ITAT Allows Rectification in Revised Return Despite Late Filing of Original Return

Introduction:

In a recent ruling, the Delhi bench of the Income Tax Appellate Tribunal (ITAT) has provided a significant relief to taxpayers. The ITAT held that rectification in a revised return would be permissible even if the original return was filed late. This ruling came in response to the case of Navneet Dutta, who had inadvertently failed to claim a loss in his original income tax return.

Background:

Navneet Dutta initially filed his original return of income on 10.01.2012, declaring a total income of Rs. 1,00,000. Unfortunately, due to a clerical/typographical error, he omitted to claim a loss of Rs. 20,000 that he had incurred during the relevant assessment year.

Realizing the mistake, Navneet Dutta filed a revised return on 14.03.2012, seeking to rectify the omission and claim the aforementioned loss. However, the Assessing Officer (AO) rejected the revised return on the grounds that it was filed after the due date.

The Appeal and ITAT's Decision:

Navneet Dutta appealed against the AO's decision to the Commissioner of Income Tax (Appeals) (CIT(A)), who ruled in favor of the assessee and directed the AO to allow the claim of loss. Unsatisfied with this outcome, the Revenue filed an appeal against the CIT(A)'s decision before the ITAT.

After considering the arguments presented by both parties, the ITAT held that rectification in a revised return should be allowed despite the late filing of the original return. The ITAT emphasized the following points in support of its decision:

1. Genuine Mistake: The assessee had made a genuine error in omitting to claim the loss in the original return. This mistake did not stem from any deliberate intention to evade taxes.

2. No Prejudice to AO: The late filing of the revised return did not cause any prejudice or loss to the Assessing Officer. The AO's ability to assess and determine the tax liability of the assessee was not affected by the delay.

3. Timely Revised Return: The revised return was filed within one year from the end of the relevant assessment year, ensuring compliance with the prescribed timeline.

4. Payment of Interest: The assessee had paid the necessary interest on the additional tax liability arising from the inclusion of the loss in the revised return.

Implications and Conclusion:

The ITAT's ruling is a welcome relief for taxpayers who have inadvertently omitted or made genuine mistakes in their income tax returns. It sets a precedent for rectification in revised returns despite the late filing of the original return, provided certain conditions, such as timely submission and payment of interest, are met.

This decision underscores the importance of ensuring accuracy in income tax returns. However, it also acknowledges that individuals can make inadvertent errors and should be given an opportunity to rectify them. The ITAT's stance promotes fairness and protects taxpayers' rights while maintaining the integrity of the tax system.