Rectification to Correct Income Mistakenly Offered Twice Cannot Be Denied: ITAT Restricts Addition to Prevent Double Taxation [Read Order]

The Income Tax Appellate Tribunal (ITAT), Jodhpur, has held that rectification under Section 154 of the Income Tax Act, 1961, is permissible where an inadvertent mistake in return filing results in double taxation of the same income.

The appellant, M/s Jain Natural Pickles Private Limited, faced a survey under Section 133A of the Income Tax Act, 1961, during which it voluntarily surrendered income of ₹64,35,168 pertaining to Assessment Years 2015-16 and 2016-17. Out of this, ₹42,99,430 was already brought to tax in Assessment Year 2015–16 under Section 143(3).

However, while filing its return for Assessment Year 2016-17, the company inadvertently offered the entire surrendered amount again, instead of restricting it to the balance ₹21,35,738. The Assessing Officer (AO) rejected the subsequent rectification petition filed under Section 154, holding that such a correction was beyond the scope of “mistake apparent from record.”

Appearing the appellant, Amit Kothari, Chartered Accountant, contended that the inadvertent declaration of the entire amount led to impermissible double taxation, as survey records clearly established that the larger portion had already been taxed in the earlier year. He argued that the rectification sought was not a fresh claim or deduction but a correction of an obvious mistake apparent from record.

Representing the Revenue Authorities, Brij Lal Meena, Additional CIT-DR, supported the orders of the AO and Commissioner of Income Tax (Appeals) [CIT(A)], contending that once the assessee had voluntarily offered the income in its return, no rectification could be entertained except through filing of a revised return. He placed emphasis on the Supreme Court’s decision in Goetze (India) Ltd. v. CIT (2006) 284 ITR 233, which restricted AO from entertaining fresh claims outside revised returns.

The Bench comprising Anikesh Banerjee, Judicial Member and Dr. Mitha Lal Meena Accountant Member, ruled in favour of the assessee. It distinguished the Goetze (India) ruling by observing that the present case was not about making a new claim but correcting an error that resulted in double taxation.

The bench held that the survey and assessment records of Assessment Year 2015-16 clearly demonstrated that ₹42,99,430 had already been taxed, and therefore, subjecting it again in Assessment Year 2016-17 was impermissible.

This documentary evidence of survey records under Section 133A and the completed assessment order under Section 143(3) for Assessment Year 2015-16, directly impacted the application of Section 154, as it demonstrated a mistake apparent from record warranting rectification.

Accordingly directed the AO to restrict the addition to ₹21,35,738 and delete the balance amount.

Thus the appeal was allowed.

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