Goodwill Management Private Limited, Bangalore V. The Deputy Commissioner Of Income Tax (CPC), Bangalore

ITA 670/BANG/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6535 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-01-2021
• Assessment Year: 2018-2019
• Appeal Filed On: 19-10-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH GHALE
• Assessee Lawyers: SUMAN LUMKAR
• Keywords: Business income; Earning of tax free income; Revised return; Ignorance of law; Set aside
• Section: 143(1)

Judgement Text

ITA NO.670/BANG/2020 GOODWILL MANAGEMENT PVT. LTD., BENGALURU IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: BANGALORE BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER SMC ITA NO.670/BANG/2020 ASSESSMENT YEAR: 2018-19 GOODWILL MANAGEMENT PVT. LTD. NO.43, 1 ST FLOOR, KILARI ROAD AVENUE ROAD CROSS BENGALURU 560 053. PAN NO : AACCG2858B VS. DEPUTY COMMISSIONER OF INCOME-TAX (CPC) BANGALORE APPELLANT RESPONDENT APPELLANT BY : SMT. SUMAN LUMKAR, A.R RESPONDENT BY : SHRI GANESH GHALE, STANDING COUNSEL DATE OF HEARING : 29.03.2021 DATE OF PRONOUNCEMENT : 15.04.2021 O R D E R THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER DATED 18.9.2020 PASSED BY LD. CIT(A)-3, BENGALURU A ND IT RELATES TO THE ASSESSMENT YEAR 2018-19. THE ASSESSEE IS AGGRI EVED BY THE DECISION OF LD. CIT(A) IN CONFIRMING THE ADJUSTMENT MADE TO THE TOTAL INCOME IN THE INTIMATION ISSUED U/S 143(1) OF THE I NCOME-TAX ACT,1961 ['THE ACT' FOR SHORT]. 2. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING NIL INCOME ON 20.9.2018 AND THE SAME WAS PROCESSED U/S 143(1) OF THE ACT ON 10.6.20 19. IN THE COMPUTATION OF INCOME, THE ASSESSEE HAD CLAIMED DIV IDEND INCOME OF ITA NO.670/BANG/2020 GOODWILL MANAGEMENT PVT. LTD., BENGALURU PAGE 2 OF 5 RS.13.37 LAKHS AS EXEMPT. HOWEVER, THE ASSESSEE OM ITTED TO FILL THE DETAILS OF EXEMPT IN SCHEDULE-EI IN THE STATUTORY RETURN FORM PRESCRIBED FOR FILING RETURNS. IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAD MENTIONED THAT THE DIVIDEND INCOME OF RS.13.37 LAKHS IS EXEMPT IN SCHEDULE BP RELATING TO COMPUTATION OF INCOME FROM BUSINESS OR PROFESSION. HENCE, WHILE PROCESSING RETURN U/S 143(1) OF THE ACT, THE CENTRALISED PROCESSING CENTRE (CPC) DID NOT GRA NT EXEMPTION CLAIMED BY THE ASSESSEE AND ACCORDINGLY, COMPUTED T HE TOTAL INCOME OF THE ASSESSEE AT RS.13.37 LAKHS. ACCORDINGLY, IT RAISED DEMAND UPON THE ASSESSEE. 3. THE ASSESSEE CHALLENGED THE ADJUSTMENT MADE IN T HE INTIMATION GIVEN U/S 143(1) OF THE ACT BY FILING AP PEAL BEFORE LD. CIT(A). THE FIRST APPELLATE AUTHORITY OBSERVED THA T THE ASSESSEE HAS OMITTED TO MENTION THE DETAILS OF EXEMPT INCOME IN SCHEDULE EI. HE ALSO OBSERVED THAT THE ASSESSEE DID NOT FILE REVISE D RETURN OF INCOME, EVEN THOUGH THE DISCREPANCY WAS INFORMED BY CPC TO THE ASSESSEE. ACCORDINGLY, THE LD. CIT(A) DECLINED TO INTERFERE W ITH THE INTIMATION ISSUED U/S 143(1) OF THE ACT. AGGRIEVED, THE ASSES SEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. 4. THE LD. A.R. SUBMITTED THAT EVEN THOUGH, THE A SSESSEE HAS FURNISHED DETAILS OF EXEMPT INCOME IN SCHEDULE BP, YET IT HAS FAILED TO REPORT THE SAME IN SCHEDULE EI, WHICH IS THE SCH EDULE PRESCRIBED IN THE RETURN OF INCOME FOR REPORTING EXEMPT INCOME . HENCE THE EXEMPTION HAS BEEN DENIED BY CPC WHILE PROCESSING R ETURN U/S 143(1) OF THE ACT. THE LD. A.R. SUBMITTED THAT THE DIVIDEND INCOME IS NOT TAXABLE UNDER THE ACT AND HENCE, THE EXEMPTI ON COULD NOT HAVE BEEN DENIED BY THE CPC. SHE FURTHER SUBMITTED THAT THE ERROR HAS OCCURRED ON INADVERTENCE OMISSION OR DUE TO IGNORAN CE WHILE FILLING THE RETURN OF INCOME. ACCORDINGLY SHE SUBMITTED TH AT THE SAME CANNOT BE USED TO DENY THE EXEMPTION TO THE ASSESSE E. THE LD. A.R. ITA NO.670/BANG/2020 GOODWILL MANAGEMENT PVT. LTD., BENGALURU PAGE 3 OF 5 FURTHER RELIED ON THE FOLLOWING DECISIONS TO CONTEN D THAT THE ASSESSEE SHOULD BE ALLOWED EXEMPTION CLAIMED BY IT EVEN THOU GH THE SAME WAS NOT REPORTED IN SCHEDULE EI: A) SUMAN CHANDRA G. MEHTA VS. ITO (ITA NO.564/MUM/2 012 DATED 24.1.2015). B) ACIT VS. RUPAM IMPEX (2016) 66 TAXMAN.COM 181 (R AJ.) THE LD. A.R. SUBMITTED THAT THE LD. CIT(A) WAS NOT CORRECT IN OBSERVING THAT THE ASSESSEE HAS NOT RESPONDED TO TH E DEFICIENCY POINTED OUT BY THE CPC INVITING OUR ATTENTION TO PA GE NO.118 OF THE PAPER BOOK, WHEREIN COPY OF RESPONSE GIVEN BY THE A SSESSEE IS PLACED. THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAS DULY R ESPONDED TO THE DISCREPANCY POINTED OUT BY THE CPC BUT THE SAME HAS NOT BEEN TAKEN INTO ACCOUNT WHILE ISSUING INTIMATION U/S 143(1) OF THE ACT. 5. ON THE CONTRARY, THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAS NOT REPORTED THE DETAILS OF EXEMPT INCOME IN SCHED ULE EI, WITHOUT WHICH THE CPC COULD NOT GRANT EXEMPTION CLAIMED BY THE ASSESSEE. ACCORDINGLY, HE SUPPORTED THE ORDER PASSED BY LD. C IT(A). 6. I HEARD THE RIVAL CONTENTIONS AND PERUSED THE RE CORD. I NOTICED THAT THE ASSESSEE HAS MENTIONED THAT THE DIVIDEND I NCOME OF RS.13.37 LAKHS IS EXEMPT IN SCHEDULE BP RELATING TO COMPUTATION OF BUSINESS INCOME. HOWEVER, THE DETAILS OF EXEMPT INCOME WERE MENTIONED IN THE SCHEDULE EI OF THE RETURN OF INCOM E. IN VIEW OF THE SAME, THE CPC HAS NOT GRANTED EXEMPTION TO THE ASSE SSEE. THE QUESTION THAT ARISES IS WHETHER THE INADVERTENT ERR OR COMMITTED BY THE ASSESSEE WHILE FILLING UP THE RETURN OF INCOME FILED THROUGH ELECTRONIC MODE WOULD BE FATAL AND WOULD DISENTITLE THE ASSESSEE FROM EXEMPTION, WHICH IS OTHERWISE ALLOWABLE AS PER THE PROVISIONS OF THE ACT. AN IDENTICAL ISSUE WAS EXAMINED BY THE MUMBAI BENCH OF TRIBUNAL IN THE CASE OF SUMAN CHANDRA G. MEHTA (SUP RA). FOLLOWING ITA NO.670/BANG/2020 GOODWILL MANAGEMENT PVT. LTD., BENGALURU PAGE 4 OF 5 OBSERVATIONS MADE BY THE TRIBUNAL IN THE ABOVE SAID CASE ARE RELEVANT HERE: 4. WHEN THIS MATTER WAS AGITATED BEFORE THE LD. C IT(A), THE CIT(A) WAS OF THE OPINION THAT IT WAS A INCORRE CT CLAIM ON ACCOUNT OF THE ASSESSEE, FAILING TO REFLECT THE COR RECT DETAILS IN THE RETURN OF INCOME, AS PER COMPUTERIZED PROCESSING PR OGRAMME, THE A.O. HAS RIGHTLY MADE ADJUSTMENTS FOR THIS INCORREC T CLAIM FOR DEDUCTION AND HELD THAT THERE IS NO MISTAKE IN THE PROCESSING OF RETURN AND FURTHER CONCLUDED THAT NO APPEAL LIES AG AINST SUCH PROCESSING WHERE ADJUSTMENTS HAVE BEEN CORRECTLY MA DE DURING PROCESSING AS PER SEC.143(1)(A)(II) OF THE ACT. 7. THE PRESENT CASE IS A PERFECT EXAMPLE OF SUCH IGNORANCE. THE ASSESSEE HAS SHOWN INTEREST INCOME EARNED AS WELL AS INTEREST PAID UNDER THE HEAD INCOME FROM OTHER SOURCES. NOT REALIZING THE NEGATIVE FIGURE IS NOT ACCEPTED BY TH E SERVER AND THEREFORE THE INTEREST PAID SHOWN AS RS.2,33,535/- WAS REJECTED BY THE SERVER WHILE PROCESSING THE RETURN. 8. NO DOUBT THE CBDT HAS THE POWERS TO FRAME THE R ULES BUT, AT THE SAME TIME, IT CANNOT BENEFIT FROM THE I GNORANCE OF THE TAXPAYERS USING THE LATEST TECHNOLOGY. WE DO NOT F IND ANY REASON WHY SUCH ERROR SHOULD NOT BE RECTIFIED BY THE AA.O. THIS IS NOT IGNORANCE OF LAW BUT IGNORANCE OF THE USAGE OF THE LATEST TECHNOLOGY. 9. THEREFORE IN THE INTEREST OF JUSTICE AND FAIR P LAY TO THE TAXPAYER, WE RESTORE THIS ISSUE BACK TO THE FILES O F A.O. THE A.O. IS DIRECTED TO EXAMINE THE CLAIM OF THE ASSESSEE OF IN TEREST PAID AT RS.2,33,535/- AND IF SATISFIED WITH THE CLAIM, THE A.O. IS DIRECTED TO DEDUCT THE SAME FROM THE POSITIVE INTEREST FIGURE O F RS.3,38,345/- MEANING THEREBY THAT ONLY RS.1,04,810/- SHOULD BE A DDED TO THE TAXABLE INCOME. 10. BEFORE PARTING, A SIMILAR ISSUE CAME UP FOR HE ARING BEFORE THE TRIBUNAL IN THE CASE OF SRIKANT REAL EST ATE PVT. LTD. 140 ITD 155 WHEREIN ONE OF US (AM) IS THE AUTHOR OF THE DECISION WHERE ALSO THE TRIBUNAL HAS TAKEN A SIMILAR VIEW AND DIRE CTED THE A.O. TO RECTIFY THE ERROR. DRAWING SUPPORT FROM THE FINDIN GS GIVEN IN THE AFORESAID CASE, THIS APPEAL IS ALSO RESTORED BACK T O THE FILES OF THE A.O. WITH THE ABOVE DIRECTION. 7. THE FACTS IN THE PRESENT CASE ARE IDENTICAL. TH E ASSESSEE, OUT OF IGNORANCE OR INADVERTENCE HAS OMITTED TO MENTION THE DETAILS OF EXEMPT INCOME IN THE RELEVANT SCHEDULE EI. SO, T HE IGNORANCE OF THE ASSESSEE OR INADVERTENT MISTAKE COMMITTED BY TH E ASSESSEE ITA NO.670/BANG/2020 GOODWILL MANAGEMENT PVT. LTD., BENGALURU PAGE 5 OF 5 SHOULD NOT COME IN HIS WAY IN CLAIMING EXEMPTION, W HICH IS OTHERWISE ALLOWABLE UNDER THE ACT. IT IS ALSO NOT A CASE THA T THE ASSESSEE DID NOT RESPOND TO THE NOTICE ISSUED BY CPC. THE ASSES SEE HAS DULY RESPONDED TO THE SAME, BUT IT IS THE SUBMISSION OF REVENUE THAT THE ASSESSEE SHOULD HAVE FILED A REVISED RETURN OF INCO ME. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE I S ENTITLED FOR EXEMPTION OF DIVIDEND INCOME. THE OBJECT OF ASSESS MENT IS TO DETERMINE CORRECT TOTAL INCOME OF THE ASSESSEE. AC CORDINGLY, I AM OF THE VIEW THAT THE RIGHT OF THE ASSESSEE COULD NOT B E DENIED MERELY ON ACCOUNTING OF TECHNICAL ERRORS. HENCE THERE IS A M ISTAKE APPARENT FROM RECORD IN NOT GRANTING EXEMPTION CLAIMED BY TH E ASSESSEE. ACCORDINGLY, I AM OF THE VIEW THAT THE SAID MISTAKE DESERVES TO BE RECTIFIED. 8. ACCORDINGLY, I SET ASIDE THE ORDER PASSED BY LD . CIT(A) ON THIS ISSUE AND DIRECT THE A.O. TO ALLOW THE EXEMPTION CL AIMED BY THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH APR21 SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 15 TH APR, 2021. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE