Senior citizen wrongly paid tax on Rs 25.42L interest; ITAT orders Rs 9.91L refund
Each year, the senior citizen reported the interest earned from his investments in tax-free bonds under the ‘exempt income’ category in his income tax return (ITR). But made a mistake in one year. The man realised the error only after the deadline for filing a revised ITR had passed. He therefore approached the jurisdictional assessing officer (JAO) and filed a rectification application.
A senior citizen in Gurugram was wrongly charged tax on tax-free interest earnings, leading to a Rs 9.91 lakh refund from the Income Tax Appellate Tribunal (ITAT) Delhi. The man had invested Rs 3 crore in government tax-free bonds in 2013 and reported the interest earned under 'exempt income' each year. However, when filing his return for AY 2022-23, he mistakenly declared Rs 25.42 lakh in interest as taxable income.
As a result, he paid Rs 9.91 lakh in taxes, despite the investments being tax-free by definition. The man realized his error after the deadline for filing a revised ITR had passed, leading him to approach the assessing officer (JAO) and file a rectification application under Section 154. The JAO initially rejected his request, citing a Supreme Court decision in Goetze (India) Ltd. v.
CIT. However, the senior citizen appealed to the ITAT Delhi, arguing that the rectification was aimed at correcting an error apparent from the existing record. The tribunal held that the Goetze decision did not apply to this case and directed the AO to treat the interest as exempt under Section 10(15)(iv)(h). The ITAT also ruled that the man should receive a refund of Rs 9.91 lakh, including interest, as per the law.
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