PRATHI VIJAY KUMAR,SRIKAKULAM vs. INCOME TAX OFFICER, WARD-1 , SRIKAKULAM

PER DUVVURU RL REDDY, Judicial Member :

This appeal filed by the assessee is against the order of the Ld. CIT(A)-12, Mumbai in DIN & Order No. ITBA/APL/S/250/2023-24/1056126431(1), dated 15/09/2023 arising out of the order passed U/s. 143(1) of the Income Tax Act, 1961 [the Act] for the AY 2021-22.

an individual filed his return of income for AY 2021-22 on

7/01/2022 admitting a total income of Rs.8,35,190/-. In the tax

audit report of the assessee filed for AY 2021-22, the assessee’s

Auditor mentioned the income under the column ‘any other items

of income’ as follows:

(Rs.) Interest from saving bank 511 Profit on sale of site 21,76,370 Total amount 21,76,890

Thereafter, the return filed by the assessee was processed by the

CPC and the Intimation U/s. 143(1) of the Act was issued on

14/07/2022 wherein the total income was computed at Rs.

30,12,881/-. In the Intimation the adjustment was made for an

amount of Rs. 21,76,881/- as mentioned in the Tax Audit Report

under ‘any other items of income’ but the same was not

mentioned in Column No.5(D) of Part-A 01 ‘Any other items of

income’ in the return. It was also mentioned that since the said

amount of Rs. 21,76,881/- was received towards interest on

savings account for Rs. 511/- and from the sale of sites Rs.

21,76,370/- and is admitted under the respective heads ie.,

‘income from other sources’ and ‘income from capital gains’.

Thus, an addition of Rs.21,76,881/- was made by the CPC and

3 also charged the interest U/s. 234B and 234C of the Act

amounting to Rs. 85,820/- and Rs. 31,288/- respectively.

Aggrieved by the Intimation passed by the CPC U/s. 143(1) of the

Act, the assessee preferred an appeal before the Ld. CIT(A). On

appeal, the Ld. CIT(A) considered the submissions of the assessee

that the mistake is attributable to the Auditor (Chartered

Accountant) who filed the Tax Audit Report of the assessee. But

the Ld. CIT(A) did not appreciate the submissions of the assessee

and held that the mistake appears to be a calculation mistake

and not a human error which could have been corrected by the

assessee by way of quick and timely remedial action but was not

done in the case of the assessee and therefore the Ld. CIT(A)

dismissed the grounds raised by the assessee by dismissing the

assessee’s appeal. Aggrieved by the order of the Ld. CIT(A), the

assessee is in appeal before the Tribunal by raising the following

grounds of appeal:

“1. The order of the Ld. Addl./JCIT (Appeals)-12, Mumbai is contrary to the facts and also the law applicable to the facts of the case.

assessee filed his return of income admitting his income under

three heads as under: (Rs.) Income from business 8,00,023 Income from capital gains 1,85,171 Income from other sources 511 Total income 9,85,705 Deduction under Chapter VIA 1,50,511 8,35,190

He therefore argued that the assessee’s Auditor while filing the

Tax Audit Report has erroneously mentioned the fact that the

proceeds from sale of property and the interest income was not

routed through the P & L Account. The Ld. AR further pleaded

that since the capital gains out of sale of property is disclosed

under the head ‘income from capital gains’ while filing the return

of income and ‘interest income’ is disclosed under ‘income from

other sources’, the CPC, Bengaluru has erred in adding the above

said income once again to the total income of the assessee. In

this connection, the Ld. AR also demonstrated before me in the

5 computation statement filed vide paper book page 97, wherein

the gross proceeds from the sale of capital asset is Rs.

28,45,000/- and the purchase cost is Rs. 6,68,630/-. The Ld. AR

further pleaded that the difference between the purchase and

sale value amounting to Rs. 21,76,370/- has been wrongly

disclosed by the Auditor in the TAR Sl No. 16, which is available

in the paper book page-110. The Ld. AR further submitted that

the LTCG on the sale of assets have been computed after indexing

the cost of acquisition and has been disclosed in the return of

income filed by the assessee. Hence, the Ld. AR pleaded that the

same amount cannot be taxed twice in the hands of the assessee.

He therefore pleaded that the addition made by the CPC be

deleted.

Revenue Authorities.

on record as well as the orders of the Ld. Revenue Authorities. It

is an admitted fact that the assessee has shown the capital gains

against the sale of capital asset and interest income in the return

of income for the AY 2021-22. But, due to wrong disclosure in

the Tax Audit Report that the income was not routed through the

6 P & L Account, the CPC, Bengaluru made an addition of Rs.21,76,881/- as business income of the assessee but whereas the assessee treated the sale of capital asset as personal asset and has computed the capital gains while filing the return of

income and paid taxes accordingly. Similarly, interest income was also disclosed while filing the return of income by the assessee. Given the above facts, I am of the opinion that the CPC while processing the return U/s. 143(1) of the Act has erroneously added the sale consideration and the interest income as business of the assessee whereas ignored the fact that these

have been already declared in the respective heads of income while filing the return of income of the assessee. Therefore, the addition made by the CPC U/s. 143(1) is erroneous and hence I direct the Ld. AO to delete the addition. It is accordingly.

Pronounced in the open Court on 28thFebruary, 2024 Sd/- (दु�वू� आर.एल रे�डी) (DUVVURU RL REDDY) �या�यकसद�य/JUDICIAL MEMBER

Dated :28/02/2024 OKK - SPS

7 आदेश क� ��त�ल�प अ�े�षत/Copy of the order forwarded to:- 1. �नधा�रती/ The Assessee – Prathi Vijay Kumar, D.No. 14-01-23, Main Road, Ichapuram, Srikakulam, Andhra Pradesh-532312. 2. राज�व/The Revenue – Income Tax Officer, Aayakar Bhavan, Palakonda Road, Srikakulam, Andhra Pradesh – 532001. 3. The Principal Commissioner of Income Tax, 4.आयकर आयु�त (अपील)/ The Commissioner of Income Tax (Appeals), 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, �वशाखापटणम/ DR, ITAT, Visakhapatnam 6.गाड� फ़ाईल / Guard file आदेशानुसार / BY ORDER

Sr. Private Secretary ITAT, Visakhapatnam