2009 (4) TMI 995 - AT - Income Tax

Appellate Tribunal directs exclusion of non-taxable gain, emphasizes AO duty to rectify errors

Rajesh Rasiklal Shah Versus Deputy Commissioner of Income Tax

The Appellate Tribunal allowed the appeal in favor of the assessee, directing the Assessing Officer (AO) to consider the rectification petition under ... - Issues involved: Appeal against rejection of petition u/s 154 by AO, whether AO should have entertained rectification petition, legal issues regarding claim, mistake apparent from record, jurisdiction under s. 154.Summary:The appeal was filed by the assessee against the order of the CIT(A)-XV, Mumbai rejecting the petition u/s 154 by the AO. The assessee had initially declared total income for the assessment year 2005-06, including long-term capital gain, which was later sought to be rectified by excluding it from taxation. The AO rejected the rectification application, which was upheld by the CIT(A) on the grounds that no mistake was caused by the AO in the intimation given u/s 154 and that no revised return was filed by the assessee. The assessee contended that the mistake was inadvertent and all details were available with the AO, who should have entertained the petition u/s 154. Legal issues were raised citing relevant case laws to support the claim.Upon considering the arguments, the Appellate Tribunal found that there was a mistake on the part of the assessee in offering long-term capital gain that was exempt from tax. The Tribunal held that the AO should have excluded the non-taxable amount from the computation of income, as it was the duty of the AO to correct such mistakes and guide the assessee. Citing precedents, the Tribunal emphasized that legitimate taxes should be determined as collectible and relief cannot be denied merely due to omission by the assessee. Therefore, the Tribunal directed the AO to consider the petition, verify the claim, and exclude the non-taxable long-term capital gain. The Tribunal set aside the orders of the AO and CIT(A) and allowed the grounds of the assessee, with a direction to give the assessee an opportunity before passing the order u/s 154.In conclusion, the appeal was allowed in favor of the assessee, emphasizing the importance of rectifying mistakes apparent from the record and ensuring correct taxation as per the provisions of the Act.