AO Cannot Punish Assessee for Bona Fide Error Due to Incorrect ITR Filing
Fact and issue of the case
Both the appeals have been preferred by the assessee against the separate orders dated 19.09.2022 of the National Faceless Appeal Centre [hereinafter referred to as the ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). Since, common issues are involved in both the appeals, hence these have heard together and are being disposed of by this common order.
The brief facts of the case are that the assessee is an Association of Persons (AOP) who inadvertently filed the return in ITR Form 7 instead of ITR Form No.5. The said return was processed by the Central I.T.A Nos.613&614/Kol/2022 Assessment years: 2014-15 & 2015-16 Young Mens Welfare Society Processing Centre and thereby the assessee was taxed at maximum marginal rates without giving deduction of expenses.
Being aggrieved by the said action, the assessee filed a rectification application u/s 154 of the Act, however, the same was rejected in a mechanical manner by the Assessing Officer. The appeals filed by the assessee have also been dismissed by the ld. CIT(A) holding the same as barred by limitation.
Observation of the court
Before us, the ld. AR of the assessee has submitted that the appeal filed by the assessee before the CIT(A) is required to be treated within the limitation period as the same was covered by the decision of the Hon’ble Supreme Court in Suomoto Writ Petition (C) No. 3 of 2020 dated 10.01.2022. The ld. Counsel for the assessee has further submitted that the assessee has filed rectification application which has been dismissed by the Assessing Officer in a mechanical manner. The assessee inadvertently filed the return in ITR 7, however, when the defect was pointed out, the assessee rectified the defect and filed return in ITR
It has been held time and again that the Income Tax Authorities are not supposed to punish assessees for their bona fide mistake. We, therefore, set aside the impugned orders of the lower authorities and restore the matter to the file of Assessing Officer with a direction to examine the contentions raised by the assessee and tax the assessee at the rates as applicable to the assessee considering the revised return filed by the assessee.
Since the facts and issues involved are identical in both the appeals, therefore, in view of our findings given above, will mutatis mutandis apply to ITA No.614/Kol/2022.
In the result, both the appeals of the assessee are treated as allowed for statistical purposes. Kolkata, the 1st May, 2023.
In the result, appeal of the assessee is allowed and ruled in favour of the assessee