Income Tax Deduction cannot be denied due to wrong classification in ITR: ITAT

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that a deduction under the Income Tax Act cannot be denied due to a wrong classification in the Income Tax Return (ITR). National Contracting Company, the appellant, had filed its return of income, which was processed under Section 143(1) of the Income Tax Act. \r

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The Centralized Processing Centre (CPC) Bengaluru made disallowances based on incorrect classification by the assessee. The assessee had disclosed gratuity paid under the wrong schedule. Despite submitting a revised tax audit report and ITR, CPC Bengaluru did not rectify the error. The ITAT found that the non-reporting in the tax audit report by the auditor was inadvertent and bona fide since all details were available in the ITR. \r

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The Tribunal held that genuine claims should not be denied due to classification errors and directed the Assessing Officer to delete the additions.