DAMODAR JOMA KHOT,PANVEL vs. COMMISSIONER OF INCOME TAX, NATIONAL FACELESS APPEAL CENTER

Assessment Year: 2017-18 Damodar Joma Khot, V The Commissioner of At Bamandongari, Wahal, s Income Tax(National Tal-Panvel, Panvel – faceless Appeal Center). 411206. PAN: AWGPK8388M Appellant/ Assessee Respondent / Revenue Assessee by Shri Suresh Kumar Gundher – AR Revenue by Dr. Shashank Ojha – DR Date of hearing 12/11/2024 Date of pronouncement 21/11/2024 आदेश/ ORDER

PER DR. DIPAK P. RIPOTE, AM:

1. Ld.CIT(A) has erred in dismissing the appeal filed stating that the rectification application dated 06.07.2020 still pending before CPC, without checking the proper facts of case, assigning proper reasons, justification and adjudication.

2. CPC was not rectify the claim therefore appellant has filed rectification application to JAO on 08.11.2021. He accepted the appellant calim and passed the order on 27.12,2021 but withdrew the same on 31.12.2021. It is the duty of the JAO to allow correct claim of the assessee whether the assessee has claimed or not. However, duty is case up on the JAO as per circular No. XIV of 1955 directing them to assist the assessee in allowing legitimate deduction/exemption and not to collect extra tax from the assessee. Hon'ble Supreme Court have also of the view that the legitimate tax only be collected and no tax be collected from the ignorance of the law from the assessee.

3. CIT (A) ought to have considered the understated vital facts, being the issue involved in appellant case is debatable and involves verification of facts. In its order dated 31.08.2023 vide Para 5.2, Ld. CIT(A) has also accepted that issue involved in appellant case is debatable and involves verification of facts. Hence, action of CPC making addition of Interest u/s 143 (l)(a) is not permissible on the following: ii. an incorrect claim, if such incorrect claim is apparent from any information in the return; vi. addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return. In view of the above, addition in intimation order u/s 143(1)(a) is invalid, arbitrary, non-jurisdictional and bad in the eyes of law and facts.

, if necessary, on the basis of submissions to be made at the time of personal hearing.” Submission of Ld.AR :

2. The Ld.AR submitted that the assessee is a Senior Citizen, he is illiterate. The assessee’s agricultural land situated at Mouje Wahal, Taluka Panvel Dist.Raigad was acquired by Government for Navi Mumbai Project vide notification dated 10/03/1986. During the year the assessee has received Rs.8380269/- on account of Interest on Land Acquisition as per the Decision of the Hon’ble Senior Divisional Civil Judge order for compensation dated 12/02/2014 in appeal number 80/2009. The Ld.AR submitted that the Hon’ble Court has directed to pay Interest on Delayed Payment for the period 10/03/1986 to 22/11/2014 of Rs.86,25,602/- under Section 28 of the Land Acquisition Act. The assessee filed the return of Income for AY 2017-18 and claimed the said income as Exempt Income u/s 10(37) of the Act.Ld.AR took us through the relevant part of the Return of Income i.e schedule EI details of Exempt Income which is at page 34 of the paper book. The entire Return of Income is at page 13-38 of the paper book. The Dy.Commissoner of Income Tax Central Processing Centre Bangalore passed an order u/s 143(1)(a) of the Act disallowing the claim of exemption of the assessee. Ld.AR submitted that u/sec.143(1) of the Act the CPC do not have any jurisdiction to disallow the claim of exemption. Ld.AR submitted that hence the order u/sec.143(1) is bad in law. The Assessee filed an application for rectification on the ground that the CPC do not have any jurisdiction hence order is bad in law. The AO rejected the application. Assessee filed appeal before the CIT(A) who dismissed the appeal of the assessee.

2.1 Ld.AR submitted that the Interest on compensation received u/sec.28 of the Land Acquisition Act is not taxable. Ld.AR relied on following decisions :  The Hon’ble Bombay High Court in case of Bajaj Finance Ltd VS CIT Pune, Bombay HC I T Ref. No. 25/2000  The Hon’ble Income Tax Appellate Tribunal, Chennai in case of Tangar Exports LLP VS ACIT Chennai ITAT  The Hon'ble ITAT Pune in case of Dnyanoba Shajirao Jadhav vs ITO ITAT Pune ITA No.168/PUN/2016  The Hon’ble ITAT Pune in case of Kusum Jairam Thakur vs ITO ITAT Pune ITA No. 1332/PUN/2023  The Hon'ble ITAT Pune in case of Sahebrao Kishan Rao More vs ITO ITAT Pune ITA No.1805/PUN/2017  The Hon’ble ITAT Pune in case of Sanjay Bhimrao Patil vs ITO ITAT Pune ITA No. 532/PUN/2017  The Hon’ble ITAT Pune in case of Vithal Gurunath Patil vs ITO ITAT Pune ITA No. 1386/PUN/2017 2.2 Ld.AR also pleaded that even if for argument sake it is taken as debatable issue then also Dy.CIT CPC do not have jurisdiction to disallow the Interest on Compensation u/s 143(1)(a) of the Act. Ld.AR submitted that appeal of the assessee may be allowed.

Submission of ld.DR : 3. Ld.Departmental Representative(ld.DR) for the Revenue submitted that it is a debatable issue hence AO had no jurisdiction u/s 154. Ld.DR relied on the order of the AO and ld.CIT(A).

Findings and Analysis: 4. We have heard both the parties and perused the records. We are herby reproducing the relevant part of the Order u/sec.143(1)(a) for ready reference as under :

We have studied the entire Return of Income of the assessee, the assessee has shown Total Income at Rs.4,92,630/- . But the assessee has shown Rs.83,80,269/- as Exempt Income in the Schedule EI under the head “ Details of Exempt Income” in the Return of Income. It is at page 34 of the paper book filed by the assessee. Thus, the Assessee had shown the Income of Rs.83,80,269/- in the Return of Income. Therefore, it is apparent from the Return that the Dy.CIT,CPC has erred in not considering the Return of Income in totality. In this fact and circumstances of the case we agree with the Ld.AR of the assessee that CPC had no jurisdiction to make adjustment.

5.1 In these facts and circumstances, when we analysed the rectification application filed by the assessee before the AO, it is clear that there was apparent mistake from record as the Dy.CIT CPC has made the addition only on the ground that there was mismatch in the Form 26AS and Total Income shown in the return without referring to the Schedule EI of the Return. Once we read the Return of Income in totality, there is no difference in the Total Income as appearing in the Form 26AS and the Income as appearing in the Return of Income. This is definitely a mistake apparent from the record. Therefore, the AO has erred in not correcting the mistake apparent from the record. In this case there is no question of debatable-ness of the issue as the issue before the AO was never whether the Interest on land acquisition compensation is taxable or not. The issue before the AO was that CPC has erred in not considering the Schedule EI of the Return of Income. Therefore, we are of the considered opinion that the AO has erred in rejecting the Rectification application of the assessee. Accordingly, we direct the AO to allow the Rectification application of the Assessee and assess the Total Income of the assessee at Rs. 4,96,021/-. We find support from the order of the Hon’ble Bombay High Court in the case of Mahalakshmi Glass Works Ltd. vs ACIT 203 ITR 658 wherein the Hon’ble High Court observed as under :

Quote, “The intimation which is required to be given under section 143(1)(a) must determine the tax found due on the basis of the return and if any refund is due on the basis of such return it shall be granted to the assessee. The scope of an intimation under section 143(1)(a) has been considered by a Division Bench of this court, to which one of us (Mrs. Sujata Manohar, J.) was a party, in the case of Khatau Junkar Ltd. v. K.S. Pathania [1992] 196 ITR 55 (Bom.). In view of the ratio which is laid down in that judgment the 1st respondent had no jurisdiction under section 143(1)(a) to reopen the account of the assessee and to recalculate the quantum of income of the assessee by allowing or disallowing certain deductions as set out hereinabove. The intimation dated 3-8-1990 is, therefore, set aside.”Unquote.

5.2 Accordingly, the ground of appeal raised by the assessee is allowed.