2023 (10) TMI 700 - AT - Income Tax

Rectification u/s 154 - During filing in audit report in Form No. 10 amounts are interchanged, and the form was filed with mentioning the wrong amount by mistake - demand in intimation u/s 143(1) - accumulation of income u/s 11(2) restricted - computing the total income of the appellant institution more as against NIL returned income on the reasoning that the accumulation of income u/s 11(2) has correctly been allowed instead of amount as claimed by the appellant - HELD THAT - The issue is well settled, and the ld. DR has also accepted that the mistake occurred only in the audit report and the claim of the assessee is genuine. The ld. AR invited our attention in ITR 7 where it is mentioned that the correct figures in claim of section 11(1)(2) of the Act. The assessee submitted the Form No. 10 and modified Form where the rectification was done by the auditor. It is very clear that there is no mistake in the return of income but mistake was occurred in the audit report which was duly rectified by the said auditor. Accordingly we accept that the said mistake is apparent from the record which has covered u/s 154 of the Act. The ld. DR was not able to submit any contrary judgment or fact against the assessee s submission. Accordingly, we accept the ground of the assessee and sent back the matter to the file of the ld. AO with direction, the ld. AO rectified the intimation u/s 143(1) and pass the order accordingly. Assessee appeal allowed.

Summary

Issues Involved:
The appeal against the order of NFAC, Delhi under the Income Tax Act 1961 for A.Y. 2017-18.

Ground 1:
The CIT(A) confirmed the action of the assessing officer CPC under sections 154 and 143(1) of the Act, making prima facie adjustment to the total income of the appellant institution, which was contested by the appellant as not in line with the provisions of section 143(1)(a)(ii) of the Act.

Ground 2:
The CIT(A) was criticized for restricting the accumulation of income under section 11(2) at a lower amount than claimed by the appellant, despite evidence supporting the higher claim, leading to the confirmation of the adjustment under sections 143(1) and 154.

Ground 3:
The appellant requested the liberty to modify the grounds of appeal during the hearing.

Case Background:
The appellant, a trust registered under section 12A(a) of the Act, filed a return for A.Y. 2017-18 claiming accumulation of income under section 11(2) at Rs. 13,51,645, later corrected to Rs. 4,20,986 in an amended Form No. 10. The CPC's intimation under section 143(1) restricted the accumulation to Rs. 4,20,986, resulting in a tax liability of Rs. 1,37,998, which the appellant sought to rectify under section 154, but the AO did not accept. The CIT(A) upheld the AO's decision, leading to the present appeal.

Judgment:
After considering submissions and documents, it was acknowledged that the mistake in the audit report, not the return, led to the discrepancy in the claimed amount of accumulation. Citing a relevant ITAT Bangalore Bench case, it was concluded that the mistake was rectifiable under section 154, as the intimation under section 143(1) did not constitute an assessment. The absence of contrary evidence or judgments led to the acceptance of the appellant's grounds, directing the AO to rectify the intimation under section 143(1) accordingly.

Outcome:
The appeal of the assessee was allowed, and the matter was remanded to the AO for rectification as per the directions provided in the judgment.

This summary captures the issues involved, case background, judgment details, and the final outcome of the legal judgment delivered by the Appellate Tribunal ITAT Jodhpur.