2020 (7) TMI 710 - AT - Income Tax

Correct year of assessment - Interest income was taxed in the earlier assessment year - interest income from partnership firms was included in the total income of the assessee for the year under consideration as well as for the assessment year 2014-15 - mistake on the part of the assessee is to declare and offer to tax the interest income - only reason for denial of exclusion of the income from the total income of the assessee is non filing of the revised return of income - HELD THAT - Since the return of income was filed by the assessee belatedly, therefore, the assessee could not file a revised return of income. Undisputedly the said income on account of interest from the partnership firms has been taxed for the assessment year 2014-15 and it was again taxed for the year under consideration. It is a case of taxing the same income twice. It is duty of the AO to assess the correct income of the assessee permissible in law. AO cannot take the advantage of any mistake on the part of the assessee to offer an excess income which is otherwise not taxable under law. In the case in hand, what is the mistake on the part of the assessee is to declare and offer to tax the interest income for the AY 2015-16 instead of 2014-15. Once, the interest income was assessed for AY 2014-15 and the assessee has not challenged the said order of the Assessing Officer then the consequent effect of the assessment for the assessment year 2014-15 would be to exclude the same income for the assessment year 2015-16. Addition made for the assessment year 2014-15 would led to double taxation of the same income. AO has to remove the said anomaly in the assessment by excluding the said income for the assessment years 2015-16 as the income pertains to the assessment year 2014-15 and was also accordingly, taxed as per law. Once, the AO has treated the income in question as chargeable to tax for the assessment year 2014-15 the same cannot be charged to tax for the assessment year 2015-16. Even if the Assessing Officer is having limitation for not assessing income below the income declared in return of income the said bar is not applicable to the appellate authority. CIT(A) has also misunderstood the fact about the return of income for the year under consideration was filed much prior to the assessment framed by the AO for the assessment year 2014-15. At the time of filing of the return of income it was not certain or known to the assessee that the AO would make an addition of the said income for the assessment year 2014-15. Even otherwise the assessee is liable to pay tax only on the income which is chargeable to tax as per law, if any excess amount of income offered to tax the AO is duty bound to correct the same and only income which assessable to tax as per law has to be assessed to tax Assessee cannot be penalized only for the reason that he has not filed revised return of income for correcting the apparent mistake of double taxation of the income. In view of the above fact and circumstances of the case the income which is already charged to tax for the assessment year 2014-15 on account of interest from partnership firms is deleted from the total income of the assessee. - Decided in favour of assessee.

Summary

Issues:
1. Taxation of interest income for AY 2015-16 already assessed in AY 2014-15.

Analysis:
The appeal addressed the issue of whether interest income of ?23,57,248 from partnership firms, previously assessed for AY 2014-15, should be excluded from the total income of the assessee for AY 2015-16. The assessee contended that the income was mistakenly offered for taxation in AY 2015-16 and should not be taxed twice. The AO and CIT(A) rejected the claim due to the non-revision of the return of income by the assessee.

The assessee argued that since the income was already taxed for AY 2014-15 and not challenged, it should not be taxed again for AY 2015-16. Referring to legal precedents and a CBDT circular, the assessee asserted that the AO should correct the double taxation anomaly. The non-filing of a revised return was explained as the return was filed belatedly, preventing revision. The assessee emphasized the duty of the AO to assist taxpayers and assess correct income as per law.

The Revenue contended that the assessee did not rectify the return for filing a revised return, suggesting that the issue could be addressed under a specific section of the Act. The authorities below supported this argument.

The Tribunal found that the interest income in question belonged to AY 2014-15, not offered for taxation in that year but mistakenly included in AY 2015-16. The AO had added this income to the total for AY 2014-15, resulting in double taxation. The Tribunal emphasized the AO's duty to assess correctly and rectify any mistakes in income declaration. The CIT(A)'s dismissal based on the non-revised return was deemed incorrect, as the return for AY 2015-16 was filed before the assessment for AY 2014-15. The Tribunal held that the income, already taxed for AY 2014-15, should be excluded from AY 2015-16, directing the AO to assess the total income by excluding the said amount.

In conclusion, the Tribunal allowed the appeal, ruling in favor of the assessee and ordering the exclusion of the interest income from partnership firms from the total income for AY 2015-16, as it was already taxed for AY 2014-15, thus preventing double taxation.