Ramesh Singh Vs ITO (ITAT Agra)
Forgotten in the Return, Not Lost in Appeal: ITAT Revives PPF and NPS Deductions
An Omitted Claim Gets a Second Chance
The Agra Bench of the Income Tax Appellate Tribunal directed the Assessing Officer to allow deductions of ₹1,50,000 under Section 80C and ₹50,000 under Section 80CCD(1B), subject to verification, although the assessee had omitted both claims from his original return and had not filed a revised return.
The Tribunal held that appellate authorities are empowered to entertain fresh claims, even when they were not made in the return. It admitted the supporting documents as additional evidence and directed the Assessing Officer to verify them before granting relief. The decision gives an inadvertently omitted deduction an opportunity for examination rather than allowing the omission alone to determine the taxpayer’s liability.
Investments Made, Deductions Forgotten
The assessee, a Uttar Pradesh State Government employee, filed his return for Assessment Year 2020-21 on 21 July 2020, declaring total income of ₹6,94,730.
According to him, he had invested ₹1,50,000 in the Public Provident Fund and contributed ₹50,000 to the National Pension System, making him eligible for deductions under Sections 80C and 80CCD(1B), respectively. However, these deductions were inadvertently left out while filing the return.
To correct the omission, he filed a rectification application under Section 154. The CPC rejected the request. The assessee then approached the CIT(A), seeking allowance of the deductions on the basis of the investments actually made.
The controversy therefore concerned an omitted claim for statutory deductions supported by investment documents, rather than an attempt to claim relief without making the underlying investments.
CIT(A) Insists on a Revised Return
The CIT(A) rejected the appeal on the ground that the appropriate remedy for an omitted deduction was to file a revised return.
According to the first appellate authority, the assessee could not obtain the deduction by seeking rectification under Section 154. Consequently, the demand arising from the rectification order dated 4 October 2023 was confirmed.
This approach treated the failure to claim the deductions in the original or revised return as decisive. The assessee challenged that conclusion before the Tribunal, contending that the investments were genuine and that the claims deserved consideration on their merits.
A 258-Day Delay Was Condoned
The Tribunal appeal was filed with a delay of 258 days. In his condonation application, supported by an affidavit, the assessee explained that he had believed bona fide that rectification proceedings would resolve the issue.
He also stated that he was not legally trained, was unaware of the proper appellate remedy and had not deliberately delayed the appeal.
The Tribunal accepted the explanation as sufficient cause, condoned the delay and proceeded to adjudicate the appeal. This was a finding based on the explanation and affidavit furnished in the particular case.
Supporting Documents Placed Before the Tribunal
The assessee submitted that the non-claim was an inadvertent mistake and that the investments were supported by documentary evidence. He relied on the distinction between the powers of the Assessing Officer and those of appellate authorities.
His submissions referred to Goetze (India) Ltd., arguing that the restriction concerning a claim without a revised return applied to the Assessing Officer and did not curtail appellate powers.
He also filed an application under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963, seeking admission of documents relating to the PPF investment and NPS contribution. He contended that these documents were essential for a just determination of his entitlement.
Appellate Powers Permit Examination of Fresh Claims
The Tribunal relied on the Bombay High Court’s decision in CIT v. Pruthvi Brokers and Share Holders Pvt. Ltd., 349 ITR 336 (Bombay High Court), which recognises the power of appellate authorities to admit fresh claims even when they were not made in the original return.
It also referred to CBDT Circular No. 14 of 1955, observing that an eligible claim should not be denied because the assessee was ignorant of his rights.
The Tribunal further noted that the claims concerned investments in PPF and NPS, schemes duly notified by the Central Government. Considering these circumstances, the judicial precedent and the Board’s circular, it admitted the additional evidence and directed the Assessing Officer to allow both deductions after due verification.
Author’s Comments
The significant point is that failure to claim a deduction in the return need not foreclose its consideration in appeal. A genuine claim, supported by evidence, may still be examined through the appellate process. The principle that the restriction in Goetze (India) Ltd. is directed at the Assessing Officer and does not similarly restrict appellate authorities has repeatedly been recognised in subsequent decisions.
However, the order should not be read as holding that every omitted deduction must be allowed through Section 154. The Tribunal granted relief by exercising its appellate jurisdiction, admitting additional evidence and requiring verification. It did not lay down a general rule that every such omission constitutes a mistake apparent from the record.
Equally, the relief was conditional upon verification, rather than an unconditional allowance of ₹2 lakh. The decision preserves the taxpayer’s opportunity to establish eligibility while retaining the Assessing Officer’s responsibility to examine the supporting documents. An inadvertent omission should not, by itself, prevent an otherwise eligible deduction from receiving a proper hearing.
Cases Discussed
- CIT Vs Pruthvi Brokers & Shareholders Pvt. Ltd., (2012) 349 ITR 336 (Bombay High Court) — Relied upon by the Tribunal for the proposition that appellate authorities are empowered to admit fresh claims even when those claims were not made in the original return of income.
- Goetze (India) Ltd. Vs CIT, (2006) 284 ITR 323 (Supreme Court) — Cited in the assessee’s written submissions for the distinction between the Assessing Officer’s restriction on entertaining a fresh claim without a revised return and the wider powers of appellate authorities.
FULL TEXT OF THE ORDER OF ITAT AGRA
This appeal is directed against the impugned order dated 25.03.2025 passed in appeal No NFAC/2019-20/10292716 by the NFAC (hereinafter referred to as the Commissioner of Income Tax), u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for the A.Y. 2020-21, wherein ld. CIT (A) has dismissed assessee’s appeal.
2. The present appeal has been filed delayed by 258 days. The assessee has filed a condonation application and the relevant extract of the same is reproduced as under :
“ The appellant most respectfully submits as under :
1. That the appeal against the order passed by the Ld. Commissioner of Income Tax (Appeals) u/s. 250 could not be filed within the prescribed period of 60 days.
2. That delay occurred due to bona file belief that rectification proceedings would resolve the issue.
3. That appellant is not legally trained and was unaware of proper appellate remedy.
4. That delay is neither intentional nor deliberate.
5. That the appellant has strong case on merits.
It is prayed that delay may kindly be condoned in the interest of justice.”
2.1. The above facts are supported by an affidavit dated 12.02.2026 filed by the assessee.
2.2 Considering the facts stated in the delay condonation application, we are satisfied that there was sufficient cause for the delay in filing the appeal. Accordingly, we condone the delay of 258 days in filing of this appeal and adjudicate the appeal on merits.
3. In this case, assessee had filed his return of income on 21.07.2020 for A.Y 2020-21 declaring total income of Rs. 6,94,730/-. As per the facts noted from the return of income filed by the assessee, the assessee is a State Govt. employee in U.P. Government. It is submitted by the assessee that he had genuinely invested a sum of Rs.1,50,000/- in PPF and paid an amount of Rs. 50,000/- in NPS, making him eligible to claim deduction of Rs.1,50,000/- u/s. 80C and Rs.50,000/- u/s. 80CCD(1B) of the Act from his gross total income, which inadvertently was not claimed while filing his return of income. The Assessee filed a petition u/s. 154 of the Act, requesting for allowance of the above claims, which was rejected by the CPC. Aggrieved with the same, assessee filed an appeal before learned CIT(A), wherein in the grounds, it was stated that section 80C rebate was not claimed in the original return, which the assessee wants to correct. However, the same was not accepted by learned CIT(A) and learned CIT(A) dismissed the appeal of the assessee. The relevant extract of the said order is reproduced as under :
“Findings & Decision:-I have gone into facts and circumstance of the case. The appellant has pleaded that he forgot to avail deduction u/s 80 of the Act in his original ITR for the A.Y. 2020-21. The appellant applied for rectification u/s 154 of the Act and has not been given opportunity to avail deduction u/s 80 vide rectification order issued u/s 154 for A.Y. 2020-21. It is pertinent to mention here that if the appellant omitted to avail deduction u/s 80 in his original ITR, the option available with him is to file revised return of income. He cannot avail deduction u/s 80 by applying rectification u/s 154 of the Act. Therefore, the demand ascertained after the rectification order u/s 154 dated 04.10.2023 is hereby confirmed and the ground of appeal of the appellant is dismissed.”
4. Aggrieved with the said order, assessee is in appeal before us on the following grounds of appeal :
“1. The Ld. CIT(A) erred in confirming the action of CPC in not allowing deduction under section 80C of ₹1,50,000.
2. The Ld. CIT(A) erred in confirming non-allowance of deduction under section 80CCD(1B) of ₹50,000.
3. The Ld. CIT(A) failed to appreciate that the appellant had made genuine investments eligible under Chapter VI-A.
4. The Ld. CIT(A) erred in holding that deduction cannot be allowed through rectification u/s 154 without considering that the claim was apparent from record and supported by documentary evidence.
5. The order passed is bad in law and against the principles of natural justice.
6. The appellant craves leave to add, amend or alter any ground at the time of hearing.”
5. In this regard, assessee has filed a written submission and also an application under Rule 29 of Income Tax Appellate Tribunal Rules, 1963, which are respectively reproduced as under :
Written submissions :
May it please the Hon’ble Tribunal:
1. The appellant had genuinely invested Rs.1,50,000/- under section 80C and Rs.50,000/- under section 80CCD(1B).
2. The non-claim was purely inadvertent and technical mistake while filing return.
3. The investments are supported by documentary evidence (PPF)
4. It is settled law that appellate authorities have power to entertain legitimate claims.
5. The Hon’ble Supreme Court in Goetze (India) Ltd. has held restriction applies only to AO and not to appellate authorities.
6. The appellant is not making a fresh claim but seeking allowance of statutory deduction actually eligible.
7. Substantial justice should prevail over procedural technicalities.
It is therefore prayed that deduction under section 80C and 80CCD(1B) be allowed.”
APPLICATION UNDER RULE 29 OF ITAT RULES, 1963:
“APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE.
1. That the appellant seeks to file documentary evidence relating to investments under section 80C and 80CCD(1B).
2. That these documents could not properly appreciated during earlier proceedings.
3. That the evidence goes to the root of the matter and is essential for just decision.
4. That non-admission would cause grave injustice.
It is prayed that additional evidence may kindly be admitted under Rule 29.”
5.1 At the time of hearing before us, Learned AR supported the above written submission and requested for admission of the additional evidence in support of his claim.
6. On the other hand, Learned Sr.DR supported the orders of authorities below.
7. We have heard both the parties and perused the material on record. In this case, the claim of the assessee for deduction of Rs.1,50,000/- u/s. 80C and Rs.50,000/- u/s. 80CCD(1B) of the Act was denied by the CPC, which was confirmed by the learned CIT(A) for the reason that the said claim was not made by the assessee in the original return of income and also not claimed by filing a revised return of income. The Ld. CIT(A) further held that the assessee cannot avail deduction u/s 80 by applying rectification u/s 154 of the Act. In this regard, the Hon’ble Bombay High Court in case of CIT vs. Pruthvi Brokers and Share Holders Pvt. Ltd., 349 ITR 336 (Bombay) has held that appellate authorities are empowered to admit fresh claims even if not made in the original return of income. Further, the CBDT Circular No. 14 of 1955 also states that an eligible claim of the assessee will not be denied by the department due to ignorance of the assessee as to his rights. Further, we also take note that the claim of the assessee for deduction of Rs.1,50,000/- by making investment in PPF u/s. 80C and further deduction of Rs.50,000/- by way of contribution to National Pension Scheme u/s. 80CCD(1B) are being claimed in the schemes which are duly notified by the Central Government. Keeping these facts in view and the judicial precedent as cited above and the Board’s circular as referred above, we direct the Assessing Officer to allow the claim of the assessee of Rs.1,50,000/- u/s. 80C and Rs.50,000/- u/s. 80CCD(1B) of the Act for deduction after due verification. In this regard the additional evidences filed under Rule 29 of the ITAT Rules, 1963 are admitted, which the AO shall verify before allowing the claim made by the assessee.
8. In the result, the appeal is allowed in the terms indicated above.
Order pronounced in the Open Court on 29/09/2026
