Archive · 13 Sep 2026
ITAT Deletes ₹26.69 Lakh Demand After Wrong ITR Form
A small trader earned money by selling mobile recharges and SIM cards.
He reported his business income using the wrong tax return form.
The tax records showed commission receipts of ₹26,69,319.
Officials treated that amount as extra income.
The trader said he had already included the same receipts in his business income.
This meant the same money could be taxed twice.
Earlier tax authorities rejected his explanation.
The Chandigarh ITAT reviewed corrected documents and removed the entire addition.
A small trader filed ITR-4 instead of the applicable ITR-3 for assessment year 2017-18.
The tax department treated ₹26,69,319 in commission receipts shown in Form 26AS as additional income.
The taxpayer said those commission receipts had already been included in his declared business income.
The CPC rejected his rectification request, and the CIT(A) upheld the addition partly because of the incorrect form.
The Chandigarh ITAT deleted the full addition, ruling that an incorrect ITR form alone could not establish undisclosed income.
- Who
- A small trader, the Centralized Processing Centre, the Commissioner of Income Tax (Appeals), and the Chandigarh Income Tax Appellate Tribunal were involved.
- What
- The ITAT deleted a ₹26,69,319 income addition and the resulting tax demand after finding that the receipts had already been included in the trader’s business income.
- When
- The case concerned assessment year 2017-18; the ITAT ruling followed the taxpayer’s appeal from earlier proceedings.
- Where
- The matter was decided by the Income Tax Appellate Tribunal in Chandigarh.
- Why
- The taxpayer had filed ITR-4 instead of ITR-3, and the tax authorities treated commission receipts already included in declared business income as additional income.
Tax authorities’ position
Taxpayer and ITAT’s position
Effect of the incorrect ITR form
Tax authorities’ position
The CIT(A) emphasized that ITR-3, rather than ITR-4, should have been filed and noted that no revised return had been submitted before it to support the taxpayer’s claim.
Taxpayer and ITAT’s position
The ITAT held that filing an incorrect form could not by itself establish that the related income was undisclosed.
Treatment of Form 26AS receipts
Tax authorities’ position
The tax authorities treated the ₹26,69,319 shown in Form 26AS as additional income without specifically determining whether it was already included in the declared business income.
Taxpayer and ITAT’s position
The taxpayer argued, and the ITAT accepted based on corrected records and supporting documents, that the receipts had already been included, so adding them again resulted in double taxation.
- Tax demand
- ₹26.69 lakh
- Addition deleted
- ₹26,69,319
- Assessment year
- 2017-18
- Business activity
- Selling mobile recharges and SIM cards
- Incorrect form filed
- ITR-4
- Applicable form noted
- ITR-3
- Commission reporting
- Telecom operators reported the receipts after deducting tax under Section 194H