Vishal Kumar Vs ITO (ITAT Chandigarh)
ITAT Chandigarh Condemns “Misuse of Authority” — Deletes Wrong Addition Made for Income Erroneously Declared by Tax Consultant
Assessee appealed against the order of CIT(A), NFAC, Delhi confirming addition of ₹2,55,016/- made by AO as business income u/s 44AD. The appeal was delayed by 215 days, which Tribunal condoned after considering the explanation given in the affidavit.
The facts revealed that Assessee originally filed a return declaring income of ₹2,75,320/-, which included ₹2,55,016/- declared as business income u/s 44AD. Subsequently, it came to light that this amount pertained to another person & was mistakenly included by the tax consultant. Assessee filed a revised computation showing his actual income from partnership remuneration of ₹10,04,782/-, interest on capital of ₹3,013/-, & commission of ₹17,304/-, aggregating to ₹10,25,100/-, & also paid due taxes. Despite this, AO assessed total income at ₹12,80,120/- by including the wrongly offered ₹2,55,016/-. CIT(A) upheld the assessment.
Tribunal observed that the case was a clear example of misuse of authority by tax officials. Assessee had voluntarily offered higher correct income & paid tax, thereby demonstrating bona fides. Yet, both the AO & CIT(A) wrongly taxed an amount that admittedly did not belong to Assessee. Emphasizing that Income Tax Authorities must assist taxpayers in determining correct income rather than penalize bona fide mistakes, the Tribunal held that such inclusion was unjustified.Accordingly, the addition of ₹2,55,016/- was deleted, & the appeal of the Assessee was allowed in full.
