2024 (9) TMI 28 - HC - Income Tax

Rectification of mistake - penalty notice passed u/s 221(1) imposing penalty on account of filing wrong return - HELD THAT - As apparent that the petitioner was having full knowledge of having filed return in the wrong format. More so, as he had also filed return for the AY 2014-15 in the ITR Form 7, which was later on revised by him and ITR was filed under Form No.5 subsequently. Once he has himself corrected his ITR for the subsequent AY 2014-15, there was no occasion for the petitioner not to correct his ITR for AY 2013-14. The petitioner has remedy in terms of Section 154 as above for seeking necessary rectifications. If such an application is moved by the petitioner, the respondent shall decide the same on the basis as above, and allow the petitioner, if required, to file return. No further adjudication is required by this Court at this stage. Petition is accordingly dismissed in aforesaid terms.

Summary

Issues:
1. Challenge to penalty notice under Section 221(1) of the Income Tax Act, 1961 for filing a wrong return for AY 2013-14.
2. Objection to not availing remedies under Section 154 and Section 249 of the Act.
3. Request for withdrawal of penalty and fresh notice under Section 143(1) for correcting the return.

Analysis:
1. The petitioner challenged the penalty notice for filing a wrong return for AY 2013-14. The respondent highlighted that the petitioner filed the return in the wrong format, leading to a demand of Rs. 68,36,280. The respondent argued that the petitioner repeated the mistake in AY 2014-15 as well. The respondent contended that the petitioner did not respond to the central processing center's intimation regarding the defective return, resulting in the demand. The respondent emphasized that the petitioner had not availed the correct procedures and remedies available under the Income Tax Act, 1961.

2. The respondent objected that the petitioner circumvented the remedies available under Section 154 and Section 249 of the Act. The petitioner argued that the respondent did not provide a fair opportunity and requested the withdrawal of the penalty with a fresh notice under Section 143(1) to correct the return. The Court considered Section 154 of the Act, which allows for rectification of mistakes apparent from the record. The Court noted that the petitioner had corrected the return for AY 2014-15, indicating awareness of the mistake. The Court advised the petitioner to utilize the remedy under Section 154 for seeking necessary rectifications.

3. The Court emphasized that the petitioner had the option to seek rectifications under Section 154 of the Act. The Court dismissed the petition, stating that the petitioner should avail of the remedy provided under the Act to rectify the mistakes in the return. No further adjudication was deemed necessary at that stage, and all pending applications were disposed of accordingly.