ITAT Mumbai : Income Tax Return by Income Tax Department (ITR) It is legally wrong to treat an inadvertent typing or data entry error while filing as “undeclared income” and impose a tax penalty. According to reports, the Mumbai-based Income Tax Appellate Tribunal (ITAT Mumbai) has ruled in favor of the salaried taxpayer, completely quashing the hefty tax demand of the Income Tax department.

In ITR Rs. 9.6 lakh recorded as EPF withdrawal interest income

Taxpayer mistakenly entered in his ITR Rs. 9.6 lakhs EPF The transfer/withdrawal was recorded as interest income, after which the department issued a notice. As the Tribunal’s decision makes clear, the actual tax liability cannot be determined solely on the basis of human error in the ITR. Let us discuss this matter and the decision of ITAT in detail…

What is the whole matter?

ITAT Mumbai recently ruled that based on wrong entry in ITR, EPF income of Rs. 9.6 lakhs is not appropriate to add tax. This is especially true, when there is no evidence that the salaried employee has actually received money from EPFO, withdrawn from their EPF account or received any corresponding credit in their bank account.

The decision comes in a case where Mr Gole, a resident of Belapur Road, Mumbai, filed his Income Tax Return (ITR) on July 25, 2022, declaring a total salary income of Rs 28.25 lakh. However, due to an error by Mr. Gole’s ITR filing assistant, he had wrongly declared Rs.9.6 lakh as tax-free income under Section 10(11). This section deals with payments received under the Provident Funds Act, 1925 from statutory provident funds or certain prescribed PF schemes of the Central Government.

Mr. Gole was working as a plant manager for a private company in Gujarat. So, first of all, they were covered under the Employees Provident Fund Organization (EPFO) rather than the central government’s PF. Secondly, he neither withdrew any money from his EPF nor earned interest of Rs 9.6 lakh from EPFO. However, the Income Tax Department sent a tax notice to Gole, asking him to prove his claim and provide supporting documents.

Income tax notice sent

According to the Income Tax Assessing Officer (AO) of Kautilya Bhawan, Mumbai, Gole failed to provide satisfactory documentary evidence for the amount declared tax-free under Section 10(11). The AO held that since Gole had declared the PF amount in his ITR but could not prove his claim for tax exemption, the amount should be taxed.

On March 11, 2024, while completing the assessment under section 143(3) and section 144B, the AO added Rs.9.6 lakhs to Gole’s tax liability. The Appellate Commissioner (CIT A) allowed this increase, following which Gole filed an appeal before the ITAT, Mumbai. Chartered Accountant Tarun Gupta represented him at the ITAT, Mumbai and Gol won the case on June 19, 2026.

How did Gol win this case?

Chartered Accountant Suresh Surana said in an ET report that Gole told the ITAT, Mumbai that the PF details provided under Section 10(11) were actually a clerical and data-entry error made while preparing the return, and no such amount was ever received. To support his case, Gole presented several strong documentary evidences.

In which form no. 16, Form 26AS, bank statement, EPFO ​​account statement showing that no withdrawals have taken place during the relevant financial year, complete bank reconciliation details and an affidavit are included. The affidavit stated that no withdrawal was made from the provident fund, nor Rs. 9.6 lakhs received any other amount.

The tax department has no evidence

According to Surana, Gole also said that Rs 9.6 lakh was never deducted from his salary income while computing the taxable income declared in the ITR, and therefore, he did not get any tax benefit by giving false information. The ITAT Mumbai accepted Gole’s contentions and said that the Income Tax Department could not provide any evidence that Rs 9.6 lakh had been received.

According to Surana, there is no proof of withdrawal from the EPFO ​​account, no payment made by any provident fund authority, and no such amount deposited in any bank account of the concerned person. On the contrary, the documentary evidence produced by Gole consistently proves that the amount declared in the ITR is not really income.

ITAT did not ignore the affidavit

The ITAT Mumbai also held that Gole’s affidavit cannot be ignored unless the Income Tax department has evidence to prove it false. Surana argues that mere conjecture or suspicion is not enough to reject it. According to Surana, the ITAT Mumbai emphasized another important point.

Section 10(11) was not actually applicable as Gole was working in the private sector and was covered by the Employees Provident Fund and Miscellaneous Provisions Act, 1952. Section 10(11) deals with payments received from statutory provident funds under the Provident Funds Act, 1925 or other prescribed funds.

Decision in favor of taxpayer

Surana argued that the basis on which the AO proceeded was also proved wrong. Therefore, the ITAT Mumbai ultimately ruled that false information in the ITR cannot itself be proof of receipt of income. Gole provided credible documentary evidence to prove that no such income was received, but the burden of proving otherwise fell on the Income Tax Department, which met the initial burden. Surana contends that without concrete evidence, an increase in income cannot be supported simply because a wrong entry was reflected in the ITR. Therefore, ITAT Mumbai directed to delete the addition of Rs.9.60 lakhs.