2017 (4) TMI 451 - AT - Income Tax

Determination of total income u/s 143(1) - wrong figure of disallowance under partnership remuneration - mistake committed by the assessee resulted in the error creeping in the assessment order - Held that - The assessee had genuinely committed a mistake in mentioning the wrong figure of disallowance under partnership remuneration which was duly brought to the notice of the revenue at the time of appellate proceedings. But both the authorities failed to appreciate the contentions of the assessee comprising of genuine typographical error and fastened unreasonable tax liability on the assessee. We find lot of force in the argument of the ld. AR and we are convinced with the explanations given by the ld. AR as stated supra as they are completely borne out from the facts on record. In the instant case, the ld. AO also had not disposed of the rectification petition filed by the assessee on 9.7.2013 pointing out the aforesaid mistake. We find that the ld. CIT(A) upheld. the action of the ld. AO on the ground that the assessee had not filed any revised return of income to justify its claim. We would. like to mention here in this regard that it is well settled that the revenue cannot take undue advantage of the ignorance of the assessee or genuine mistake committed by the assessee and is always duty bound to assess only the real income of the assessee. See ACIT vs Rupam Impex 2016 (1) TMI 1114 - ITAT RAJKOT We direct the ld. AO to grant relief to the assessee. Accordingly, the grounds raised by the assessee are allowed.

Summary

Issues:
- Determination of total income under section 143(1) of the Income Tax Act, 1961 for Assessment Year 2009-10.

Analysis:
The appeal before the Appellate Tribunal ITAT Kolkata involved the determination of total income under section 143(1) of the Income Tax Act, 1961 for Assessment Year 2009-10. The appellant, a partnership firm, filed its return of income electronically showing a total income of ?86,96,990. However, upon realizing an error in the return, the correct income was found to be ?10,79,809. The appellant duly paid tax on the correct income, but the Assessing Officer (AO) determined the total income at ?86,96,990, ignoring the mistake. The appellant's rectification petition and appeal were not acted upon favorably by the lower authorities. The appellant contended that a typographical error led to the incorrect figure being reflected in the return, which did not impact the actual tax liability. The Tribunal found merit in the appellant's argument, emphasizing that the revenue should assess only the real income of the assessee and not take advantage of genuine mistakes. Citing a precedent, the Tribunal directed the AO to grant relief to the assessee, allowing the appeal.

The Tribunal noted that the mistake in mentioning a higher disallowance figure in the return was a typographical error and did not affect the tax payable by the assessee. Despite the mistake being attributed to the assessee, the Tribunal emphasized that the revenue authorities cannot levy tax at a higher amount due to errors made by the assessee. The Tribunal highlighted the duty of the revenue authorities to assess only the actual income of the assessee and not take advantage of mistakes. Referring to a circular by the CBDT, the Tribunal stressed the importance of assisting taxpayers and ensuring fair treatment. Based on these principles, the Tribunal directed the AO to provide relief to the assessee, as the mistake did not warrant an increase in tax liability.

In conclusion, the Tribunal allowed the appeal of the assessee, directing the AO to grant relief based on the genuine mistake made in the return filing process. The decision emphasized the importance of assessing the real income of the assessee and providing fair treatment, even in cases where errors are made by the taxpayer.