The Income Tax Appellate Tribunal ( ITAT ), Mumbai Bench, has recently in an appeal filed before it, held that no addition shall be made on the ground of typographical error in the Income Tax Return by the assessee.
The aforesaid observation was made by the ITAT when an appeal was preferred before it by an assessee, as against the order dated 15/10/2019, passed under section 250 of the Income Tax Act, 1961, by the Commissioner of Income Tax (Appeals) Mumbai, for the assessment year 2014– 15.
The brief facts of the case were that the assessee was an individual, who for the year under consideration, had e-filed her return of income on 29/03/2015, declaring the total income at Rs. 1,53,634.
From the details filed during the course of assessment proceedings, it was so observed by the department that during the financial year 2013 – 14, the assessee had sold residential flat at 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 assessee’s son, it was further observed that he had offered under the head ‘capital gain’, the value of consideration from the sale of the said property at Rs. 14,50,000 only, against which he had claimed deduction under section 48 the cost of acquisition, without indexation at Rs. 7,09,827, with the balance amount of Rs. 7,40,173 being offered for taxation.
With the bank statement of the assessee’s son confirming the amount of Rs. 14,50,000 received by him, the Assessing Officer (AO) vide order dated 30/11/2016, passed under section 143 (3) of the Income Tax Act, treated the balance amount of Rs. 85,70,000 (Rs. 1,20,00,000 minus Rs. 14,50,000) as sale consideration received by the assessee during the relevant financial year, since the assessee’s bank statement also reflected the credit of the said amount from the sale of the said property at Bandra. And accordingly, the AO computed the long term capital gain of Rs. 1,08,637 and added the same to the total income of the assessee.
Further, it was so observed that the assessee had declared the full value of consideration in the return of income at Rs. 23,72,161, and it was submitted by the assessee that she had received Rs. 15,16,161 on sale of gold ornaments.
Since, no explanation was offered in respect of the balance amount of Rs. 8,57,000 (Rs. 23,73,161 minus Rs. 15,16,161), the AO added the differential amount as income from other sources, and subsequently denied the exemption of Rs. 7,23,711, claimed under section 54F in respect of sale of gold ornaments.
In appeal, the CIT(A) vide his order dismissed the appeal filed by the assessee in entirety, and it is being aggrieved by the same, that the assessee has preferred the instant appeal before the ITAT Bench.
With Shri. Bhavya Sundesha, on behalf of the assessee submitting that it was due to the error committed while filing the return of income, the consideration for sale of residential flat was declared as Rs. 8,57,000 instead of Rs. 85,70,000 and accordingly the full value of consideration on transfer of two long-term capital asset, 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 upon the orders passed by the lower authorities, thereby submitting that the entire consideration on sale of residential flat was to be taxed, and that since the assessee’s son had only declared partial amount of consideration which was received in his account, the balance amount credited in assessee’s bank account was to be taxed in assessee’s hands only.
However, hearing the arguments of both the sides and perusing the materials available on record, the ITAT Bench consisting of Om Prakash Kant, the Accountant Member, along with Sandeep Singh Karhail , the Judicial Member, observed as follows :
“In the present case, there is neither any allegation that the amount of Rs. 8,57,000 has been received by the assessee or credited in her bank account nor any material has been brought on record in this regard. Merely because the assessee could not explain the balance amount of Rs. 8,57,000, as mentioned in her computation of income and return, the same was added to the total income of the assessee by stating the same as income from other sources”
“Thus, in view of the above, we find no basis in sustaining the addition of Rs. 8,57,000, which appears to be merely a typographical error on the part of the assessee, while filing the return of income.” The ITAT Bench added.
Thus allowing the assessee’s appeal, the Mumbai ITAT ruled:
“We direct the AO to delete the addition of Rs. 8,57,000 made to the total income of the assesse”
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