Wrong Claim in Original Return Does Not Automatically Defeat Genuine Chapter VI-A Deduction- ITAT Orders Fresh Verification

Ashfak Kasam Patel Vs ITO (ITAT Pune)

Wrong Claim in Original Return Does Not Automatically Defeat Genuine Chapter VI-A Deduction- ITAT Orders Fresh Verification

The Pune ITAT held that merely because an assessee had admitted certain mistakes in the original return and voluntarily repaid excess refund received, a genuine claim for deduction under Chapter VI-A cannot be denied without proper verification. The matter was restored to the Assessing Officer for fresh examination.

The assessee, a salaried employee of Bosch Ltd., had originally filed returns claiming deductions under Chapter VI-A and a loss under the head “House Property”. Subsequently, he discovered that his tax consultant had made certain incorrect claims, resulting in excess refund being granted. The assessee voluntarily repaid the excess refund along with interest to the Government.

During reassessment proceedings, the Assessing Officer denied the entire Chapter VI-A deduction for AYs 2016-17 and 2017-18 on the ground that the assessee himself had admitted mistakes in the original returns. However, the assessee contended that deductions such as contributions to Provident Fund, LIC premium and tuition fees were genuine deductions reflected in Form 16 issued by the employer.

The Tribunal observed that the deductions claimed under Chapter VI-A appeared to be supported by Form 16 and other evidence, and therefore their correctness required proper verification. At the same time, the ITAT noted that the assessee had again claimed the refunded amount, which had already been repaid to the Government, as prepaid taxes in the reassessment return, which was not permissible.

Accordingly, the ITAT restored the matter to the Jurisdictional Assessing Officer for the limited purpose of verifying the admissibility of the Chapter VI-A deductions on the basis of Form 16 and supporting evidence, while also directing the assessee to file a revised computation excluding the excess refund already received and repaid. The appeals were allowed for statistical purposes.

FULL TEXT OF THE ORDER OF ITAT PUNE

This appeal at the instance of the assessee is directed against the order of Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)”] dated 15/10/2025 passed under section 250 of the Income Tax Act, 1961 (“Act”) which is arising out of assessment order dated 21.09.2021 passed u/s. 147 r.w.s. 144B for the Assessment Year (AY) 2017-18.

2. The common grievance of the assessee in the instant two appeals for A.Ys. 2016-17 & 2017-18 is against the finding of Ld.CIT(A) confirming the action of the Ld. Assessing Officer (AO) denying deduction claimed by the assessee under Chapter VI-A of the Act.

3. At the outset, learned counsel for the assessee submitted that assessee is a salaried employee with BOSH Ltd. and in the Form No. 16 issued by the employer company, deduction u/s. 80C claimed by the assessee is appearing towards contribution to the employees’ Provident Fund (PF), Life Insurance Premium (LIC) receipts and tuition fee etc. However, Ld.AO has not granted the said deduction and therefore, prayed for affording an opportunity to file necessary details before the Ld.AO in support of the said claim.

4. On the other hand, Ld. Departmental Representative (DR) vehemently argued supporting the orders of Ld. CIT(A).

5. I have heard rival contentions and perused the records placed before me. I observe that assessee is an individual and is employed with BOSH Ltd. Regular return of income for A.Ys. 2016-17 & 2017-18 have been filed on 04.07.2017 & 07.06.2016 claiming loss under the head “house property” as well as deduction under Chapter VI-A of the Act. The assessee has claimed refund in both these returns and the same was subsequently granted to the assessee. Thereafter, assessee came to know that certain wrong claim of loss under the head “house property” and certain deduction under Chapter VI-A have been made by the Tax Consultant in filing the returns and wrong/excess claim of refund has been made in the original returns. Thereafter, assessee deposited the excess income tax refund along with interest in the Government Treasury for A.Ys. 2016-17 & 2017-18.

6. Subsequently, Ld.AO issued valid notices u/s. 148 of the Act and served upon the assessee for A.Ys.2016-17 & 2017-18 and in response, assessee has filed the returns of income showing the income from salary, income from other sources and deduction claimed under Chapter VI-A. Deduction claimed under Chapter VI-A is also appearing in Form No. 16 issued by the employer-BOSH Ltd. However, Ld.AO while calculating re-assessment proceedings has denied the deduction claimed under Chapter VI-A commonly observing that the assessee made wrong claim in the original returns and he himself stated in the submissions filed before him of having wrong claim and deduction and therefore Ld.AO added back the deduction of ₹ 2,25,000/- & 2,75,000/- claimed by the assessee in the returns of income for A.Ys. 2016-17 & 2017-18. I also observe that in the computation of income, the excess refund deposited back by the assessee has again been shown as a prepaid tax and refund has been claimed which is not in accordance with law. I find that deduction under Chapter VI-A relating to contribution to PF payment, LIC and tuition fee etc. have been denied to the assessee.

7. Under these given facts and circumstances, I am of the considered view that the correctness of the assessee’s claim for deduction under Chapter VI-A for the impugned two assessment years deserve to be restored back to the file of Ld. Jurisdictional Assessing Officer (JAO) for limited purpose of verification, for which assessee shall furnish necessary evidence including Form No.16 issued by the employer-BOSH Ltd. specifying the deduction under Chapter VI-A mentioned in and also direct the assessee to furnish a revised computation of income by not claiming the excess TDS refund received and deposited with the Government Treasury as part of the prepaid taxes and on due consideration of these details, Ld. JAO shall compute the total income of the assessee calculate and tax liability, if any, arising thereon. Needless to mention that Ld. JAO shall afford a reasonable opportunity of being heard to the assessee and then decide the issues in accordance with law. The assessee is also directed to remain vigilant and not to take unnecessary adjournments unless otherwise required for reasonable cause. Effective grounds of appeals raised in the instant two appeals by the assessee are allowed for statistical purposes.

8. In the result, both the appeals of the Assessee are allowed for statistical purposes.

Order pronounced in the open Court on 16.02.2026