20 hrs ago
ITAT Chandigarh Deletes ₹26.69 Lakh Tax Demand After Filing Error
A small trader earned commission from selling mobile recharges and SIM cards.
While filing a tax return, the trader used the wrong form.
A tax-processing centre saw ₹26,69,319 in commission receipts on Form 26AS.
It treated that amount as new income and created a large tax demand.
The trader said the money had already been included in the business income reported in the return.
Earlier attempts to correct the problem were rejected.
The ITAT Chandigarh examined the corrected return and supporting records.
It decided that using the wrong form did not prove that income had been hidden.
The tribunal removed the full additional tax demand, while stressing that taxpayers must still file carefully and keep evidence.
A small trader filed ITR-4 instead of ITR-3 for business income in assessment year 2017-18.
The Centralised Processing Centre relied on Form 26AS, which reported ₹26,69,319 in commission receipts.
The tax department added the receipts as fresh income, although the trader said they were already included in business income.
The trader’s rectification application and appeal before the Commissioner of Income Tax (Appeals) were rejected.
ITAT Chandigarh deleted the entire addition, ruling that an incorrect form alone does not prove undisclosed income.
- Who
- A small trader, the Centralised Processing Centre, the Commissioner of Income Tax (Appeals), and the Income Tax Appellate Tribunal, Chandigarh.
- What
- The tribunal deleted a ₹26,69,319 income addition after finding that commission receipts had already been included in the trader’s declared business income.
- Where
- The matter was decided by the Income Tax Appellate Tribunal, Chandigarh, after the return was processed by the Centralised Processing Centre.
- When
- The case concerned assessment year 2017-18.
- Why
- The trader had filed ITR-4 instead of ITR-3, and the commission receipts were consequently treated as fresh income despite documentary evidence that they had already been offered to tax.
Taxpayer’s position
Tax authorities’ position
Treatment of commission receipts
Taxpayer’s position
The trader argued that the ₹26,69,319 in commission receipts was already included in the business income declared in the return, so adding it again taxed the same income twice.
Tax authorities’ position
The Centralised Processing Centre relied on Form 26AS and treated the reported gross commission receipts as additional income.
Effect of the incorrect ITR form
Taxpayer’s position
The trader maintained that filing ITR-4 instead of ITR-3 was a procedural mistake and did not mean that income had been concealed.
Tax authorities’ position
The Commissioner of Income Tax (Appeals) emphasized the incorrect form and the absence of a revised return when rejecting the appeal.
Evidence supporting the claim
Taxpayer’s position
Before the tribunal, the trader submitted a corrected return and supporting documents showing that the receipts were embedded in the originally declared business income.
Tax authorities’ position
The earlier rectification application and appeal were rejected before the tribunal reviewed the additional documents and accepted the trader’s explanation.
Key facts
- Tax demand
- ₹26.69 lakh
- Income addition deleted
- ₹26,69,319
- Assessment year
- 2017-18
- Income source
- Commission from mobile recharges and SIM-card sales
- Incorrect form filed
- ITR-4 instead of ITR-3
- Relevant statement
- Form 26AS reported commission receipts after tax was calculated and deducted under Section 194H
- Tribunal outcome
- The entire addition was deleted
Sources
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