Krishnakant Kishore Palav Vs ITO (ITAT Mumbai)
ITAT Gives Salaried Employee Relief: Genuine Return Mistake Deserves Correction, Not Tax on Wrong Income
The Mumbai ITAT came to the rescue of a salaried taxpayer, Krishnakant Kishore Palav, holding that a bona fide mistake in the return of income should be examined on merits rather than being rejected on technical grounds of delay. The Tribunal condoned the delay in filing the appeal before the CIT(A) and restored the matter to the Assessing Officer for fresh consideration.
The assessee had worked with two employers during FY 2016-17 and earned salary of about ₹10.31 lakh. While filing the return, he inadvertently mixed up salary figures of different years, failed to claim certain exemptions and also claimed TDS relating to a subsequent year. This resulted in excess income being offered to tax and a demand of ₹1.18 lakh being raised by CPC. The assessee attempted to rectify the mistake by filing a revised return and multiple rectification applications under section 154, but the requests were rejected.
When the assessee eventually filed an appeal, the CIT(A) dismissed it in limine on the ground of delay. Before the Tribunal, the assessee explained that the delay occurred because he was bona fide pursuing alternative remedies through rectification proceedings and that a substantial portion of the intervening period was covered by the Covid-19 period.
Accepting the explanation, the Tribunal observed that neither the CPC/AO nor the CIT(A) had examined the issue on merits. Since the assessee was genuinely seeking determination of the correct taxable income and not attempting to evade tax, the delay deserved to be condoned. The Tribunal emphasized that the dispute involved a claim that excess income had been mistakenly offered to tax and therefore required proper verification.
Accordingly, the matter was restored to the jurisdictional Assessing Officer with directions to reconsider the revised return, verify the salary details, examine Form 26AS and Form 12BB, determine the correct taxable income and pass a fresh order after granting adequate opportunity to the assessee.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. This appeal by assessee is directed against the order of Ld. CIT(A) / NFAC dated 23.10.2025 for A.Y. 2017-18. The assessee has raised following grounds of appeal;
i. The Learned CIT(A) has erred in mentioning that there has been a delay of 1943 days in filing the appeal before his good self The Learned CIT(A) has ignored that the
> The Demand was confirmed by Learned Jurisdictional Assessing Officer on 30th November 2023
> Appeal filed before his good self on 11 January 2024
> Further, the Covid-period has not been considered.
ii. The Learned CIT(A) has not considered the facts and circumstances of the given case before dismissing the case in limine.
iii .The action of the Learned CIT(A) are contrary to the view fortified by the judgment of Hon’ble Supreme Court in the case of CIT Vs Shelly Products (261 ITR 367) wherein the Court observed that, if any assessee on account of inadvertent mistake or ignorance included in his income any amount which is exempt from income-tax or is not income within the contemplation of the law, the assessee may bring this to the notice of the income-tax authorities, which if satisfied may grant relief and refund the excess taxes paid.
iv. The CPC/ learned Assessing Officer has failed to act in accordance with CBDT Circular No. 14 dated 11 April 1955 which provides the following: “Officers of the department must not take advantage of ignorance of an assessee as to his rights. Although the responsibility for claiming refunds and reliefs rests with the assessee, on whom it is imposed by law; officers should-
a. draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reasons or other;
b. freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refund and reliefs.”
v. Tax cannot be levied on notional income. The action of Learned CIT(A) is contrary to Article 265 of the Constitution of India which provided that no tax shall be collected or levied except with the authority of law.
2. Rival submissions of both the parties have been heard and record perused. The Ld. Authorised Representative (in short ‘AR’) of the assessee submits that the assessee is individual and during financial year 2016-17, relevant to assessment year (AY) 2017-18, the assessee was employed with Capgemini India Private Limited from 01.04.2016 to 07.11.2016 and subsequently joined MSCI Services Private Limited where he served for remaining five months. The total salary from both the employer during the relevant financial year was Rs. 10,31,378/-. However, while filing return, the assessee got confused between income from salary and gross total income and forgot to claim certain exemptions. The assessee, inadvertently, declared salary income from next financial year instead of current assessment year thereby offered excess income and also claimed TDS credit of subsequent year. The return of income was processed by CPC and a demand of Rs. 1,18,640/- was created. The assessee filed revised return of income on 07.06.2018. The revised return of income was not accepted. The assessee filed application under section 154 on 19.12.2018 which was rejected vide order dated 17.08.2018. The assessee again filed rectification application on 15.03.2019 which was rejected also vide order dated 17.04.2019. Aggrieved by the action of AO/CPC, the assessee filed appeal before CIT(A) on 11.01.2024. The appeal of assessee was dismissed in limine by not condoning delay in filing appeal. Further aggrieved, the assessee has filed this appeal.
