2023 (12) TMI 220 - HC - Income Tax

Rectification of mistake - Income Tax Returns were filed showing the rental income as income under two heads - assessee shown rental income in his returns under two heads i.e. one under the heading Business Income and another under the heading Income from House Property so the same was assessed twice and accordingly the income tax was paid double the amount of actual tax - petitioner also filed a revision application u/s 264 and the same came to be dismissed by the first respondent HELD THAT - A reading of the Division Bench judgment Annamallais Agencies 2002 (9) TMI 62 - MADRAS HIGH COURT referred to by the learned Senior Counsel for the petitioner would go to show that in the event if the Assessing Officer has not taken anything into consideration which are mentioned in the returns in such cases the rectification can be carried out. It is not that in the returns if something is wrongly mentioned the Assessing Officer can make correction and pass orders. This court is of the view that the AO is justified in rejecting the rectification application and also the revision petition which requires no interference. The issue that the assessee / petitioner has committed an error in filing the returns and by virtue of the said error the assessee has shown the income under two heads and thereby his income was taxed twice under two heads and this error is apparent on the Income Tax return. The said fact was admitted by the respondent and even the respondent submitted that it is a mistake purely on the part of the petitioner. Thus ultimately justice has to be rendered as nobody s income has to be taxed twice. Only re-course available in this case is by filing the revised Income Tax Returns which is available under Section 139 (5) of the Income Tax Act 1961. However the petitioner has not chosen to file the same in time. He has to file the revised returns instead he had filed the application for rectification before the second respondent revision petition before the first respondent and two writ petitions before this Court. Because of the wrong guidance and ill advise the petitioner should not be penalised. This Court is inclined to grant permission to the petitioner/assessee to file the revised return within 15 days from the date of receipt of a copy of this order. Upon filing of the revised returns by the petitioner the Assessing Officer shall process the returns in accordance with law.

Summary

Issues:
1. Challenging the order passed under Section 264 of the Income Tax Act.
2. Challenging the rejection of rectification application for Assessment Year 2017-18.

Issue 1: Challenging the order under Section 264 of the Income Tax Act:
The petitioner filed a revision application under Section 264 of the Income Tax Act, which was dismissed by the first respondent. The petitioner contended that the respondent can rectify even the Income Tax Returns if wrongly filed. Reference was made to a judgment stating that if there has been an omission by the Assessing Officer in considering the contents of the return, the mistake in assessment can be apparent. The court, after hearing both parties, agreed with the respondent's stance that rectification in Income Tax Returns cannot be made unless revised returns are filed by the petitioner.

Issue 2: Challenging rejection of rectification application for Assessment Year 2017-18:
The petitioner had rental income shown under two heads in the returns, leading to double assessment and payment of taxes. The rectification application was initially rejected but later allowed upon reconsideration, only to be rejected again. The court acknowledged the mistake made by the petitioner in filing returns and the need for rectification. It was emphasized that no one's income should be taxed twice. The court granted permission to the petitioner to file revised returns within 15 days, directing the Assessing Officer to process them accordingly. Failure to file revised returns would render the impugned orders enforceable.

In conclusion, the court disposed of both writ petitions, allowing the petitioner to rectify the error in filing returns to avoid double taxation, emphasizing the importance of filing revised returns promptly to correct such errors and ensure fair taxation.