Case Law Details
Poorvanchal Vikas Foundation Vs ITO (ITAT Varanasi)
Held that rectification application u/s 154, after ROI being processed u/s 143(1)(a), for any typographical/ technical mistake reflected higher income than real income should be accepted by AO to verify the correctness of the total income of assessee
Facts-
The assessee submitted that at the time of filing of return of income for those two assessment years, the assessee declared the income at Rs. 26,477/- and Rs. 27,792/-, respectively. However, for the reasons not known to the assessee, this amount has been taken by the computer as well as by CPC at Rs. 26,47,737/- and Rs. 27,79,249/-, respectively. It was only a typographical mistake or may be a technical error due to which the total income declared by the assessee was enhanced by 10 times. After the ROI were processed by CPC under section 143(1)(a), the assessee realized this mistake and filed the application under section 154 of the Income Tax Act for both the years on 28.02.2018 which were rejected by the Assessing Officer, vide order dated 19th January, 2020.
On the other hand, the learned DR has submitted that the return of income filed by the assessee was processed and accepted under section 143(1) of the Act and therefore, there is no mistake apparent on record which can be rectified by the Assessing Officer under section 154 of the Act.
Conclusion-
The Assessing Officer is not supposed to take advantage of ignorance or mistake of assessee but the Assessing Officer is duty bound to assist the taxpayer in every reasonable way particularly in the matter of claiming and securing relief. The Assessing Officer should take the initiative in guiding the tax payer instead of taking advantage of mistake of the assessee. Even otherwise, the State is not supposed to take undue benefit or profit because of the mistake on the part of the assessee. The CBDT has been issuing guidance as well as instructions to the tax authorities / officers from time to time in this respect.
Held that once the assessee has brought into notice of AO that due to some typographical or technical mistake, the assessee has offered the income 10 times more to the actual income while filing the return of income. Then AO is expected to verify the correctness of the total income of the assessee. Though there is a remedy to revise the return but if the assessee could not revised its return of income within the period prescribed, it does not mean that there is no remedy for such a mistake leading to incorrect assessment.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
These two appeals by the assessee are directed against the two separate orders of the CIT(A) (National Faceless Appeal Centre), Delhi both dated 22.03.2022 for the assessment years 2013-14 and 2014-15, respectively. The assessee has raised the common grounds as under:-
“i. Because it was fully explained the receipt of the assessee for the relevant year had been only Rs. 26,477/- but by mistake when the income was feeded in the computer and it has been changed to Rs. 2647634/- and the assessment has been completed u/s 143(1) of the I.T. Act, 1961 on the round figure of Rs. 26,47,740/-.
ii. Because it was fully explained that the assessee raised the matter before the Ld. Assessing Officer u/s 154 of the I.T. Act, 1961 but the same has been rejected.
The Ld. CIT(A) has also erred and acted illegally in confirming the assessment at Rs. 26,47,737/- instead of the correct figure as per balance sheet to the tune of Rs. 26,477/-.
iii. Because the Ld. CIT(A) has erred and acted illegally in not taking into the account books of accounts, the audited balance sheet, Bank Accounts and all other primary documents submitted in the appeal.
iv. Because the order u/s 143(1)(a) / 154 of the I.T. Act, 1961 is bad both on facts and law and not maintainable.”
2. The assessee is a society came into existence on 11.6.2004 and was registered under Societies Registration Act from 11.02.2009. The assessee filed its return of income for both the assessment years i.e. 2013-14 and 2014-15 on 28.03.2015. The return was processed under section 143(1) on 16.3.2016 accepting the return of income for the assessment year 2013-14 at Rs. 26,47,727/-and for the assessment year 2014-15 at Rs. 27,79,249/-. Thereafter, the assessee filed an application under section 154 on 28.02.2018 for rectification of the mistake in the total income for both the years. When no order was passed by the Assessing Officer on the said application under section 154, the assessee also filed a revision petition under section 264 on 1.10.2019 for both the years. Since, there was a delay in filing the revision petition under section 264, it was not entertained by the Commissioner. Thereafter the Assessing Officer has rejected the application filed under section 154 of the Act, vide order dated 29th January, 2020 for both the years. The assessee filed appeals before the CIT(A) against the order passed by the Assessing Officer under section 154 of the Act. The CIT(A) has dismissed the appeals of the assessee on the ground that there was no mistake in the processing of the return under section 143(1)(a) and therefore, there is no infirmity in the order of the Assessing Officer dated 29th January, 2020 passed under section 154 of the Act.
3. Before the Tribunal, the learned AR of the assessee has submitted that at the time of filing of return of income for those two assessment years, the assessee declared the income at Rs. 26,477/- and Rs. 27,792/-, respectively. However, for the reasons not known to the assessee, this amount has been taken by the computer as well as by CPC at Rs. 26,47,737/- and Rs. 27,79,249/-, respectively. It was only a typographical mistake or may be a technical error due to which the total income declared by the assessee was enhanced by 10 times. After the return of income were processed by CPC under section 143(1)(a), the assessee realized this mistake and filed the application under section 154 of the Income Tax Act for both the years on 28.02.2018 which were rejected by the Assessing Officer, vide order dated 19th January, 2020. The ld. AR has referred to the bank account of the assessee and submitted that there was no transaction of such a deposit which can support such a high amount of total amount. He has further submitted that as per the books of accounts comprising of balance-sheet, income and expenditure account for these two years, it is clear that even the total receipt including donation, subscription and administrative charges were not more than 30,000/-therefore, the question of declaring the total income of Rs. 26,47,737/- and Rs. 27,79,249/-, does not arise. He has thus submitted that the income of the assessee may be directed to be assessed which is the real income of the assessee.
4. On the other hand, the learned DR has submitted that the return of income filed by the assessee was processed and accepted under section 143(1) of the Act and therefore, there is no mistake apparent on record which can be rectified by the Assessing Officer under section 154 of the Act. He has relied upon the orders of the authorities below.
5. I have considered the rival submissions as well as relevant material on record. The assessee in the application under section 154 sought to rectify the mistake in total income as assessed while processing the returns under section 143(1) at Rs. 2647740/- and Rs. 2779250/- for the assessment years 2013-14 and 2014-15 as against Rs. 26,477/- and Rs. 27,792/-. The Assessing Officer rejected the application of the assessee by identical orders dated 19th January, 2020 as under:-
Thus, the Assessing Officer rejected the application on the ground that on careful consideration, it is noted that the rectification of mistake sought by the assessee does not come under the provisions of section 154 of the Act. Against the rejection of the application under section 154, the assessee filed the appeal before the CIT(A) and submitted as under:-
“6.1 SUBMISSION OF THE A.R.:- During appellate proceedings, the Appellant filed following online written submission through e-filing portal dated 05.10.2021.
1. “ That the appeal for both the year i.e. A.Y. 2013-14 and A.Y. 2014-15 are identical and based on same ground and therefore the same submission is being made for both assessment years.
2. That the assessee is a registered society which came into existence on 11.06.2004 and has been granted registration under Society Registration Act on 11.08.2009 and later on this registration renewed on 11.08.2009 for five years.
3. That the assessee has submitted his return of income for A.Y. 2013-14 and A.Y. 2014-15 on 28.03.2015
4. That the computer operator who submitted the return of income for A.Y. 2013-14 at Rs. 2677 and for A.Y. 201-15 for Rs. 27,792/- and for the reason not know to the assessee this amount has been taken by the computer as well as by CPC at Rs. 26,47,737/- and Rs. 27,79,249/- respectively. That on these two figures the computation u/s 143(1)(a) has been passed for both the year and huge demand has been created.
5. That the assessee submitted the application u/s 154 of the IT Act for A.Y. 2013-14 and A.Y. 2014-15 on 28.02.2018 and also submitted a written argument u/s 154 on 04.09.2019. The Ld. Assessing officer communicated the assessee verbally that he will not entertain the application u/s 154 as it has no mistake apparent on record, there was no written order passed by him.
6. That the assessee being aggrieved and having no remedy submitted revision petition before PR. CIT, Varanasi on 01.10.2019 for the both the years.
7. That the assessee has received a communication from the Ld. Commissioner of Income Tax Varanasi who has jurisdiction over the assessee and he has asked the assessee to explain these two question as under:
i) The DCIT, CPC is subordinate to Commissioner of Income Tax CPC and not to Pr. Commissioner of Income Tax, Varanasi.
ii) The revision petition may be filed within one year from the date of order whereas in this case, it has been filed on 01.10.2019, in this way, the application which was to be submitted latest by 16.03.2017 is delayed by two years.
iii) That the assessee has filed two application dated 11.06.2018 and 04.09.2019 to pursue the matter before the Ld. Assessing officer. The copies of all application are attached.
8. That the delay cause in furnishing the revision petition u/s 264 was not intentional and in absence of order u/s 154, the assessee have to file their revision petition when he came to know that his application is going to be rejected.
9. That the assessee has received order u/s 154 of the IT Act, 1961 of the Ld. Assessing Officer dated 29.01.2020. A copy of the same is attached. In view of this order, it can never be said that the application of the assessee is belated or late.
10. That so far as the subordinate of the DCIT, CPC to the Commissioner of Income Tax Varanasi is concern, it is an established law that the jurisdiction of the CPC and Assessing Officer both are concurrent and in view of this concern jurisdiction the CIT, Varanasi as well as CIT CPC both have the jurisdiction over the assessee and both have right to decide revision petition/s 264 of the Act.
11. That so far as the Income of the assessee is concern, the assessee submitted herewith the bank account and on perusal thereof, it would be found that the assessee has never been in possession of Rs. 2 lac or 20 lac or 22 lac, his total deposit in the account in beginning was Rs. 50000/- and latest peak amount is here is Rs. 107394/-. There is entry only of interest. That the deposit of Rs. 97800/- on 04.04.2016 is from the Government for the training programme organized by the assessee for skill development and withdrawal of Rs. 96000/- pertains to the expenditure and payment of the salary etc.
12. That it is important to mention that as per provision of Section 12A(1) in the case of the society, if the gross receipt is more that taxable income, the society will have to be get their account audited by the C.A. it is surprising that the income is taken at an amount of more than Rs. 20Lacs without any audit report.
13.That on the date of hearing of Revision petition Pr. CIT, Allahabad on 26.02.2020 the petitioner/appellant has withdrawn his revision petition for both the year i.e. AY 2013-14 & 2014-15 and preferred appeal before your honour.”
The CIT(A) dismissed the appeal of the assessee in para 6.2 to 6.4 as under:-
“6.2 DECISION:- I have perused the intimation u/s 143(1) of the Act, submission of the appellant, order u/s 154 and other material available on record. On perusal of the different rows of the return of income in regard to ‘gross total income” (Row 5 of Part B-T-1) and ‘amount applied to charitable purposes in India during the previous year (Row 6 of Part B-T-1) it is noted that the appellant had filled up the same amount of Rs. 26,47,737/-at both places which cannot be a typo error. It at all, it is omission or commission of a mistake on the part of the appellant, while filing the return of income, the only alternative available to the appellant was to file a revised return u/s 139(5) of the Act within the time limit prescribed for this purpose.
6.3 Instead of filing a revised return, to correct any mistakes in filing the return, appellant approached unnecessarily Pr. CIT for a remedy u/s 64 of the Act. Failing there, it filed on application under section 1544 of the Act before the assessing office. On perusal of the rectification order of the AO that there is no mistake apparent from record in the order under Section 143(1) of the Act.
6.4 The present appeal is filed against the order passed u/s 154 of the Act and I am of the view that there is no infirmity in the said order dated 2901.2020. Hence, it is held that appellant has failed to establish that there as any mistake apparent from record in order passed u/s 154 of the Act. Ground of appeal is therefore, DISMISSED.”
6. Thus, the CIT(A) has concurred with the Assessing Officer and held that there is no infirmity in the order passed by the Assessing Officer as there was no mistake apparent from record.
7. It is pertinent to note that the Assessing Officer is a quasi –judicial authority and therefore, ought to have function in accordance with law and to assess the correct income of the assessee. The Assessing Officer is not supposed to take advantage of ignorance or mistake of assessee but the Assessing Officer is duty bound to assist the taxpayer in every reasonable way particularly in the matter of claiming and securing relief. The Assessing Officer should take the initiative in guiding the tax payer instead of taking advantage of mistake of the assessee. Even otherwise, the State is not supposed to take undue benefit or profit because of the mistake on the part of the assessee. The CBDT has been issuing guidance as well as instructions to the tax authorities / officers from time to time in this respect. Therefore, once the assessee has brought into notice of the Assessing Officer that due to some typographical or technical mistake, the assessee has offered the income 10 times more to the actual income while filing the return of income. Then the Assessing Officer is expected to verify the correctness of the total income of the assessee. Though there is a remedy to revise the return but if the assessee could not revised its return of income within the period prescribed, it does not mean that there is no remedy for such a mistake leading to incorrect assessment. Even otherwise, if assessee has offered an income to tax by mistake or due to technical mal functioning of computer system, the appellate authority has the jurisdiction to rectify such mistake and particularly to avoid the assessment of the income which is not the real income of the assessee. Accordingly, the mistake pointed out by the assessee in the applications under section 154 was required to be verified by the Assessing Officer from the bank account as well as the accounts maintained by the assessee. Prima facie it appears that for both the assessment years, the gross receipt of the assessee were not more than Rs. 32,000/- or Rs. 35,000/- and hence, the total income mentioned in the return of income and finally assess to tax at Rs. 2647740/- and Rs. 2779250/-, respectively for the assessment years 2013-14 and 2014-15 is not the real income of the assessee. Since neither the Assessing Officer nor the CIT(A) has verified the correct facts about the wrong income offered to tax by the assessee due to typographical mistake or technical mistake while filing the return of income therefore, the matter for both the assessment years are set aside to the record of the Assessing Officer for reconsideration of the same after a proper enquiry and verification of the record to find out the correct facts about the income of the assessee for these two assessment years and then assess the correct income of the assessee. Needless to say, the assessee be given an appropriate opportunity of hearing before passing the fresh order.
8. In the result, both the appeals of the assessee are partly allowed.
Order pronounced on 04.08.2022 at Allahabad, U.P. in accordance with Rule 34(4) of Income Tax (Appellate Tribunal) Rules, 1963.
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