Krishnaping Alloys Ltd. Vs ACIT (ITAT Mumbai)
Rectification for Return-Filing Mistake Revived; Mere Dispatch Entry Not Proof of 143(1) Service
The assessee’s return for AY 2006-07 correctly showed profit before tax of about ₹22 lakh, but due to an accountant’s error the gross sales figure of about ₹5.05 crore was mistakenly entered in the “income from business” column in the computation, inflating the total income to about ₹5.08 crore. The return was processed under section 143(1) on the basis of this erroneous figure, creating a huge demand of about ₹2 crore.
The assessee claimed that it never received the 143(1) intimation and therefore remained unaware of this demand for years. Even subsequent recovery notices issued in 2013 and 2016 did not mention any demand for this assessment year. The issue surfaced only when the assessee later checked the tax portal and then filed a rectification application under section 154 to correct the apparent mistake. The AO rejected the rectification and the CIT(A) confirmed the rejection.
The Tribunal noted two key aspects:
1. The error was apparent from the return record itself, since the profit and loss figures and schedules showed the correct profit while only the computation column carried the wrong figure.
2. The Revenue relied merely on a dispatch register entry to claim service of the 143(1) intimation. Following the Orissa High Court decision in Alok Kumar Mahapatra, the Tribunal held that a dispatch entry alone is not conclusive proof of actual service so as to deny rectification on limitation grounds.
Since the AO had rejected the rectification without examining on merits whether there was a “mistake apparent from record”, the Tribunal set aside both the AO and CIT(A) orders. The matter was restored to the AO for fresh adjudication of the section 154 application after verifying the return, computation and records and after giving proper opportunity of hearing to the assessee.
The appeal was allowed for statistical purposes with a direction for de novo consideration of the rectification claim.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
