ITAT Orders AO to Remove the Addition For Typo in ITR

The Income Tax Appellate Tribunal ( ITAT ), Mumbai Bench, in a petition furnished to it stated that there would be no addition incurred on the basis of a typographical error in the ITR via the taxpayer.

ITAT, before-mentioned observation when a plea was chosen before it via the taxpayer, as against the order on 15/10/2019, passed under section 250 of the Income Tax Act, 1961, via the Commissioner of Income Tax (Appeals) Mumbai, for the assessment year 2014-15.

The major facts related to the case, the taxpayer was an individual and is under the consideration for the year and would have e-filed her income tax return on the date 29.03.2015 showing a total income of Rs 1,53,634.

Through the information furnished in the assessment proceedings, the department found that in the FY 2013-14, the taxpayer sold the residential flat located at Bandra for a total consideration of Rs 1,00,20,000 and the specified property was owned via the taxpayer and her son, Shri Pravin Madanlal Shah.

On the validation of the return which has been furnished by the taxpayer’s son, it monitored that he proposed beneath the head capital gain the consideration value from the dale of the specified property at Rs 14,50,000 and against that he avail the 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.

Confirmation from the bank statement of the taxpayer’s son the amount of Rs. 14,50,000 which has been obtained via 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 the sale consideration obtained via taxpayer in the related fiscal year as the taxpayer’s bank statement shows the credit of the specified amount via the sale of the property at Bandra as per that, AO calculated the long term capital gain of Rs. 1,08,637 and sum that to the taxpayer’s total income.

Assessee shows the full value of the consideration in the income return of Rs 23,72,161 and was furnished via taxpayer which has would have obtained Rs 15,16,161 for the gold ornaments sale.

As no elaboration was proposed for the balance amount of Rs 8,57,000 (Rs. 23,73,161 minus Rs. 15,16,161), AO summed the differential amount since the income via additional sources, and refuse Rs. 7,23,711 exemption which has been claimed under section 54F with regard to the gold ornaments sale.

In the petition, the CIT(A) vide his order refused the petition furnished via taxpayer in full, and the same would be aggrieved by it, that the taxpayers chose the instant appeal to the ITAT Bench.

On behalf of taxpayers, Shri Bhavya Sundesha furnished that the same was because of the error performed during income tax return filing, for the sale of the residential flat a consideration was shown as Rs 8,57,000 rather than Rs. 85,70,000 and as per that the full consideration value on transfer of two long-term capital asset, mentioned in the return at Rs. 23,73,161 (i.e. Rs. 15,16,161 + Rs. 8,57,000), Smt. Smita Nair, Sr.AR laid on the full consideration on the residential flat sale would subject to tax, as the declaration of the partial amount of the consideration was there only performed by the taxpayers that were obtained in his account, the balance amount credited in the account of the taxpayer shall be levied to tax merely by the taxpayers.

But, hearing the arguments from each side and perusing the materials available on record, the ITAT Bench comprises Om Prakash Kant, the Accountant Member, including 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 stated.

Recommended: ITAT Removes Addition as A.O. Didn’t Give Option for Witness Cross-Examination

Mumbai ITAT stated that permitting the taxpayer petition: “We direct the AO to delete the addition of Rs. 8,57,000 made to the total income of the assessee”