Young Mens Welfare Society Vs ADIT (CPC) (ITAT Kolkata)
Income Tax Appellate Tribunal (ITAT) in Kolkata has ruled in favor of a reassessment for the Young Mens Welfare Society. The Association of Persons (AOP) inadvertently filed their income tax return using ITR Form 7 instead of the appropriate ITR Form No.5, leading to taxation at maximum marginal rates without the deduction of expenses. The ITAT ordered a review of the case following the rejection of the assessee’s rectification application and the dismissal of their appeal by the Commissioner of Income Tax (Appeals).
Analysis: This ruling underscores the ITAT’s commitment to just and equitable proceedings. The Young Mens Welfare Society inadvertently used an incorrect ITR form, leading to a faulty tax assessment. The organization sought rectification under section 154 of the Act, which was initially rejected. Their subsequent appeals were also dismissed as time-barred by the CIT(A). However, the ITAT has overturned these rulings, emphasizing that tax authorities should not penalize assessees for bona fide mistakes. The ITAT has ordered a reassessment, instructing the Assessing Officer to consider the revised return.
Conclusion: This ITAT ruling highlights the importance of correct ITR form submission and reaffirms the principle of fairness in tax proceedings. By setting aside the orders of the lower authorities, the ITAT has opened the door for the assessee’s case to be reviewed and rectified in light of their inadvertent error. It serves as a crucial reminder to taxpayers about the necessity of using the correct form and provides hope for those who make honest mistakes.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
Both the appeals have been preferred by the assessee against the separate orders dated 19.09.2022 of the National Faceless Appeal Centre [hereinafter referred to as the ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). Since, common issues are involved in both the appeals, hence these have heard together and are being disposed of by this common order.
2. The brief facts of the case are that the assessee is an Association of Persons (AOP) who inadvertently filed the return in ITR Form 7 instead of ITR Form No.5. The said return was processed by the Central I.T.A Nos.613&614/Kol/2022 Assessment years: 2014-15 & 2015-16 Young Mens Welfare Society Processing Centre and thereby the assessee was taxed at maximum marginal rates without giving deduction of expenses.
3. Being aggrieved by the said action, the assessee filed a rectification application u/s 154 of the Act, however, the same was rejected in a mechanical manner by the Assessing Officer. The appeals filed by the assessee have also been dismissed by the ld. CIT(A) holding the same as barred by limitation.
4. Before us, the ld. AR of the assessee has submitted that the appeal filed by the assessee before the CIT(A) is required to be treated within the limitation period as the same was covered by the decision of the Hon’ble Supreme Court in Suomoto Writ Petition (C) No. 3 of 2020 dated 10.01.2022. The ld. Counsel for the assessee has further submitted that the assessee has filed rectification application which has been dismissed by the Assessing Officer in a mechanical manner. The assessee inadvertently filed the return in ITR 7, however, when the defect was pointed out, the assessee rectified the defect and filed return in ITR 5. It has been held time and again that the Income Tax Authorities are not supposed to punish assessees for their bona fide mistake. We, therefore, set aside the impugned orders of the lower authorities and restore the matter to the file of Assessing Officer with a direction to examine the contentions raised by the assessee and tax the assessee at the rates as applicable to the assessee considering the revised return filed by the assessee.
5. Since the facts and issues involved are identical in both the appeals, therefore, in view of our findings given above, will mutatis mutandis apply to ITA No.614/Kol/2022.
6. In the result, both the appeals of the assessee are treated as allowed for statistical purposes. Kolkata, the 1st May, 2023.
