Shital Bachubhai Vaidya, Vadodara V. The ADIT CPC, Banglore

ITA 42/AHD/2022

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 4708 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-11-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 09-02-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: INCORRECTLY MENTIONING DIVIDEND INCOME
• Keywords: Rectification of order; Revised return
• Section: 144; 10; 154; 139(5); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I .T .A . No .4 2/ A h d / 2 02 2 ( A s se ss m e nt Y e a r : 20 17- 1 8 ) S h ita l B a ch ub h a i V aid ya - I n d iv id u a l, 6 1/ A , S un r is e P ar k So c ie t y, V a sn a, V a do d ar a- 3 9 00 15 V s . A D I T C PC , B a n ga lo r e [P A N N o.A C B P V 2 8 2 8A] (Appellant) .. (Respondent) Appellant by : Shri M. J. Shah & Shri Rushin Patel, A.Rs. Respondent by: Ms. Saumya Pandey Jain, Sr. D.R. D a t e of H ea r i ng 06.11.2023 D a t e of P r o no u n ce me nt 13.12.2023 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeal), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi in DIN & Order No. ITBA/NFAC/S/250/2021-22/1037845489(1) vide order dated 16.12.2021 passed for Assessment Year 2017-18. 2. The assessee has taken the following grounds of appeal:- “1. The Learned C.I.T. (Appeals) National Faceless Appeal Centre has wrongly disallowed the exempt income u/s. 10 for which holding statement of each investments is filed and it is on the record. 2. In Revised computation of income was written all exempt income of Rs. 17,50,637/- you honourable body is fact finding body and fact is the income of Rs. 17,50,637 is exempted income u/s 10 is as under and another Rs.2,58,827 was for ITA No. 42/Ahd/2022 Shital Bachubhai Vaidya - Individual vs. ADIT Asst.Year –2017-18 - 2– PPF and IRDA Tax Free Interest which is already mentioned in revised return of income: IIFCL Tax Free Interest 1,75,259 Power Finance Tax Free Interest 2,90,128 HUDCO Tax Free Interest 2,03,150 IRFC Bond Tax Free Interest 2,12,664.96 REC Tax Free Interest 2,25,842 National Highway Authority Tax Free 17,027 NHB Tax Free Interest 1,75,821 NTPC Ltd. Tax Free Interest 11,963 Dividend on TPKAMARANJAN Port Ltd. 1,66,700 Reliance Money Fund 2,72,082 Total Comes to 17,50,637 IRDA Tax Free Interest 1,30,854 PPF Interest 1,27,973 Total Comes to 2,58,827 Sir, from above table there are all tax free interest income from Government companies except two companies which are dividend incomes. One casn also find out from attached holding statements. Your appellant craves, leave to add or alter or modify the above grounds of appeal on or before the date of final hearing.” 3. The brief facts of the case are that for the impugned year under consideration, the assessee filed return of income in which the dividend received by the assessee amounting to Rs. 17,50,637/- was claimed to be exempt from taxation under Section 10 of the Act. However, the claim of the assessee was not allowed by the Assessing Officer and an order / intimation under Section 143(1) of the Act was passed making addition / adjustment of Rs. 17,50,637/-. Thereafter, the assessee filed application under Section 144 of ITA No. 42/Ahd/2022 Shital Bachubhai Vaidya - Individual vs. ADIT Asst.Year –2017-18 - 3– the Act on 18.01.2020 claiming that the aforesaid amount was exempt from tax under Section 10 of the Act. Order under Section 154 of the Act was passed on 05.02.2020 and the request of the assessee claiming the above income as exempt was rejected by the Assessing Officer. 4. In appeal, against the order under Section 154 of the Act, the assessee submitted before the Ld. CIT(A) that the aforesaid income of Rs. 17,50,637/- is actually interest income instead of dividend income and the aforesaid interest income was received from investments made in Government Companies like IIFCL, Power Finance Corporation, HUDCO, Indian Railway Finance Corporation, Rural Electrification Corporation Ltd., NHAI, TPK Port Ltd. and NTPC. The assessee also submitted the holding statement in the aforesaid Government Companies which reflected ISIN Number of individual investment in Government Companies, in support of the contention that the aforesaid amounts were received by the assessee as “interest income” from investments made in Government Companies. However, the Ld. CIT(A) rejected the contentions of the assessee with the following observations:- “d) In view of the facts and respectfully following the judgements as outlined in paras 8.2(a) to 8.2 (c) of this order the claim made by appellant in application u/s 154 cannot be said to be mistake apparent from record due to following reasons. • IF, the ITR filed and application filed u/s 154, the Appellant stated that income of Rs. 17,50,637/- is Exempt Dividend income u/s 10 of the Act. However, in the appeal filed the appellant has changed its stand stating that it is Exempt Interest Income and not Exempt Dividend Income as claimed earlier. In support the Appellant filed holding statements in Govt. Companies which reflect ISIN number of individual investments. • These claims made by the Appellant cannot be said to be mistake Apparent from record as they are not obvious or patent mistake or self evident mistakes. They require an examination or argument to establish them i.e. whether it is Interest Income as now claimed or Dividend Income as earlier claimed. Further, it has to be verified whether such Interest Income earned is Exempt or not. ITA No. 42/Ahd/2022 Shital Bachubhai Vaidya - Individual vs. ADIT Asst.Year –2017-18 - 4– • These claims have to be established by long drawn process of reasoning on points where there may be conceivably two opinions. • In view of these facts the action of AO in rejecting the application u/s 154 of the Act is upheld. Grounds of Appeal Nos. 1 to 2 are dismissed.” 5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A) rejecting the contention of the assessee. 6. Before us, the assessee submitted that from the facts placed on record, it is evident that the assessee had earned interest income from Government Companies, which is exempt under Section 10 of the Act. However, inadvertently, in the return of income, the assessee had stated that the aforesaid income was “dividend income” (as against interest income) and claimed that such dividend income was exempt from tax. However, this was an inadvertent mistake made by the assessee by incorrectly mentioning dividend income instead of interest income, but at the same time notably the assessee had claimed the aforesaid receipts as exempt from under Section 10 of the Act. It was submitted that clearly the aforesaid interest income was exempt from tax under Section 10 of the Act, however, Ld. CIT(A) simply brushed aside the contention of the assessee and did not go through the details submitted which would clearly prove that the aforesaid amount was exempt from tax under Section 10 of the Act. Accordingly, the Counsel for the assessee submitted that the matter may be restored back to the file of the Ld. CIT(A) so as to carry out the necessary verification and in case it is found that the aforesaid income is exempt from tax under Section 10 of the Act, the necessary relief may be given to the assessee. 7. In response, Ld. D.R. placed reliance on the observations made by the Ld. CIT(A) in the appellate order. ITA No. 42/Ahd/2022 Shital Bachubhai Vaidya - Individual vs. ADIT Asst.Year –2017-18 - 5– 8. We observe that in the case of DCIT vs. Justice Dilip Kumar Seth reported at [2006] 98 ITD 241 (Kol.):: [2006] 101 TTJ 90 (Kol), the ITAT held that the Assessing Officer is well competent to rectify any mistake in the intimation u/s.143(1) of the Act which was brought to his notice by the assessee. Further, the Hon’ble Delhi High Court in the case of Pawan Kumar Aggarwal vs. CIT in ITA No.199/2014 has held that from bare reading of section 154 of the Act, it is apparent that the power of rectification extends to amendment of an intimation or deemed intimation u/s.143(1) of the Act. The Hon’ble High Court further held that this power of rectification enures even after the matter has been considered and decided in any proceedings by way of appeal or revision. It was held that necessarily this power extends even at the stage of the appeal and further appeal to the ITAT. In the case of Zen Tobacco (P.) Ltd. v ACIT 65 taxmann.com 320 (Ahmedabad - Trib.), the assessee had filed its return of income declaring certain income and the same was processed under section 143(1). Subsequently, on verification of assessee's record, it was noticed that the provision of deferred tax assets of certain amount, which ought to have been deducted from total income, was not deducted but added back to amount of profit and, thus, taxable income was overstated. Therefore, the assessee filed an application under section 154 seeking for rectification of mistake along with the revised statement of income and claimed a refund. The Assessing Officer rejected the application observing that the assessee should have filed a revised return rather than taking recourse to section 154, which was not permissible under the Act. On appeal, the Commissioner (Appeals) dismissed the appeal. On second appeal, the Ahmedabad ITAT held that from the provisions of sections 139(1), 139(5) and 143(1) it is evident that it is not the case that revenue authorities have to accept whatever has been stated in the return and compute the taxable income ITA No. 42/Ahd/2022 Shital Bachubhai Vaidya - Individual vs. ADIT Asst.Year –2017-18 - 6– mechanically. As per provisions of section 143(1), the concerned revenue authority has to examine whether any claim as made by the assessee is correct or not. This includes understatement and overstatement of the income. If the revenue authority failed to take note of any incorrect claim with regard to total income of the assessee, such failure would necessarily mean mistake apparent from the record. In the case of Shri Chetanbhai Ramjibhai Avaiya vs. ITO (ITA No. 364/Srt/2017 A.Y. 2014-15 dated 15.07.2022) the ITAT has held as under:- “8. We have considered the rival submission of both the parties. We find that there is no dispute on the facts of the present case that at the time of filing of return of income, assessee offered LTCG on sale of agriculture land and made payment tax of Rs.34,87,890/- . As per Ld. AR of the assessee, the assessee realized his mistake and filed an application for rectification under section 154 of the Act by taking plea that the agriculture land is not falls under the definition of capital asset. The said application of assessee was dismissed by Assessing Officer by holding that in the order under section 143(1) no prima facie adjustment can be made nor any levy of additional income can be made by the Assessing Officer. The Assessing Officer cannot visit beyond that return except to compute tax or interest after adjustment of prepaid taxes. The Assessing Officer have no power to disturb the income disclosed in the return of income. And the assessee has failed to furnish any revised return, after taking into consideration all the facts of the case. The Ld. CIT(A) confirmed the action of Assessing Officer with the observation that the “mistake is by the appellant in computation of income”. 9. Now before us, the Ld. AR for the assessee vehemently relying upon the CBDT Circular No.14(XL-35) dated 11.04.1955 and submitted that though the assessee committed mistake which was realized later on, however, it was the duty of officer of the Department not to take the advantage of ignorance of as about his right. The Ld. AR for the assessee submits that the CBDT’s Circular dated 11.04.1955 has not been withdrawn till now and various courts including Hon'ble jurisdictional High Court by referring the said CBDT’s Circular dated 11.04.1955 held that it is the policy of Department that office should not take advantage of ignorance of the ae about his right. Besides reliance on various case laws, Ld. AR for the assessee vehemently relied on the decision of Hon'ble jurisdictional High Court in the case of Ahmedabad Keiser-E-Hind Mills Co. Ltd. (supra), wherein the Hon'ble jurisdictional High Court while referring the said CBDT”s Circular dated 11.04.1955 held that is incumbent on the Income Tax Officer to advice the assessee to claim relief if any preceding either at this stage of original am that the assessee was entitled to such relief.” ITA No. 42/Ahd/2022 Shital Bachubhai Vaidya - Individual vs. ADIT Asst.Year –2017-18 - 7– 9. In our considered view, looking into the instant facts placed before us and in the interest of justice, the matter is being restored to the file of the Ld. CIT(A) to carry out necessary verifications and if the claim of the assessee is found to be correct, may be allowed relief to the assessee in accordance with law. 10. In the result, the appeal of the assessee is allowed for statistical purpose. This Order pronounced in Open Court on 13/12/2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 13/12/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/ Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 04.12.2023 2. Date on which the typed draft is placed before the Dictating Member 05.12.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S 07.12.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .12.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 13.12.2023 7. Date on which the file goes to the Bench Clerk 13.12.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................