2017 (5) TMI 69 - AT - Income Tax

Power of AO to rectify mistake - mistake in uploading the return - denial of exemption u/s 10A of the IT Act - case of assessee is that they has wrongly entered the amounts in different columns which resulted in the deduction being denied. Assessee claims that their business profits are eligible for u/s 10A of the IT Act and the same was correctly mentioned in the return also and subsequently, Assessee filed a revised return on the advice of Add. CIT in writing - Held that - there is a mistake apparent from record which is required to be rectified - the A.O as well as the CPC, Bengaluru directed to rectify the mistake and accept the application filed by Assessee under the provisions of Sec. 154 of the IT Act - appeal allowed - decided in favor of assessee.

Summary

Issues:
Mistake in uploading return and denial of exemption u/s 10A of the IT Act.

Analysis:
The appeal was filed against the order of CIT(A)-4, Hyderabad, regarding a mistake in uploading the return leading to the denial of exemption u/s 10A of the IT Act. The Assessee, engaged in Software and IT services, filed a return for A.Y 2009-10 with an error in entering income figures, resulting in the denial of the claimed exemption. Despite correctly mentioning the business profits eligible for u/s 10A, a mistake in column entries led to a demand notice. The Assessee's rectification petitions were rejected by the CPC, Bengaluru, and the A.O, stating no prima facie error. A revised return was filed beyond the permitted time, not accepted by the A.O. The Assessee contended that the mistake was rectifiable and cited a similar case for reference.

The Assessee argued that the mistake was apparent from the record and could be corrected, emphasizing the correct reporting of income and deductions. The DR countered that the revised return was not filed within the stipulated time, hence not correctable under sec. 154. The Tribunal examined the original return and identified the error in column entries, leading to the incorrect taxation of income under special business. Referring to a similar Mumbai case, the Tribunal highlighted the powers of rectification under sec. 154 and 143(1) of the IT Act, allowing adjustments for arithmetical errors or incorrect claims apparent from the return information.

Relying on the Mumbai case, the Tribunal concluded that the mistake in the return was rectifiable under sec. 154. The A.O and CPC, Bengaluru were directed to rectify the error and accept the Assessee's application. Consequently, the appeal by the Assessee was allowed, emphasizing the rectifiability of the mistake apparent from the record.

In conclusion, the Tribunal's decision favored the Assessee, acknowledging the rectifiability of the mistake in uploading the return, leading to the denial of exemption u/s 10A of the IT Act. The judgment highlighted the importance of correct reporting in tax returns and the provisions for rectification under the IT Act, ensuring fair treatment for taxpayers in cases of genuine errors.