JANKI WIND FARM DEVELOPERS PRIVATE LIMITED,AHMEDABAD V. THE ITO, WARD-3(2)(1), AHMEDABAD

ITA 1000/AHD/2025

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The case involves Janki Wind Farm Developers Pvt. Ltd., which appealed against the order of the National Faceless Appeal Centre (NFAC) and the rectification order passed by the Income Tax Officer (ITO), Ward 3(2)(1), Ahmedabad. The dispute centered on the rectification of an alleged double addition of an income tax provision amounting to Rs.7,40,475 in the assessee's return for the Assessment Year 2018-19. The ITO had partially allowed the rectification concerning TDS credit but rejected the claim regarding the double addition. The CIT(A) upheld the ITO's decision, stating that the mistake originated from the revised return filed by the assessee and not from the 'base order'. The Tribunal, however, found that the mistake was apparent from the record and directed the ITO to rectify it under section 154.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717605 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 05-05-2025
• Other Referred Cases: CIT v. Shelly Products, Shital Bachubhai Vaidya v. ADIT [CPC]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT PRATAP SINGH
• Assessee Lawyers: D.K. PARIKH
• Keywords: Revised return; Principle of natural justice; TDS; Rectification of order
• Section: 154; 37; 119(2)(b)

Judgement Text

"आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ ‘SMC’ अहमदाबाद। अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD ]BEFORE MS.SUCHITRA R. KAMBLE, JUDICIAL MEMBER AND SHRI MAKARAND V.MAHADEOKAR, ACCOUNTANT MEMBER ITA No.1000/Ahd/2025 Asstt.Year : 2018-19 Janki Wind Farm Developers Pvt. Ltd. Kintech House-9 3d Floor, Shivalik Palaza Opp: AMA Centre, Ambawadi Ahmedabad 380015. PAN : AADCJ 5205 C Vs. ITO, Ward-3(2)(1) Ambawadi Ahmedabad. (Applicant) (Responent) Assessee by : Shri D.K. Parikh, AR Revenue by : Shri Amit Pratap Singh, Sr.DR सुनवाई क तारीख/Date of Hearing : 31/07/2025 घोषणा क तारीख /Date of Pronouncement: 12/08/2025 आदेश आदेश आदेश आदेश/O R D E R PER MAKARAND V.MAHADEOKAR, AM: This appeal by the assessee is directed against the order dated 17.04.2025 passed by the National Faceless Appeal Centre [NFAC], Delhi [hereinafter referred to as “CIT(A)”] under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”], for the A.Y. 2018–19, arising from the rectification order passed under section 154 dated 23.01.2024 by the ITO, Ward 3(2)(1), Ahmedabad [hereinafter referred to as “Assessing Officer”]. 2. Facts of the Case 2.1 The assessee filed its original return of income for A.Y. 2018–19 on 31.08.2018 declaring total income at Rs.22,96,025/-. Subsequently, it filed a revised return in response to notice u/s 139(9), declaring total income of Printed from counselvise.com ITA No.1000/Ahd/2025 2 Rs.3,73,79,914/-. The return was processed u/s 143(1) and intimation was issued accordingly. Thereafter, the assessee filed a rectification application under section 154 on 17.11.2021 pointing out two mistakes apparent from record: i. That TDS credit was short allowed at Rs.5,10,840/- against actual available credit of Rs.7,48,440/-. ii. That income tax provision of Rs.7,40,475/- was already debited to Profit & Loss Account, and the same was again disallowed while computing income, resulting in double addition and overstatement of total income by Rs.7,40,475/-. 2.2 The AO passed a rectification order dated 23.01.2024 under section 154 wherein he partly allowed the rectification by granting the correct TDS credit of Rs.7,48,440/-, but rejected the rectification in respect of the income overstatement, observing that the income computed u/s 143(1) remains unchanged. 2.3 The assessee filed an appeal before CIT(A), contending that the error in overstatement of income due to double addition of tax provision is apparent from record and rectifiable under section 154. The Ld. CIT(A), however, held that the rectification of income was not allowable since the mistake had occurred in the revised return filed by the assessee itself, and not in the order passed by the AO. It was further held that there was no mistake apparent in the “base order”, and the scope of section 154 is limited to correcting errors arising in the AO’s order and not those arising in the return filed by the assessee. He further held that since the mistake was in the return, the remedy, if any, lies under section 119(2)(b) of the Act, which empowers the Board to condone genuine claims made after expiry of due dates. As the assessee had not approached the CBDT under section 119(2)(b), the CIT(A) concluded that the appeal was not maintainable. The appeal was accordingly dismissed. 3. Aggrieved by the order of CIT(A), the assessee is in appeal before us raising following grounds of appeal: Printed from counselvise.com ITA No.1000/Ahd/2025 3 1. The Ld. National faceless Appeal Centre [ NFAC]/ CIT (APPEALS) has grievously erred both in law and on facts in holding that appeal filed by appellant against Rectification Order dated 23.01.2024 passed by ITO was not maintainable and in not directing to rectify mistake apparent of facts whereby appellant had added twice an amount of Rs. 7,40,475/- which resulted into computation of income at Rs. 37,37,914/- as against actual income of Rs. 29,97,440/-. The mistake being of fact and when brought to notice of the Id CIT(A), the same ought to be allowed. It be so held now. 2. The Id NFAC/CIT(A) further erred in law and on facts in not appreciating that there was a mistake in computing real income while accepting that the appellant was aggrieved person by virtue of appellant’s own mistake since the powers vested un to him are co-terminus and under law, only real income can be taxed. It be so held now and addition of Rs. 7,40,475/- added twice by mistake be directed to be deleted. 3. Both the lower authorities erred in law and on facts in not computing correct income which under law and on the basis of Return and audited accounts was computed by appellant at more by an amount of Rs.7,40,475/- and the law casted duty on the authorities to correctly compute income which by mistake is arithmetically computed higher than actual figure. It be so held now. 4. The Id NFAC/CIT(A) ought to have allowed the appeal in toto and directed the Id AO to compute correct income by rectifying the mistake pointed out to him in appeal. 5. The appellant craves leave to add, alter, modify or delete any of the grounds at the time of hearing. 4. During the course of hearing, the learned Authorised Representative, reiterated the facts and submitted that while the Assessing Officer vide rectification order dated 23.01.2024 under section 154 r.w.s. 143(1) correctly allowed the TDS credit by granting full credit of Rs.7,48,440/-, he failed to rectify the second mistake relating to the double addition of income tax provision. It was submitted that this error is factual, arithmetical, and manifest from the return and the computation statement itself and therefore falls within the purview of a mistake apparent from record under section 154. 4.1 To substantiate the mistake, the AR referred to the audited Profit & Loss Account for the year ended 31.03.2018 and highlighted that the net profit after tax was shown at Rs.21,87,300/-, which was after debiting Printed from counselvise.com ITA No.1000/Ahd/2025 4 income tax expense of Rs.7,40,475/-. However, while computing taxable income, the assessee again added back Rs.7,40,475/- thereby effectively taxing the same income twice. It was submitted that such a duplication is apparent on the face of the computation and does not require any further inquiry or interpretation and hence is squarely covered under the scope of section 154. The AR filed a comparative computation of total income showing that the correct taxable income should have been Rs.22,96,025/- (i.e. Rs.21,87,300/- profit after tax + Rs.1,08,725/- disallowance under section 37 for penalty/fine), whereas the returned income was wrongly computed at Rs.29,27,775/- due to double addition of Rs.7,40,475/-. 4.2 The AR also referred to the revised computation submitted during the appellate proceedings and reiterated that the mistake is traceable from the return and statements filed by the assessee and accepted by the Department itself in granting TDS credit. He further submitted that CIT(A), while dismissing the appeal, incorrectly invoked section 119(2)(b) and held that the assessee’s only remedy lay before the CBDT. The AR contended that section 119(2)(b) applies in cases of delayed claims or missed deductions requiring condonation, whereas in the present case, the assessee is not making a fresh claim but merely seeking rectification of an apparent error. In support of the claim, the learned AR placed reliance on various judicial precedents including judgement of Hon’ble Supreme Court in case of CIT v. Shelly Products [(2003) 261 ITR 367 (SC)] and decision of Co-ordinate Bench in the case of Shital Bachubhai Vaidya v. ADIT [CPC] [ITA No. 42/Ahd/2022]. It was argued that the Hon’ble Supreme Court held that even where an amount is included in income due to inadvertence or error, relief must be granted under section 154 if the mistake is apparent. The AR submitted that the CBDT vide its circular No. 14 (XL-35) dated 11.04.1955 has clearly directed departmental officers not to take advantage of the assessee’s mistake, but rather to assist in correct computation of income and grant of lawful relief. Printed from counselvise.com ITA No.1000/Ahd/2025 5 4.3 The AR, in conclusion, prayed for full relief by directing the AO to rectify the overstatement of Rs.7,40,475/- and recompute the total income at the correct figure of Rs. 22,96,025/-. It was submitted that in line with the statutory scheme and principles of natural justice, the assessee should not be taxed on an income higher than what is truly and legally assessable, especially when the mistake is admitted and substantiated from the record. 5. The learned Departmental Representative (DR) appeared on behalf of the Revenue and placed reliance on the findings recorded in the appellate order passed by the Ld. CIT(A). However, when queried by the Bench as to whether the error was purely arithmetical and evident from the face of the computation and P&L statement, the learned DR fairly submitted that the issue is factual in nature and left the matter to the wisdom of the Bench for appropriate adjudication in accordance with law. 6. We have carefully considered the rival submissions of the parties, the rectification order passed under section 154, the appellate order passed by the Ld. CIT(A), the grounds raised before us, and the material placed in the paper book filed by the assessee. The issue before us is limited in scope i.e. whether the Assessing Officer and the CIT(A) were justified in rejecting rectification of an apparent factual mistake, which resulted in overstatement of income by Rs.7,40,475/-, being the amount of income tax provision added twice while computing total income. 6.1 The assessee has placed on record its ITR-6 along with audited financial statements. We note from page 18 of the paper book (i.e. audited Profit and Loss Account) that the profit after tax is Rs.21,87,300/-, which already reflects deduction of income tax expense of Rs.7,40,475/- under the head “Tax Expense – Current Tax.” Thus, the tax provision had already reduced the net profit in the P&L Account. However, from Schedule BP of the ITR-6, we observe the following: Printed from counselvise.com ITA No.1000/Ahd/2025 6 • At Column A(1) of Schedule BP [PB page 63 / ITR page 38], the assessee has shown the net profit before tax at Rs.29,27,774/-, which includes the income tax provision of Rs.7,40,474/- over and above the actual profit of Rs.21,87,300/- as per books. This is clearly inconsistent with the audited P&L, and results in inflated starting point for computation of income under the head “Profits and Gains of Business or Profession.” • Thereafter, at Column 24 of Schedule BP [PB page 64 / ITR page 39], the assessee again adds back the same sum of Rs. 7,40,474/- under the head “Any other item or items of addition under clause (f) of Explanation to section 115JB(2).” 6.2 We also note from page 46 of the paper book, which contains “Part A– P&L Account” of ITR-6 for the financial year 2017–18 (A.Y. 2018–19), that at Column 48 (Profit after tax), the assessee has clearly reported the figure of Rs.21,87,299/-, which matches with the profit after tax reflected in the audited Profit and Loss Account (page 18 of the paper book). This confirms that the figure of Rs.29,27,774/- entered in Column A(1) of Schedule BP [PB page 63] was not the actual profit before tax, but a mistakenly inflated figure that includes the tax provision of Rs.7,40,475/- already debited to the accounts. Therefore, when the same amount is again added back under Column 24 of Schedule BP [PB page 64], it results in a clearly identifiable double addition, arising solely due to a mistake in transposing the correct figure from audited books to the return. This internal inconsistency in ITR-6 itself is sufficient to hold that the mistake is apparent from record, requiring rectification. This computation flows entirely from the return itself and requires no external verification. It constitutes a classic case of an arithmetical and clerical mistake apparent from record, falling squarely within the ambit of section 154. Printed from counselvise.com ITA No.1000/Ahd/2025 7 6.3 The Assessing Officer, in the rectification order, accepted the mistake relating to short grant of TDS and granted relief accordingly. However, he refused to rectify the overstatement of income, stating that the income under section 143(1) remained unchanged. The Ld. CIT(A) further held that the mistake originated from the revised return filed by the assessee and not from the “base order,” and hence no rectification could be granted. The CIT(A) directed that such a grievance could only be addressed by filing a petition under section 119(2)(b) before the CBDT. 6.4 We are unable to endorse this view. The return of income and the accompanying computation form part of the record of the Assessing Officer while processing the return under section 143(1). Therefore, if any mistake arises from the return itself such as - a double addition due to arithmetical error, it is a mistake apparent from record, rectifiable under section 154. 6.5 In our opinion, if it is by mistake and error or inadvertence an amount is included in the income, necessary relief has to be provided by the Assessing Officer and the powers of the CIT(A) are co-terminus with those of the AO, and he is empowered to do what the AO could have done. Hence, the CIT(A) ought to have directed rectification of the said mistake, rather than referring the assessee to section 119(2)(b), which is inapplicable in the present context. Section 119(2)(b) deals with delayed or belated claims requiring condonation, not with correction of mistakes apparent from record. The principle of real income is fundamental to taxation. Once it is established that tax has been computed on a fictitious or inflated figure, which arose due to a duplication of the same disallowance, the authorities are bound in law to rectify the error. Tax must be levied only on income, which is real, correct, and just, and not on account of arithmetical errors in computation, even if made by the assessee. 6.6 In our opinion, the mistake committed by the assessee is purely arithmetical and manifest on the face of the return, specifically traceable from the figures disclosed in the ITR-6, the audited profit and loss account, Printed from counselvise.com ITA No.1000/Ahd/2025 8 and the computational statements forming part of ITR and the paper book. It leads to taxation of an amount which was never actually earned nor intended to be offered as income and thus offends the fundamental principle of taxing only real income. The error arises from internal inconsistency within the return itself and does not involve any debatable interpretation or require appreciation of new evidence. Consequently, this is not a case warranting resort to section 119(2)(b) or condonation by the CBDT. It falls squarely within the ambit of a mistake apparent from the record, rectifiable under section 154 of the Act. 6.7 We are, therefore, of the considered view that the Assessing Officer ought to have allowed rectification by excluding the amount of Rs.7,40,474/- from the taxable income. The Ld. CIT(A) erred in law and on facts in rejecting the appeal on the ground of non-maintainability and in misdirecting the assessee to seek relief under section 119(2)(b), which is wholly inapplicable in the present factual context. 6.8 The Assessing Officer is directed to rectify the computation of total income under section 154 by excluding the amount of Rs.7,40,474/-, being the income tax provision that was erroneously added twice, and to recompute the assessee’s total income in accordance with law. Consequential relief, including refund and interest, if any, shall also be granted in accordance with the provisions of the Act. 7. In the result, the appeal filed by the assessee is allowed. Order pronounced in the Court on 12th August, 2025 at Ahmedabad. Sd/- Sd/- (SUCHITRA R. KAMBLE) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad, dated 12/08/2025 vk* Printed from counselvise.com "