2014 (4) TMI 670 - AT - Income Tax

Typographical error Error committed at the time of filing e-return Non-exercise of power u/s 154 of the Act - Held that - Due to some clerical error the decimal separator was not put in the total income declared by the assessee and as such the total income was treated at Rs.3, 62, 16, 725/- instead of Rs.3, 62, 167.25 it is an admitted fact that of the AO that there was a clerical error in writing the total income of the assessee - it was the duty of the AO to correct the figure exercising his powers u/s 154 of the Income Tax Act - On the failure of the AO to correct the figure it was the duty of the CIT(A) to rectify the defect - the powers of the CIT(A) are coextensive with that of AO - No law of the land can justify the action of the lower authorities in taxing the assessee for the income which in fact has not been received by the assessee but due to some error in writing the figure to which the Revenue Authorities have also not disputed thus the AO is directed to assess the income of the assessee treating the total income at Rs.3, 62, 167.25 Decided partly in favour of Assessee.

Summary

Issues:
1. Incorrect assessment of income by the lower authorities due to a clerical error in the e-filing of the return.
2. Rejection of the revised return by the Assessing Officer (AO) and Commissioner of Income Tax (Appeals) (CIT(A)).
3. Failure of the lower authorities to rectify the clerical error in the total income figure.

Analysis:
1. The main issue in this case revolves around the incorrect assessment of income by the lower authorities due to a clerical error made by the assessee during e-filing of the return. The assessee had inadvertently entered the wrong figures without the decimal separator, resulting in the total income being wrongly shown as Rs.3,62,16,725/- instead of Rs.3,62,167.25. Despite the mistake being pointed out and a revised return filed, both the AO and CIT(A) rejected the claim, citing defects and the timing of the revised return filing post-assessment proceedings.

2. The rejection of the revised return by the AO and CIT(A) further complicated the matter. The AO completed the assessment accepting the initial income figure, and the revised return was dismissed due to defects and being filed after the assessment proceedings. However, the clerical error in the total income figure was acknowledged by the AO in a remand report, where it was confirmed that the figure should have been Rs.3,62,167.25. The failure to rectify this error by the authorities raised questions about the proper exercise of powers under section 154 of the Income Tax Act.

3. The Tribunal, upon review, found that the clerical error in the total income figure was undisputed and should have been corrected by the AO or CIT(A). The Tribunal emphasized that no justification exists for taxing the assessee based on an income figure that was erroneously stated and not received by the assessee. Consequently, the appeal was partly allowed, directing the AO to assess the income at the correct figure of Rs.3,62,167.25. This decision highlighted the duty of authorities to rectify factual errors to ensure fair and accurate assessments in line with the law.