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2023 (12) TMI 648 - AT - Income TaxOrder u/s 154 denying Exemption of income u/s. 10 - dividend received was claimed to be exempt from taxation - claim of the assessee was not allowed by the AO and an order / intimation u/s 143(1) was passed making addition / adjustment - In appeal, against the order u/s 154 assessee submitted that the aforesaid income is actually interest income instead of dividend income and the aforesaid interest income was received from investments made in Government Companies - HELD THAT - We observe that in the case of DCIT vs. Justice Dilip Kumar Seth 2005 (9) TMI 239 - ITAT CALCUTTA-B ITAT held that the AO is well competent to rectify any mistake in the intimation u/s.143(1) of the Act which was brought to his notice by the assessee. Also in the case of Pawan Kumar Aggarwal vs. CIT 2014 (5) TMI 449 - DELHI HIGH COURT has held that from bare reading of section 154 of the Act, it is apparent that the power of rectification extends to amendment of an intimation or deemed intimation u/s.143(1) of the Act. The Hon ble High Court further held that this power of rectification enures even after the matter has been considered and decided in any proceedings by way of appeal or revision. It was held that necessarily this power extends even at the stage of the appeal and further appeal to the ITAT. In the case of Zen Tobacco (P.) Ltd. v ACIT 2015 (7) TMI 729 - ITAT AHMEDABAD assessee had filed its return of income declaring certain income and the same was processed under section 143(1). Subsequently, on verification of assessee's record, it was noticed that the provision of deferred tax assets of certain amount, which ought to have been deducted from total income, was not deducted but added back to amount of profit and, thus, taxable income was overstated. Therefore, the assessee filed an application under section 154 seeking for rectification of mistake along with the revised statement of income and claimed a refund. AO rejected the application observing that the assessee should have filed a revised return rather than taking recourse to section 154, which was not permissible under the Act. On appeal, the Commissioner (Appeals) dismissed the appeal. On second appeal, the Ahmedabad ITAT held that from the provisions of sections 139(1), 139(5) and 143(1) it is evident that it is not the case that revenue authorities have to accept whatever has been stated in the return and compute the taxable income mechanically. As per provisions of section 143(1), the concerned revenue authority has to examine whether any claim as made by the assessee is correct or not. This includes understatement and overstatement of the income. If the revenue authority failed to take note of any incorrect claim with regard to total income of the assessee, such failure would necessarily mean mistake apparent from the record. Thus the matter is being restored to the file of the Ld. CIT(A) to carry out necessary verifications and if the claim of the assessee is found to be correct, may be allowed relief to the assessee in accordance with law.
Issues:
The appeal filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeal), National Faceless Appeal Centre for Assessment Year 2017-18. Grounds of Appeal: The Assessee claimed exempt income under section 10, which was disallowed by the Ld. CIT(A). The Assessee contended that the income of Rs. 17,50,637 was exempt under section 10, being interest income from investments in Government Companies. Facts and Proceedings: The Assessee filed a return claiming dividend income of Rs. 17,50,637 as exempt under section 10. The Assessing Officer disallowed the claim, leading to subsequent appeals and rejections. The Assessee argued that the amount was interest income, not dividend income, from investments in Government Companies. Decision and Legal Precedents: The Ld. CIT(A) rejected the Assessee's contentions, stating that the claim could not be considered a mistake apparent from the record. However, legal precedents were cited where rectification of mistakes in income declarations was allowed even after initial processing. The ITAT decided to restore the matter to the Ld. CIT(A) for further verification and relief if the claim is found to be correct. Conclusion: The ITAT allowed the appeal for statistical purposes, emphasizing the need for proper verification of the Assessee's claim regarding the exempt income under section 10. The decision was based on the principles of justice and the duty of the Income Tax Officer to guide taxpayers on claiming rightful relief, as per relevant legal precedents and circulars. This summary encapsulates the key issues, grounds of appeal, factual background, legal arguments, and the final decision of the ITAT in the case.
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