2023 (5) TMI 1105 - AT - Income Tax

Rectification of mistake u/s 154 - salary income - denying the HRA Exemption claimed u/s 10(13) - taxing the perquisites value twice - HELD THAT - On going through the Paper Book filed by the assessee in Form 16 in which the value of perquisite u/s 17(2) has been added into the income of the assessee whereas it has been twice considered by the CPC which is wrong. Therefore, the addition is to be deleted. In Form 16, the employer has also given exemption u/s 10(13A) for HRA and employer has also granted deduction under Chapter VI A out of which part is breakup of LIC premium, unit linked insurance plan, housing loan principal repayment and employee PF has also been allowed under section 80C. Without rejecting the Form No. 16 by the revenue authorities they are bound to accept the income/exemption/deductions and other contents therein shown in the Form No. 16 issued by the employer. Section 192 has cast duty upon the employer for deducting tax on the estimated income of employees at per the rate in force for the particular financial year and the employer has to issue Form No. 16 as per Rule 31(1)(a). Appeal of the assessee allowed.

Summary

Issues involved:
The appeal filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi, rejecting the appeal on various grounds.

Grounds of Appeal:
1. The CIT(A) erred in passing the order and should have accepted the claims of the Appellant.
2. The addition in the intimation u/s 143(1) without grounds should be rectified under section 154.
3. CIT(A) erred in denying the HRA Exemption and partly allowing the deduction u/s 80C.
4. Order passed under section 250 lacked application of mind.
5. Request for leave to add, amend, alter, or delete any grounds of appeal.

Details of the Judgment:
The assessee, an employee of Wipro Ltd., filed a return of income under section 139(1) of the Income Tax Act, 1961, declaring total income and claiming deductions under various sections. Disallowances were made during the processing under section 143(1)(a), leading to a higher assessed income. The assessee's rectification application was rejected, and the appeal before CIT(A) was dismissed, citing non-coverage under section 154 of the Act based on a Supreme Court judgment.

The appeal was filed before the Tribunal after a delay, supported by reasons and judgments for condonation. The AR argued that all documents supporting deductions/exemptions were provided, including Form 16, which was not considered during processing. The CIT(A) was criticized for not accepting the claim, with the mistakes being apparent from the record.

The DR opposed the condonation petition, stating the benefits claimed were not covered under section 154. However, the delay in filing the appeal was condoned after explanations were provided. The Tribunal noted discrepancies in the processing of the return and the rejection of rectification without reasons. The Form 16 issued by the employer supported the assessee's claims, and the appeal was allowed based on the totality of facts.

Therefore, the Tribunal allowed the appeal of the assessee, emphasizing the employer's duty to issue Form 16 accurately and the need for the revenue authorities to accept the income/exemption/deductions as per the form issued.

Decision:
The appeal of the assessee was allowed by the Tribunal, considering the discrepancies in processing, the rejection of rectification, and the employer-issued Form 16 supporting the assessee's claims.