Even a small mistake made while filing Income Tax Return (ITR) can cause huge loss to the taxpayer. One such case came before the Pune Income Tax Appellate Tribunal (ITAT), in which an employee mistakenly showed an amount of Rs 65.21 lakh received under the Voluntary Retirement Scheme (VRS) as taxable income. Because of this he could not get the tax exemption he was supposed to get. However, later ITAT, while hearing the case, ruled in favor of the employee and provided relief to him.
VRS package was received after the closure of the company
The case pertains to an employee who had received a payment of Rs 65.21 lakh under VRS after the company’s manufacturing plant was closed. This amount included ex-gratia, notice pay and other retirement benefits. While filing the income tax return, the entire amount was included in the taxable income, whereas this payment was eligible for tax exemption under the Income Tax Act. Due to this mistake the employee had to face unnecessary tax disputes.
ITAT said- relief cannot be taken away due to technical mistake
During the hearing of the case, ITAT Pune said that if a taxpayer is entitled to tax exemption as per law, then he cannot be deprived of this right merely on the basis of technical or reporting error in ITR. The tribunal held that the employee had not given any wrong information intentionally, but it was an unintentional error. Therefore, the amount of Rs 65.21 lakh received under VRS was considered tax free and an order was given to give tax relief to the employee.
Important decision for other taxpayers also
Tax experts say that this decision is important for millions of taxpayers who make mistakes while filing ITR. However, this does not mean that every type of mistake will be relieved. Relief will be available only if the taxpayer can prove that he was genuinely entitled to the relevant tax exemption and the mistake was only technical or reporting related.
Keep these things in mind while filling ITR
Experts advise that before filing ITR, carefully match all the documents, Form-16, salary details and provisions related to tax exemption. It is very important to enter information related to VRS, gratuity, pension, capital gains and other tax benefits correctly. If there is any doubt regarding any rule, it would be better to take the help of a tax advisor. Filling ITR with correct information not only helps in avoiding unnecessary tax payment but also provides relief from legal disputes and lengthy process. This decision of ITAT confirms that an eligible taxpayer cannot be deprived of his legitimate tax benefits due to a technical error.
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