2023 (5) TMI 787 - AT - Income Tax

Rectification u/s 154 - disallowance claim of the amount of the exempted allowance - rectification request of the assessee is rejected as there was no mistake apparent from the record in the order passed u/s 143(1)(a) as no claim of the amount of the exempted allowance was made in the return of income and therefore, there being difference in the amount of salary appearing in the Form No. 26AS - HELD THAT:- It can be said that assessee did not make any claim for exempted allowance in the return of income, thus omission was on the part of the assessee and therefore, there is no mistake in the order passed u/s 143(1) by the CPC. Accordingly, we uphold the finding of the CIT(A) of rejecting the claim of rectification of order u/s 143(1)(a) of the Act.

Whether CIT(A) has rejected the claim of allowing relevant exemption on merit? - We find that the assessee made a fresh claim before the CIT(A) which was rejected by CIT(A) on the ground that no relevant documents in support of exemption was filed during the first appellate proceedings before him and said claim of exemption was sought merely on the basis of the Form No. 16.

But we are of the opinion that if the assessee is otherwise eligible for exemption under the provisions of the Act, she should not be deprived merely for the reason that she failed to report the claim properly in the form prescribed for filing return of income. Assessee submitted that the assessee is willing to produce all the documents in support of exemption claimed, if matter is restored back to the AO.

We feel it appropriate to restore this issue back to the file of the AO with the direction to the assessee to produce all necessary evidence in support of its claim of exemption of the allowances. AO is directed to examine the said claim and allow in accordance with law after due verification and enquiry if so required