2023 (3) TMI 607 - AT - Income Tax

Deduction u/s 11(1) - benefit of accumulation u/s 11 - HELD THAT - The right person in right manner and shall not disallow the eligible deductions on mere technicalities. The Revenue Authorities ought to have followed the ratio laid down by the Hon ble Delhi High Court in the case of Pawan Kumar Agarwal 2014 (5) TMI 449 - DELHI HIGH COURT and should have been allowed the benefit of accumulation u/s 11 Sub Section 2 of the Act to the assessee. We allow the assessee s Grounds of appeal and direct the authorities to allow the benefit of accumulation u/s 11 sub Clause 2 of the Act to the assessee. Appeal of the assessee is allowed.

Summary

Issues involved:
The judgment involves the denial of benefit of accumulation u/s 11(2) of the Income Tax Act, the rejection of revised return and Form 10B, and the application of Section 154 for rectification of mistakes.

Denial of Benefit of Accumulation u/s 11(2):
The assessee filed an appeal against the order of the ld. Commissioner of Income Tax (Appeals) denying the benefit of accumulation u/s 11(2) for the assessment year 2016-17. The assessee contended that the order was bad in law and on facts. The CIT(A) upheld the denial by the CPC, stating that there was no error apparent from the record regarding the accumulation claimed. The assessee argued that the denial was based on a technicality and should not disallow eligible deductions. The ITAT, considering the precedent set by the Delhi High Court, allowed the appeal, directing the authorities to grant the benefit of accumulation u/s 11(2) amounting to Rs. 34,73,760 to the assessee.

Rejection of Revised Return and Form 10B:
The CIT(A) also rejected the revised return and Form 10B filed by the assessee. The grounds of appeal related to this rejection were dismissed by the CIT(A). The ITAT did not specifically address this issue in the judgment, as the focus was primarily on the denial of the benefit of accumulation u/s 11(2).

Application of Section 154 for Rectification:
The assessee had filed an application u/s 154 of the Income Tax Act before the CPC to rectify the denial of accumulation benefit. The CPC rejected the application, stating that there was no error apparent from the record to support the claim. The ITAT, however, emphasized that the power of rectification under Section 154 extends to amending intimation even after the matter has been considered in appeal or revision. Citing a Delhi High Court case, the ITAT highlighted that technicalities should not obscure justice, and any mistake, including those by the parties, should be rectified. Consequently, the ITAT allowed the appeal and directed the authorities to grant the benefit of accumulation u/s 11(2) to the assessee.