Mere Mismatch between Form 26AS and ITR cannot render the ITR Defective

The Income Tax Appellate Tribunal (ITAT Pune) in the matter of Deere & Company Vs. DCIT ruled out that a Mere Mismatch between Form 26AS and ITR cannot render the ITR Defective.

The assessee is a foreign company. A return was filed declaring total income of Rs.474,37,58,130 consisting of income from Royalty at Rs. 1,96,93,72,012 and Fees for Technical Services at Rs. 2,77,43,86,118. The assessee computed its tax liability on the said income at Rs. 51,30,37,442. There was tax withholding to the tune of Rs. 52,64,80,317. The assessee claimed refund of Rs. 1,34,42,875. The return was processed by the Centralized Processing Centre (CPC), Bengaluru, which highlighted difference between the income shown in the return at Rs. 474.37 crore and as shown in Form No. 26AS at Rs. 4,78,61,86,673. A notice dated 15.11.2017 issued under Explanation (a) to section 139(9) took cognizance of such a defect in the return of income. The assessee responded to the same on 4.12.2017 through e-portal elaborating the reasons for difference in the two amounts by maintaining that correct income was reported in the return of income. The DCIT (CPC), Bengaluru rejected the assessee‟s contention and declared the return to be invalid by means of the order u/s 139(9) of the Act. The appeal against such an order before the ld. CIT(A) came to be dismissed at the threshold on the ground that the order u/s 139(9) of the Act was not appealable under section 246A of the Act. This has brought the assessee to the Tribunal.

The Coram found out that, “The AO in the extant case has invoked Explanation (a) to section 139(9) of the Act on account of mismatch of the figures of income as returned and as per Form 26AS. Section 139(9) provides in the opening part that: `a return of income shall be regarded as defective unless the following conditions fulfilled‟. Then there are clauses (a) to (f). The AO has activated clause (a), which states that: “the annexures, statements and columns in the return of income relating to computation of income chargeable under each head of income, computation of gross total income and total income have been duly filled in”. A cursory glance at the Explanation (a) manifests the nature of defect, being, not duly filling in the annexures, statements and columns in the return of income relating to computation of income chargeable under each head of income, computation of gross total income and total income. In other words, if all the annexures, statements and columns etc. of the return have been duly filled in, there can be no defect as per clause (a). The defect referred to herein is of non-filling of the requisite columns of the return of income and not filling of columns but non-tallying of the figures due to a valid difference of opinion. If the intention of the Legislature had been to treat the mismatch of income between Form 26AS and as shown in the return of income rendering the return defective, then there was no need to incorporate clause (vi) of section 143(1)(a) of the Act requiring the AO to carry out the adjustment during the processing of return of income on this score.

The Appellate Tribunal ruled out that, “Clause (i) of section 246A(1) of the Act deals with the filing of an appeal before the CIT(A) against an order u/s 237 of the Act. The latter section, in turn, provides that: `If any person satisfies the Assessing Officer that the amount of tax paid by him or on his behalf or treated as paid by him or on his behalf for any assessment year exceeds the amount with which he is properly chargeable under this Act for that year, he shall be entitled to a refund of the excess.‟Technically speaking, the AO has not passed an order u/s 237 but only u/s 139(9) of the Act. We have noticed above that firstly, the AO could not have treated the return as invalid u/s 139(9) of the Act because of a mismatch between the figure of income shown in return and that in Form 26AS, and secondly, if at all he did so on a wrong footing, he ought to have issued notice u/s 142(1)(i) of the Act for enabling the assessee to file its return so that a regular assessment could take place determining the correct amount of income and the consequential tax/refund. Here is a case in which the assessee has been deprived by the DCIT (CPC), Bengaluru of any legal recourse to claim the refund. Considering the intent of section 237 in mind and the unusual circumstances of the case, we hold that the order passed by him is also akin to an order refusing refund u/s 237 making it appealable u/s 246A(1)(i). We, therefore, set aside the impugned order and remit the matter to the file of the ld. CIT(A) for disposing off the appeal on merits as per law after allowing a reasonable opportunity of hearing to the assessee.

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