PRABHA DEVI,SAHARANPUR V. ITO WARD-3(3)(5), SAHARANPUR

ITA 4377/DEL/2025

AI Insights

The case involves Prabha Devi, an individual engaged in the cattle feed business, who appealed against the order of the National Faceless Appeal Centre (NFAC) which upheld the AO's assessment adding significant income to her declared profits. The primary contention was a reporting error in the Income Tax Return (ITR) for AY 2018-19, where fixed assets were mistakenly included in the proprietor's capital. The ITAT found that the CIT(A) erred in not appreciating the fundamental principle of taxing real income and misinterpreted the Supreme Court's decision in Goetze (India) Limited vs. CIT. The ITAT decided to allow the appeal for statistical purposes and remanded the matter back to the AO for a fresh assessment on merits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 790629 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 15-07-2025
• Other Referred Cases: Goetze (India) Limited vs. CIT, CIT vs. Aspentech India Pvt. Ltd., International Tractors Ltd. Versus DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRISHNA KUMAR RAMAWAT
• Assessee Lawyers: RAJIV SAHNI
• Keywords: Revised return
• Section: 143(3)

Judgement Text

"P a g e | 1 ITA No. 4377/Del/2025 Prabha Devi (AY: 2018-19) IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER & SHRI MANISH AGARWAL, JUDICIAL MEMBER ITA No. 4377/Del/2025 (Assessment Year:2018-19) Prabha Devi House No. 1/1522, Juneja Bhawan, Wazeer Vihar, Khalasi Line, Saharanpur Uttar Pradesh – 247001 Vs. ITO, Ward 3(3)(5) Income Tax Office, Court Road, Haqikatnagar, Saharanpur, Uttar Pradesh – 247001 \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No: AGOPD6725H Appellant .. Respondent Appellant by : Sh. Rajiv Sahni, CA Respondent by : Sh. Krishna Kumar Ramawat, Sr. DR Date of Hearing 02.12.2025 Date of Pronouncement 05.12.2025 O R D E R PER ANUBHAV SHARMA, JM: This appeal is preferred by the assessee against the order dated 26.06.2025 of the ld. National Faceless Appeal Centre (NFAC) Delhi Printed from counselvise.com P a g e | 2 ITA No. 4377/Del/2025 Prabha Devi (AY: 2018-19) (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN & Order No: ITBA/NFAC/S/250/2025-26/1077853674(1) arising out of the order dated 10.05.2021 passed u/s 143(3) r.w.s 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the National e- Assessment Center for AY: 2018-19. 2. Heard and perused the records. The assessee is an individual drawing income from cattle feed business. The return was filed showing net income of Rs.6,45,510/-. The assessment was completed on income of Rs.3,20,35,491/- by adding Rs.3,13,89,981/- to the income of the applicant. Assessing Officer examined the issue of increase in proprietors capital from what declared in ITR filed for AY: 2017-18 i.e. Rs.1,14,12,003/- and declaration made in ITR for present AY: 2018-19 of Rs.4,21,40,652/-. The assessee has asserted that there is no increase in proprietors capital per se and difference came in existence due to reporting error since in ITR filed for the present AY appellant included fixed assets of Rs.3,13,89,981/- as part of proprietors capital. Printed from counselvise.com P a g e | 3 ITA No. 4377/Del/2025 Prabha Devi (AY: 2018-19) 2.1 Contention of the assessee was rejected by the AO holding that the inclusion of item of assets side of the balance sheet mistakenly added on liability side is not acceptable in the assessment proceedings as there is no provision to consider claim otherwise by way of a revised return of income filed within due time. 3. Now before the Ld. CIT(A) all these facts were asserted that assessee could not succeed and ld. CIT(A) has sustained the impugned order of AO on following reasons: “7.1 Appellant is primarily submitting that while filing return of income for AY: 2018- 19, appellant has adopted a consolidated statement and hence has included the cost of fixed assets to the proprietor's capital. Appellant has placed details and documents related to fixed assets that are in name of appellant and forms part of the consolidated balance sheet. Appellant also admits that cost of fixed assets have been erroneously included in the share capital. There is no dispute in the fact that there has been a reporting error on part of the appellant while filing return of income for AY 2018-19. Appellant was however statutorily entitled to rectify the error by way of revising the ROl within time limit as specified in the Act. Appellant did not avail the benefit of revision provided to taxpayers. In view the same, judgment in case of Goetze (India) Limited vs. CIT(2006) 284, ITR 323 (SC) is squarely applicable in appellant's case. Appellant however contends the applicability of judgment, but, in view of the appeal, the moot point of the judgment is not the allowability of deduction but allowability of change in particular of ROI when the time of revising the ROl has elapsed. On that front, appellant has failed to revise the particulars in the return of income. Printed from counselvise.com P a g e | 4 ITA No. 4377/Del/2025 Prabha Devi (AY: 2018-19) 7.2. The submission of the appellant that there was no increase in fixed asset during the FY 2017-18 is also not true. As verified from the consolidated balance sheet of AY 2017-18 and AY 2018-19, there is an increase of an asset 'Vinayak Associates' of Rs.3,49,725/- in the fixed assets schedule as against claim by the appellant that no addition in fixed assets other than variables like mutual funds/bank balance/advances etc. 8. In view of the discussion above, I am inclined to confirm the assessment order dated 10.05.2021. In the result, appeal stands dismissed.” 4. We are of the considered view that Ld. CIT(A) has fallen an error in not appreciating the fundamental principle of taxing real income only and misinterpreted the decision of Hon’ble Supreme Court in Goetze (India) Limited Vs. CIT (supra). Once, the Ld. CIT(A) concluded that there was reporting error only then, if, there was absence of a remedy before AO then Ld. CIT(A) certainly had jurisdiction to entertain additional claim and reliance of this can be placed on the decision of Hon’ble Delhi High Court in order dated 28.11.2011, passed in ITA No.1233/2011, titled CIT vs. Aspentech India Pvt. Ltd. as relied in decision dated 07.04.2021 in ITA 35/2019 case titled International Tractors Ltd. Versus DCIT, where Hon’ble High Court has held that if a claim is otherwise sustainable in law, then the appellate authorities are empowered to entertain the same. Printed from counselvise.com P a g e | 5 ITA No. 4377/Del/2025 Prabha Devi (AY: 2018-19) 5. In the light of the aforesaid, as the facts do not indicate a case of any addition to the capital account, we sustain the ground no. 4 in favour of the assessee. However, as the facts require verification the issue on merits are restored to the files of the AO to give an opportunity of hearing to the assessee and decide the issue afresh on merit. 6. The appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 05.12.2025 Sd/- (Manish Agarwal) Sd/- (Anubhav Sharma) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 05.12.2025 Rohit, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "