Srijan Family Trust Vs ITO (ITAT Delhi)
The appeal before the Income Tax Appellate Tribunal (ITAT) in Delhi, filed by Srijan Family Trust, was a challenge to an order by the Commissioner of Income Tax (Appeals) (CIT(A)) that upheld an incorrect surcharge levy on the trust’s dividend income for the Assessment Year 2023-24.
Factual Background
The case began when the trust filed its income tax return, declaring an income of ₹1,30,13,620. During the processing of the return under Section 143(1) of the Income Tax Act, 1961, the Centralised Processing Centre (CPC) computed the tax liability by applying a surcharge rate of 37% on the dividend income.
Aggrieved by this assessment, the trust filed an appeal before the CIT(A), arguing that the correct maximum surcharge rate on dividend income should be 15%. However, the CIT(A) dismissed the appeal, upholding the CPC’s assessment. Consequently, the trust filed the present appeal before the ITAT.
Arguments and Holding of the Tribunal
During the hearing, the counsel for the trust contended that the CIT(A) had made a significant error in confirming the 37% surcharge, which was incorrect as per the law. A crucial development in the case was highlighted by the counsel: the trust had also filed a separate rectification application under Section 154 of the Act with the CPC against the original intimation.
The counsel informed the ITAT that the CPC had already accepted this rectification application and, on June 14, 2024, had issued a revised order levying the correct surcharge rate on the dividend income. This new order, which corrected the mistake, was presented to the Tribunal as part of the case paper book.
The ITAT, after reviewing the material on record and hearing both parties, found that the CPC had, in fact, rectified the error itself. Since the very issue in the appeal—the incorrect surcharge rate—had already been corrected by the CPC, the ITAT determined that the CIT(A)’s order upholding the erroneous levy was no longer relevant and should be set aside.
No judicial precedents were cited in the Tribunal’s order. The ITAT concluded by quashing the CIT(A)’s order dated November 25, 2024, and allowing the trust’s appeal.
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeal is filed by the Assessee against the order of Ld. Commissioner of Income Tax (Appeals)/ADDL/JCIT(A), Faridabad (‘Ld. CIT(A) for short), New Delhi dated 25/11/2024 for the Assessment Year 2023-24.
2. Brief facts of the case are that, the Assessee filed return of income at Rs. 1,30,13,620/- the A.O./CPC while processing the return of income, computed the tax liability by levying a surcharge rate at 37% on the dividend income vide intimation dated 18/12/2023 passed u/s 143(1) of the Income Tax Act, 1961 (‘Act’ for short). Aggrieved by the Intimation dated 18/12/2023, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 25/11/2024, dismissed the Appeal filed by the Assessee. As against the order of the Ld. CIT(A), the Assessee preferred the present appeal.
3. The ld. Counsel for the Assessee vehemently submitted that, the Ld. CIT(A) committed grave error in dismissing the Appeal of the Assessee by upholding the erroneous levy of incorrect rate of surcharge of 37% against the correct rate of surcharge of 15% maximum surcharge rate applicable on dividend income. The Ld. Assessee’s Representative also submitted that the Assessee has also filed application u/s 154 of the Act which has been allowed by levying correct surcharge by the CPC, therefore, submitted that order of the Ld. CIT(A) requires to be quashed.
4. Per contra, the Ld. Department’s Representative relying on the orders of the Lower Authorities, sought for dismissal of the Appeal.
5. We have heard both the parties and perused the material available on record. It is found that the Assessee filed an application u/s 154 of the Act as against the original Intimation passed by the CPC/A.O. dated 18/12/2023 for Assessment Year 2023-24. The CPC vide order dated 14/06/2024, allowed the said application filed by the Assessee by levying correct rate of surcharge on the dividend income. The said order dated 14/06/2024 passed u/s 154 of the Act is placed at page No. 52-59 of the Paper Book filed by the Assessee. Considering the fact that, the CPC itself has rectified the mistake wherein levied the correct rate of surcharge on the dividend income, the order of the Ld. CIT(A) is liable to be set aside. Accordingly, order impugned dated 25/11/2024 passed by the Ld. CIT(A) is hereby quashed.
6. In the result, Appeal of the Assessee is allowed.
Order pronounced in the open court on 13th August, 2025
