2022 (2) TMI 983 - AT - Income Tax

Rectification of mistake u/s 154 seeking rectification of mistake in the revised return of income - HELD THAT - There is substance in the claim of the assessee that in his revised return of income the gross total income was wrongly stated at ₹ 40,42,980/- as against income of ₹ 4,04,298/- (as originally returned), which mistake had crept in by wrongly suffixing one Zero to the amount of the income as originally returned. Our aforesaid conviction is supported by the very fact that even in the revised return of income the tax liability on the amount of income so returned i.e. ₹ 40,42,980/- had been reflected at the same amount as shown in the original return of income i.e. ₹ 15,306/- . In our considered view, the aforesaid facts duly lends credence to the claim of the assessee that the income reflected in the revised return of income on account of a mistake which was glaring on the very face of it was therein wrongly mentioned. We are of a strong conviction that the income returned by the assessee in his revised return at ₹ 40,42,980/- suffered from a mistake which was apparent, patent, obvious and glaring from record, which therein rendered the same amenable for rectification u/s.154 of the Act. We, thus, not being able to persuade ourselves to subscribe to the summarily dismissal of the assessee s application u/s.154 of the Act by the Assessing Officer, which thereafter, had been upheld by the CIT(A), therein set-aside the order of the first appellate authority and quash the order passed by the Assessing Officer u/s.154 of the Act dated 26.06.2019. Accordingly, the A.O is directed to rectify the mistake as claimed by the assessee in his application filed u/s 154 of the Act. The Ground of appeal No.1 is allowed in terms of our aforesaid observations.

Summary

Issues:
1. Rectification of mistake in revised return of income under Sec. 154 of the Income-tax Act, 1961.

Analysis:
The appeal was filed against the order passed by the CIT (Appeals) arising from the Assessing Officer's order under Sec. 154 of the Income-tax Act, 1961 for the assessment year 2010-11. The primary issue raised by the assessee was the determination of total income and rejection of the application under Sec. 154 for correction of a demand. The assessee, a retired employee of State Bank of India, initially filed a return of income declaring total income of &8377; 4,04,298/-, which was later revised to &8377; 40,42,980/-. Despite the tax liability remaining the same, a demand was raised against the assessee based on the revised return. The application seeking rectification of the mistake in the revised return was rejected by the Assessing Officer, leading to the appeal.

The core contention revolved around whether the application for rectification of the mistake in the revised return was maintainable under Sec. 154 of the Act. The original and revised returns showed a significant variance in total income, but the tax liability remained constant. The gross total income solely comprised salary income, and discrepancies in the figures were evident. The Tribunal observed that the mistake in the revised return, where an additional zero was added, was apparent and glaring. The assessee's claim that the revised income figure was erroneously stated by adding a zero to the original return carried substantial weight, supported by the consistency in tax liability despite the inflated income amount.

The Tribunal concluded that the mistake in the revised return was clear and required rectification under Sec. 154 of the Act. The order of the Assessing Officer rejecting the application was set aside, and the CIT (Appeals) decision upholding the rejection was quashed. The Tribunal directed the Assessing Officer to rectify the mistake as claimed by the assessee in the application under Sec. 154. The appeal was allowed based on these observations. The general grounds of appeal not pressed were dismissed, and the overall result favored the assessee.

In summary, the Tribunal's decision centered on the rectification of a mistake in the revised return of income under Sec. 154 of the Income-tax Act, 1961. The judgment highlighted the discrepancies in the income figures, the consistency in tax liability, and the need for rectification based on the apparent error in the revised return. The Tribunal's detailed analysis supported the assessee's claim, leading to the allowance of the appeal and the direction for rectification by the Assessing Officer.