Missed claiming the Section 87A rebate? ITAT rules that such omissions are correctable. CPC can't deny a rebate if a revised return is filed under Section 139(5).
Nidhi | Jul 5, 2025 |
Income Tax Section 87A Rebate Denied by CPC? ITAT Rules in Favor of Taxpayer
The brief facts of the case show that assessee filed original return of income on 22.6.2024 which was processed on 30.6.2024 at the same income. Subsequently on 11.7.2024, assessee revised its return of income which was processed on 24.9.2024 claiming rebate u/s. 87A of Rs. 21,350. In the intimation, the above rebate was denied. Aggrieved with the same, assessee preferred before the ld. CIT(A).
The ld. CIT (A) held that assessee has revised return of income. The revision of return of income is available only when an error or omission in the original return is found. The assessee opted from the new tax regime to old tax regime is not an error or an omission which would have allowed the assessee to file revised return and therefore revised return cannot be filed. Accordingly the appeal of the assessee was dismissed.
On the other hand, the assessee submitted that not claiming the rebate under section 87A in the original return was an “error or omission” under section 139(5). Rebate is allowed in both regimes. Additionally, as per the assessee, Section 143(1)(a) does not authorise adjustments for the denial of section 87A relief.
The ITAT held that the judgement of Hon’ble Supreme Court in the case of CIT v Wipro Ltd., that “revised return cannot be filed to convert the original return into loss return in the absence of any omission or mistake” is wrongly applied in this case.
ITAT relied on decision of the Hon’ble Bombay High Court in the case of Chamber of Tax Consultant v. DGIT (System) [2025] 473 ITR 85 wherein the claim u/s. 87A is allowed.
ITAT ruled in favour of the assessee. It held that forgetting to claim the 87A rebate is a correctable error. Section 139(5) allows revised returns for such omissions or mistakes. CPC cannot deny a valid rebate just because it was not in the original return. Section 143(1)(a) adjustments do not include the rejection of section 87A. This applies when the regime is switched without any error.
It further ruled that the Section 87A rebate applies to both old and new regimes. The ITAT ordered the Assessing Officer (AO) to allow the Rs 21,350 rebate claimed in the revised return.
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