Exemption Claimed in Tax Return Citing Wrong Section or Provision

Here is the Solution…….

Yes friends you heard rightly. Now no need to worry if return is fill claiming exemption citing wrong section or provisions.
There are so many fields to be fill while filing tax return, some time because of ignorance of law , the tax payer claims the exemption under a wrong provision or section of the Income Tax Act. For example , may be inadvertently , a tax payer may write section 10(38) or even 10(36) for claiming exemption on capital gains on share when actually the fact relates to exemption under section 54 or 54F. So , if such error happens, can assessing officer stick to the point that since a wrong provision has be mention in the tax return , he /she will not allow the exemption. I don’t think so .

Mistake in Filing of Return or Notice is Normal

Filing tax return or even issue of notice are so tedious that even Income Tax Act recognizes that there can be errors while filing income tax return. For that reason only , perhaps , Legislature has provided in the Income Tax Act , a relief to all , on account of  such errors. This is in section 292B of the Income Tax Act.

Return Of Income, Etc., Not To Be Invalid On Certain Grounds.

292B. No Return Of Income, Assessment, Notice, Summons Or Other Proceeding, Furnished Or Made Or Issued Or Taken Or Purported To Have Been Furnished Or Made Or Issued Or Taken In Pursuance Of Any Of The Provisions Of This Act Shall Be Invalid Or Shall Be Deemed To Be Invalid Merely By Reason Of Any Mistake, Defect Or Omission In Such Return Of Income, Assessment, Notice, Summons Or Other Proceeding If Such Return Of Income, Assessment, Notice, Summons Or Other Proceeding Is In Substance And Effect In Conformity With Or According To The Intent And Purpose Of This Act.

So, just a typing error or mistake in filling various columns of tax returns should not be taken as a big legal mistake.

Is it Duty of Assessing officer to allow exemption as per Law?

Yes A.O. must allow exemptions.

As Per Paramjit Singh Chhabra vs ITO [2013] 59 SOT 165 (Indore – Trib.)(URO) judgment ITAT , Indore gave verdict in favour of assessee , saying that it is duty of the A.O to allow the exemption under correct provision.

The facts involved in the case:

were that the assessee sold a shop for Rs.18 lacs on 17.1.2005 and declared sale price while working out the capital gain and investment in construction of a residential house. The assessee claimed exemption of capital gains by mentioning section 54B/54D/54G. The main plea of the Revenue is that correct section for claiming exemption for capital gains was not mention in the return.
The Tribunal held as under :
Under These Facts, We Are Of The Consider Opinion That Even If A Wrong Section Was Mention By The Assessee In The Return, It Was The Duty Of The Assessing Officer To Assist The Tax Payer In A Reasonable Way And To Provide The Relief If Due To The Assessee. This Attitude Rather Will Help The Revenue In Assessing The Income Correctly. A Correct Advice By The Department Would Inspire The Confidence Of Public At Large. Even Identical Guidelines/Instructions Have Been Issu From Time To Time By The CBDT To Its Officers (Circular No. 14(XL-35) Dated 11.4.1955 And Letter No. F.81/27/65-IT(B) Date 18.5.1965). If Due To Ignorance A Wrong Section Has Been Mention By The Assessee, It Is The Duty Of The Assessing Officer To Advise The Assessee About The Correct Claim And Also To Assess The Tax Legitimately. This Is The Clear Intention Of The Legislature.

What we Actually need to do?

If you are require to reply the notice issu by the A.o, while replying the questionnaire , you also submit the computation of income , clearly claiming the exemption u/s 54F in the said computation and somewhere point out the fact of typing error in income tax return. Most important is proving that all the condition given in a particular provision under which the exemption is allowable is fulfill,  at the time of scrutiny assessment proceeding.