No addition due to typographical error in the tax return: ITAT

Typographic error - Tax return - ITAT - taxscan

The Income Tax Appeal Tribunal (ITAT), Bombay benchrecently, in an appeal before it, ruled that no addition should be made due to a typographical error in the tax return by the assessee.

The aforementioned finding was made by the ITA when an appeal was lodged before it by a notary, against the order of 15/10/2019, issued under item 250 of the Income Tax Act 1961, by the Commissioner of Income Tax (Appeals) of Mumbai, for the tax year 2014-2015.

The brief facts of the case were that the assessee was a person who for the reporting year had electronically filed his tax return on 29/03/2015, declaring the total income at Rs. 1,53,634.

From the details filed during the valuation proceedings, it was observed by the department that during the 2013-14 financial year, the assessee sold a residential apartment in Bandra for a total consideration of Rs 1,00 20,000, and that the said property was jointly owned by the assessee and her son, Shri Pravin Madanlal Shah.

Upon verification of the return filed by the son of the assessee, it was further observed that he had offered under the heading of “capital gain”, the value of the consideration for the sale of the said property at Rs. 14,50,000 only, against which he had claimed deduction under Section 48 of the cost of acquisition, unindexed at Rs. 7,09,827, with the balance of Rs. 7,40,173 being offered for taxation.

Along with the bank statement of the assessee’s son confirming the amount of Rs. Section 143(3) of the Income Tax Act, treated the balance of Rs. 85,70,000 (Rs. 1,20,00,000 less Rs. 14,50,000) as sale consideration received by assessee during the financial year concerned, since the assessee’s bank statement also reflected the credit of said amount from the sale of said property to Bandra. And accordingly, the AO calculated the long-term capital gain of Rs. 1,08,637 and added the same to the total income of the assessee.

Further, it was observed that the assessee had declared the total value of the consideration in the return of income at Rs. 23,72,161, and it was submitted by the assessee that he had received Rs. 15,16,161 on the sale of gold ornaments.

Since no explanation has been offered regarding the balance amount of Rs. 8,57,000 (Rs. 23,73,161 minus Rs. 15,16,161), the AO has added the differential amount as income from other sources, and subsequently refused the exemption of Rs. 7,23,711, claimed under Section 54F for the sale of gold ornaments.

On appeal, the CIT(A) voids its order dismissed the appeal filed by the assessee in its entirety, and it is aggrieved that the assessee preferred the current appeal to the ITAT Panel.

With Sri. Bhavya Sundesha on behalf of the assessee saying that this was due to the error made while filing the tax return, the consideration for the sale of a residential apartment was declared at Rs. 8,57,000 instead of Rs. 85,70,000 and hence the total value of the consideration upon transfer of two long term fixed assets, disclosed in the return at Rs. 23,73,161 (i.e. Rs. 15,16,161 + Rs. 8,57,000), Smt. Smita Nair, Sr.AR vehemently relied on the orders issued by lower authorities, thus asserting that the entire consideration for the sale of the residential apartment should be taxed, and that since the assessee’s son declared only part of the consideration received in his account, the amount of the balance credited to the assessee’s bank account was to be taxed solely in the hands of the assessee.

However, upon hearing the arguments of both parties and going through the documents available on file, the ITAT bench consisting of Om Prakash Kant, the accountant member, as well as Sandeep Singh Karhail, the judicial member, observed what follows:

“In the present case, there is no allegation that the amount of Rs. 8,57,000 has been received by the assessee or credited to his bank account and no document has been registered in this regard. Simply because that the assessee could not explain the amount of the balance of Rs. 8,57,000, as mentioned in his calculation of income and yield, the same was added to the total income of the assessee stating the same as income from other sources”

“Thus, in view of the above, we find no basis to maintain the addition of Rs. 8,57,000, which appears to be merely a typographical error on the part of the assessee, when filing the tax return The ITAT bench added.

Thus allowing the assessee’s appeal, the Mumbai ITAT ruled:

“We order the AO to remove the addition of Rs. 8,57,000 contributed to the total income of the assessee”

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Pawan M. Shah v Income Tax Officer

Counsel for the Appellant: Shri. Bhavya Sundesha

Counsel for the Respondent: Smt. Smita Nair

CITATION: 2022 TAXSCAN (ITAT) 1657

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