PRAMODE KUMAR HIMATSINGKA, L/H OF GITA DEVI HIMATSINGKA (SINCE DECEASED),KOLKATA V. ITO, WARD 30(1), , KOLKATA

ITA 737/KOL/2025

AI Insights

The case involves an appeal by Shri Pramod Kumar Himatsingka, representing the deceased Smt. Geeta Devi Himatsingka, against the rectification order passed by the CPC, Bangalore, which was upheld by the CIT(A). The rectification order adjusted the returned income by treating dividend incomes from equity shares and mutual funds, which were below the exemption limits, as business income. The Tribunal examined the legal and factual basis of the CPC's rectification and found it to be incorrect, leading to the setting aside of the CIT(A)'s order and the deletion of the erroneous adjustment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712266 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Business income; Capital Gains; Rectification of order
• Section: 154

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL ‘SMC’ BENCH KOLKATA Before Shri Sonjoy Sarma, Judicial Member and Shri Rakesh Mishra, Accountant Member I.T.A. No.737/Kol/2025 Assessment Year: 2018-19 Gita Devi Himatsingka (since deceased) Represented By L/H Pramode Kumar Himatsingka…………….………..……..…………………....Appellant 2C, Queens Park, Ballygunge, Kol-19. [PAN: AARPH3735N] vs. ITO, Ward-30(1), Kolkata…………....…..………………….…..... Respondent Appearances by: Shri Manoj Kataruka, Advocate, appeared on behalf of the appellant. Shri Ranu Biswas, ACIT-Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing : July 30, 2025 Date of pronouncing the order : July 31, 2025 आदेश / ORDER Per Sonjoy Sarma, Judicial Member: This appeal has been preferred by Shri Pramod Kumar Himatsingka, legal heir of Smt. Geeta Devi Himatsingka (deceased), against the order of the Ld. CIT(A), dated 19.02.2025, confirming the rectification order passed under Section 154 of the Income-tax Act, 1961, dated 30.10.2019, by the CPC, Bangalore, for the assessment year 2018–19. 2. Brief facts of the case are that the assessee is an individual who filed the return of income for the Assessment Year 2018-19, declaring a total income of Rs.30,51,986/-. The return was processed under Section 143(1) of the Income-tax Act on 07.12.2018, and a refund of Rs.40,800/- was determined and granted to the assessee. Subsequently, the CPC passed a rectification order dated 30.10.19 by Printed from counselvise.com I.T.A. No.737/Kol/2025 Gita Devi Himatsingka 2 which made an adjustment of Rs.3,90,187/- to the returned income by treating the income received from equity shares and mutual funds exceeding Rs.10,000/- as income under the head \"Profits and Gains from Business or Profession\", instead of as originally shown by the assessee in return of income. 3. Aggrieved by the order of the CPC assessee preferred an appeal before the ld. CIT (A) where the Ld. CIT(A) also upheld the order of CPC, leading to the present appeal before the Tribunal. 4. At the time of hearing the Ld. Authorised Representative (AR) submitted that the assessee’s main source of income of assessee was interest and capital gains and the entire dividend income on equity shares (₹6,99,463) was within the exemption limit of ₹10,00,000, as per Section 115BBDA (as then applicable). The dividend from mutual funds (₹6,90,724) was exempt under Section 10(35) of the Act and was outside the purview of Section 115BBDA. The CPC erroneously treated ₹3,90,187 as taxable under the head “business income” without basis. The AR argued that the rectification order under Section 154, passed without properly verifying the facts and without applying the law correctly, was bad in law. The CPC’s classification of income into “special” to Business income was also pointed out to be factually and legally incorrect. 5. On the other hand, the Ld. Departmental Representative (DR) relied on the orders of the CPC and CIT(A), but could not controvert the factual contention that dividend income from mutual funds is exempt under Section 10(35) and dividend income on equity shares was less than ₹10 lakh, and hence not chargeable to tax under Section 115BBDA of the Act. Printed from counselvise.com I.T.A. No.737/Kol/2025 Gita Devi Himatsingka 3 6. We, after the hearing the parties and on perusal of the records and considering the rival submissions, find that it is clear that the assessee received dividend income on equity shares amounting to ₹6,99,463, which is within the ₹10 lakh exemption limit under Section 115BBDA (applicable for A.Y. 2018–19) and the dividend income from mutual funds (₹6,90,724) is specifically exempt under Section 10(35) of the Act. The CPC, however, erroneously considered total dividend income exceeding ₹10,00,000, and made an adjustment of ₹3,90,187 under Section 143(1)/154, treating it as taxable under the head “Business Income”. We therefore find that the rectification order dated 30.10.2019 suffers from legal infirmity and is not sustainable, as it fails to consider the correct nature and treatment of dividend income. In view of the above we find that the adjustment made by CPC by passing a rectification order under Section 154 of the Act dated 30.10.2019, is erroneous and bad in law. Therefore, the amount of ₹3,90,187, wrongly added as taxable business income, is liable to be deleted. Accordingly, the impugned order of the Ld. CIT(A) dated 19.02.2025 is set aside, and the adjustment made by the CPC is directed to be deleted. 7. In terms of the above the appeal of the assessee is allowed. Kolkata, the 31st July, 2025. Sd/- Sd/- [Rakesh Mishra] [Sonjoy Sarma] लेखा सदèय/Accountant Member ÛयाǓयक सदèय/Judicial Member Dated: 31.07.2025. RS Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3.CIT (A)- 4. CIT- , 5. CIT(DR), Printed from counselvise.com I.T.A. No.737/Kol/2025 Gita Devi Himatsingka 4 //True copy// By order Assistant Registrar, Kolkata Benches Printed from counselvise.com "