AO Can’t Reject Rectification Application Merely on Basis of His Conviction That No Mistake Apparent on Record | ITAT

Case Details: Jalaram Transport vs Assistant Commissioner of Income-tax - [2025] 170 taxmann.com 303 (Raipur-Trib.)

Judiciary and Counsel Details

• Ravish Sood, Judicial Member & Arun Khodpia, Accountant Member
• G.S. Agrawal, CA for the Appellant.
• Dr. Priyanka Patel, Sr. DR for the Respondent.

Facts of the Case

The assessee was a partnership firm. It was also a partner in certain other firms. The assessee received a share of profit from said partnership firms and claimed said amount to be exempt under section 10(2A). The Central Processing Centre (CPC) denied the same, holding that the assessee failed to claim exempt income in the prescribed schedule of return income. It was contended that such facts were not discernible from the P & L Account and computation of the assessee.

Subsequently, the assessee made an application before the Assessing Officer (AO) seeking rectification of mistakes apparent from the record under section 154. However, AO rejected the application, contending that it could not be considered a mistake apparent from the record.

On appeal, CIT(A) upheld the order passed by the AO. The matter reached the Raipur Tribunal.

ITAT Held

The Tribunal held that it was not in dispute between the assessee and the AO that the exemption claimed by the assessee under section 10(2A) was lawfully allowable. The controversy had cropped up on account of the revenue’s conviction that the assessee failed to claim the exempt income in the prescribed schedule of return income. Also, such facts were not discernible from the P & L account and computation of the assessee.

The assessee was entitled to claim exemption regarding the share of profit received from the partnership firm, wherein the assessee was a partner. Further, the computation of the total income of the assessee reflected the fact that the assessee had income generated through various partnership firms and had received a share in the profit of such firms, which presupposed to be taxed in the hands of respective partnership firms, therefore, the same cannot be taxed again in the hands of the assessee and the exemption under section 10(2A), hence, shall be available to the assessee.

Accordingly, the order passed by the AO under section 154 was to be quashed, and the exemption under section 10(2A) was to be allowed to the assessee with respect to the share of profit received by the assessee from the partnership firm in which the assessee is a partner.

List of Cases Reviewed

• M/s BPS Infrastructure v. ITO, Ward-1(3), Raipur, Tax Case No, 87 of 2024, dated 12.04.2024 (Para 8.3)
• Checkmate Services Pvt. Ltd. v. CIT [2022] 143 taxmann.com 178 (SC) (Para 8.4)
• Rohan Korgaonkar v. DCIT (2024) 159 taxmann.com 321 (Bombay) (Para 8.5) followed.
• Parva Buildcon v. DCIT, ITA No. 357/RPR/2023 dated 11.01.2024
• Kunjbihari Agrawal, ITA No. 17-18/RPR/2024 dated 31.01.2024 (Para 8.3) distinguished.

List of Cases Referred to

• Rohan Korgaonkar v. Dy. CIT [2024] 159 taxmann.com 321/298 Taxman 159 (Bombay) (para 8.5).