and/or submit additional ground/grounds of appeal
at the time of hearing of appeal.
4. The ld. AR referred to the relevant pages of the paper book filed by him comprising of ITR V Form (page 1 of PB) ; complete ITR 5 – Return form (Pages 2 to 23 of PB) ; Computation of total income of the firm (Page 24 of PB) ; audited financial statements along with tax audit report in Form 3CB and 3CD (Pages 25 to 41 of PB) and Explanation given before the ld. CIT(A) vide letter dated 4.12.2012 (Pages 42 & 43 of PB). The assessee referred to page 43 of PB containing the reconciliation of mistake in processing of income filed before the ld. CIT(A) which was ignored by the ld. CIT(A) as below:- Reconciliation of Mistake in Processing of Income Correct Income 10,79,809 Processed Income 86,96,986 -------------- Income increased in Processing 76,17,177 -------------- Reconciliation Partners Remuneration debited in P&L A/c 8,79,859 Partners Remuneration allowable as per computation (3,79,302) -------------- Partners Remuneration Disallowable (A) 5,00,557 Wrong amount taken in Return as remuneration Disallowable (B) 81,17,734 ---------------- Mistake in disallowing Partners Remuneration (B) –(A) 76,17,177 ---------------- 4.1. The ld. AR also referred from page 24 of the PB comprising of computation of total income as to where the wrong figure of Rs. 81,17,734/- was picked up by the assessee and reflected in the ITR 5 Return . He stated that the total amount disallowed in the computation of total income under the head „income from business‟ has been mentioned at Rs 81,17,734/- which figure has been wrongly reflected in ITR 5 return form instead of Rs 8,79,859/- which is the figure of partners remuneration added back in the computation of total income. He argued that the said mistake had crept in genuinely without the knowledge of the assessee and it is only a typographical error which ultimately did not have any impact on the tax payable by the assessee. He said that his argument would. get strengthened from the very fact that the tax payable did not undergo any change in the ITR 5 Return form and ITR–V Acknowledgement irrespective of this mistake of mentioning higher disallowance figure. He also said that in any case all the items mentioned in the computation of total income duly matched with the audited financial statements and accordingly he stated that the lower authorities had grossly erred in not appreciating the genuine mistake that crept in the ITR Return form. In response to this, the ld. DR vehemently relied on the orders of the lower authorities and argued that provisions of section 154 of the Act are meant only for correcting the mistakes of the ld. AO and not the assessee.
We have heard the rival submissions and perused the materials available on record including the paper book filed by the ld. AR. From the perusal of the details contained in the paper book, we find that the assessee had genuinely committed a mistake in mentioning the wrong figure of disallowance under partnership remuneration which was duly brought to the notice of the revenue at the time of appellate proceedings. But both the authorities failed to appreciate the contentions of the assessee comprising of genuine typographical error and fastened unreasonable tax liability on the assessee. We find lot of force in the argument of the ld. AR and we are convinced with the explanations given by the ld. AR as stated supra as they are completely borne out from the facts on record. In the instant case, the ld. AO also had not disposed of the rectification petition filed by the assessee on 9.7.2013 pointing out the aforesaid mistake. We find that the ld. CIT(A) upheld. the action of the ld. AO on the ground that the assessee had not filed any revised return of income to justify its claim. We would. like to mention here in this regard that it is well settled that the revenue cannot take undue advantage of the ignorance of the assessee or genuine mistake committed by the assessee and is always duty bound to assess only the real income of the assessee. In this regard, we would like to place reliance on the decision of the co-ordinate bench of Rajkot Tribunal in the case of ACIT vs Rupam Impex in (RJT) of 2014 dated 21.1.2016 wherein it was held. as below:-
A lot of emphasis is placed on the fact that the mistake was committed by the assessee himself which has resulted in the error creeping in the assessment order as well. Instead of being apologetic about the complete non application of mind to the facts and making a mockery of the scrutiny assessment proceeding itself, the Assessing Officer has justified the mistake on record on the ground that it is attributed to the assessee. The income tax proceedings are not adversarial proceedings. As to who is responsible for the mistake is not material for the purpose of proceedings under section 154; what is material is that there is a mistake- a mistake which is clear, glaring and which is incapable of two views being taken. The fact that mistake has occurred is beyond doubt. The fact that it is attributed to the error of the assessee does not obliterate the fact of mistake or legal remedies for a mistake having crept in. It is only elementary that the income liable to be taxed has to be worked out in accordance with the law as in force. In this process, it is not open to the Revenue authorities to take advantage of mistakes committed by the assessee. Tax cannot be levied on an assessee at a higher amount or at a higher rate merely because the assessee, under a mistaken belief or due to an error, offered the income for taxation at that amount or that rate. It can only be levied when it is authorised by the law, as is the mandate of Art. 265 of the Constitution of India. A sense of fairplay by the field. officers towards the taxpayers is not an act of benevolence by the field. officers but it is call of duty in a socially
accountable governance. If authority is needed even for justifying this approach to the taxpayers, one need not look beyond the circulars issued by the CBDT itself. In Circular No. 14, which has been taken note of by the Hon’ble Bombay High Court in the case of Dattatraya Gopal Bhotte v. CIT [1984] 150 ITR 460 the Board has these words of advice for the field. officers :
“. . . . . Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist taxpayer in every reasonable way, particularly in the matter of claiming and securing any relief and in this regard the officers should. take initiative in guiding the taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would. in the long run benefit the Department for it would. inspire confidence in him that he may be sure of getting a square deal from the Government ……….”
5.1. In view of our aforesaid findings in the facts and circumstances of the case and respectfully following the judicial precedent relied upon hereinabove, we direct the ld. AO to grant relief to the assessee. Accordingly, the grounds raised by the assessee are allowed.
6. In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 05.04.2017. Sd/- Sd/- [N. V. Vasudevan] [M. Balaganesh] Judicial Member Accountant Member Dated : 05.04.2017 {SC SPS} Copy of the order forwarded to: 1.Appellant/Assessee- C.P.L. Tannery, Calcutta Leather Complex, Zone-5, Plot No.369 Karaidanga, Bantal, 24-Pgns.(S) Pin-743502 2.Respondent –ACIT (CPC), Bangalore/ITO, Ward-33(4) 3.CIT(A)- Kolkata. 4.CIT – , Kolkata. 5.CIT(DR), Kolkata Benches, Kolkata.