ITAT Delhi Rules on Rs 9.91 Lakh Tax Refund for Senior Citizen’s Tax-Free Bond Interest Miscalculation
A senior citizen from Gurugram will receive a tax refund of Rs 9.91 lakh after the Income Tax Appellate Tribunal (ITAT) ruled in his favor. The man mistakenly reported Rs 25.42 lakh in interest from tax-free bonds as taxable income while filing his income tax return for the assessment year 2022-23. His investments in two government bonds, made in 2013, were exempt from taxation, but he inadvertently treated the interest as taxable.
Case Background
The senior citizen had consistently reported the interest from his tax-free bonds as exempt income in previous years. However, during the filing for AY 2022-23, he incorrectly classified Rs 25.42 lakh in interest as taxable income. This included Rs 16.96 lakh from IFCL bonds and Rs 8.46 lakh from REC bonds, leading to an unnecessary tax payment of Rs 9.91 lakh. After realizing the mistake, he filed a rectification application on January 19, 2024, but the jurisdictional assessing officer (JAO) rejected it, citing the Supreme Court’s ruling in Goetze (India) Ltd. v. CIT.
Tribunal’s Ruling
The ITAT Delhi found that the senior citizen’s request for rectification was to correct an obvious error and did not constitute a new claim. The tribunal noted that the Goetze ruling did not apply in this case, as it only restricts assessing authorities from considering new claims not made in a valid return. The ITAT referred to a previous decision involving Kapil Dev Nikhanj, which clarified that appellate authorities retain the power to rectify such errors.
Consequently, the ITAT directed the assessing officer to classify the Rs 25.42 lakh interest as exempt income under Section 10(15)(iv)(h) of the Income-tax Act. The tribunal mandated that the excess tax of Rs 9.91 lakh be refunded to the senior citizen, along with applicable interest.
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