The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has condoned a substantial delay in filing an appeal and directed the Assessing Officer (AO) to reassess the taxpayer’s income after considering the correct salary details, revised return, Form 26AS, and Form 12BB.
The bench of Pawan Singh (Judicial Member) and Makarand Vasant Mahadeokar (Accountant Member) observed that the taxpayer should not be denied an opportunity to have his case examined on merits merely because he was pursuing alternative remedies under a bona fide belief.
The taxpayer was employed with two different companies during the relevant financial year. He worked with Capgemini India Private Limited from April 1, 2016, to November 7, 2016, and subsequently joined MSCI Services Private Limited for the remaining part of the year. His total salary income during the financial year amounted to approximately ₹10.31 lakh.
According to the taxpayer, while filing his income tax return, he inadvertently confused “salary income” with “gross total income” and failed to claim certain eligible exemptions. He further stated that, by mistake, he included salary income pertaining to the subsequent financial year and also claimed TDS credit relating to that later year. As a result, excess income was offered to tax.
Following processing of the return by the Central Processing Centre (CPC), a tax demand of ₹1.18 lakh was raised against him. The taxpayer thereafter attempted to rectify the error by filing a revised return and subsequently multiple rectification applications under Section 154 of the Income Tax Act. However, these efforts were unsuccessful.
The taxpayer eventually filed an appeal before the Commissioner of Income Tax (Appeals). However, the CIT(A) dismissed the appeal at the threshold, holding that there was an unexplained delay in filing the appeal and refusing to condone the delay.
The taxpayer then approached the ITAT, contending that the delay was neither deliberate nor intentional. He argued that he had been continuously pursuing alternative statutory remedies and was under a bona fide belief that the issue would be resolved through the rectification process. He further pointed out that a substantial portion of the intervening period overlapped with the COVID-19 pandemic, a factor that had not been adequately considered by the appellate authority.
The Tribunal observed that the taxpayer had consistently pursued available remedies by filing rectification applications before the CPC and the Assessing Officer. It noted that neither the CPC nor the AO had examined the substantive claim on merits, and the CIT(A) had also declined to adjudicate the matter due to the delay issue.
The Bench accepted the taxpayer’s contention that he was genuinely interested in contesting the matter and seeking correction of an alleged inadvertent error in the return of income. Considering the peculiar facts and circumstances of the case, the Tribunal held that the delay deserved to be condoned.
The ITAT set aside the impugned order and restored the matter to the jurisdictional Assessing Officer for fresh examination.
While remanding the matter, the Tribunal directed the Assessing Officer to reconsider the taxpayer’s case afresh and examine the revised return filed by him. It specifically instructed the AO to take into account Form 26AS and Form 12BB while determining the correct taxable income for the relevant assessment year.
The Tribunal further directed that the taxpayer be granted a fair and reasonable opportunity of hearing before any fresh order is passed. At the same time, it advised the taxpayer to exercise greater diligence in future tax compliance and to furnish complete details before the tax authorities.
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