“A Right Tax has to be Collected from Right Person”, CPC bound to Correct Wrong Adjustment made through Automated Process: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) observed that “ a right tax has to be collected from right person” and held that Centralised Processing Centre (CPC) is bound to correct wrong adjustments made through an automated process.

The return of income of the assessee, Arya Samaj was filed on 21.09.2015 declaring income at nil after claiming exemption under section 11 of the Income Tax Act, 1961. Income from business or profession was shown at Rs. 64,33,801/-, amount applied for charitable purposes on the capital account was shown at Rs. 4,57,822/-.

Further, an amount of Rs. 53,77,479/- was claimed as deemed to have been applied to charitable or religious purposes in India as per clause (2) of the Explanation to section 11(1) and an amount of Rs.13,96,850/- was claimed as amount accumulated or set apart for application to charitable or religious purposes to the extent of 15% of income. 

The CIT(A) held that it is apparent that any claim which is inconsistent with any other entry made in the return of income will constitute “an incorrect claim apparent from any information in the return” as defined in the Explanation to section 143(1) and is liable to be disallowed.

It was submitted that the assessee has wrongly filled column A(i) about “Other details” of the ITR7 and since CPC is an automated process, the adjustment has also been wrongly made. It was argued that had there been a notice issued before adjusting, the same would have been brought to the notice of the revenue authorities.

A Coram comprising of Dr B. R. R. Kumar, Accountant Member and Sh. Yogesh Kumar US, Judicial Member held that “a right tax has to be collected from the right person and though the CPC has processed the return based on the information given by the assessee, and when the information given by the assessee itself is incorrect in filling of the relevant column, the same needs to be allowed to be rectified in the interest of justice.”

While allowing the appeal, the Tribunal remanded the matter back to the file of the JAO to consider the earlier return and subsequent return filed by the assessee and the mistake in filling column no. An (i) be rectified.

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