Mistaken Rs 9.6 Lakh EPF Entry In ITR Cannot Be Taxed, Mumbai ITAT Rules

A Mumbai taxpayer’s error while filing his income tax return led to an addition of Rs 9.6 lakh to his taxable income. Nearly four years later, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the addition, finding no evidence that he ever received the money.

The taxpayer, Gole, had reported a salary income of Rs 28.25 lakh in the return he filed on July 25, 2022. During preparation of the return, Rs 9.6 lakh was mistakenly entered as exempt provident fund income under Section 10(11) of the Income-tax Act, 1961.

Gole worked as a plant manager with a private company in Gujarat and was covered by the Employees’ Provident Fund Organisation (EPFO). He maintained that he had neither withdrawn money from his EPF account nor received Rs 9.6 lakh as interest or any other provident fund payment.

Tax Officer Treated Wrong Entry As Income

The Income Tax Department (ITD) asked the taxpayer to substantiate the exemption claimed in his return. The Assessing Officer (AO) was not satisfied with the supporting documents produced before him.

Since the amount had been disclosed as exempt income but the exemption could not be established, the AO treated it as taxable. The AO eventually added Rs 9.6 lakh to Gole’s income while passing the assessment order on March 11, 2024, under Sections 143(3) and 144B, according to a recent report by The Times of India.

His first appeal did not bring any relief, as the Commissioner of Income Tax (Appeals) agreed with the AO’s decision. Gole then approached the ITAT, arguing that the entry was merely a clerical and data-entry mistake made while the return was being prepared.

EPF And Bank Records Showed No Receipt

Before the tribunal, the taxpayer submitted Form 16, Form 26AS, bank statements and his EPFO account records. The EPFO statement showed that there had been no withdrawal during the relevant financial year.

He also furnished bank reconciliations and a sworn affidavit stating that he had neither withdrawn provident fund money nor received any other payment of Rs 9.6 lakh.

Another important fact was that the disputed amount had not been deducted from his salary while taxable income was calculated. Therefore, the wrong disclosure had not reduced his tax liability or provided him with an unintended tax benefit.

The tribunal observed that the department had not produced any material showing a payment from EPFO, a withdrawal from the provident fund account or a corresponding credit in any bank account. The affidavit could not be rejected merely on suspicion without contrary evidence.

Section Cited In Return Was Also Inapplicable

The ITAT also examined the use of Section 10(11) in the return. This provision deals with payments from a statutory provident fund governed by the Provident Funds Act, 1925, and certain notified funds.

Gole, however, was a private-sector employee covered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. The tribunal found that the provision mentioned in the return did not fit his circumstances.

In its June 19, 2026 order, the bench of Judicial Member Challa Nagendra Prasad and Accountant Member Makarand Vasant Mahadeokar said that a wrong entry in an ITR was not enough to establish that the taxpayer had actually received the money.

The documents backed Gole’s claim that the money was never received, while the department had nothing to show otherwise. The ITAT, therefore, ordered the deletion of the Rs 9.6 lakh addition.

FAQs

1. Can a wrong entry in an ITR be treated as taxable income?
Not without proof that the taxpayer actually received the money. The Mumbai ITAT held that an incorrect disclosure alone was insufficient.

2. What documents helped the taxpayer establish the mistake?
He submitted Form 16, Form 26AS, bank statements, EPFO records, bank reconciliations, and a sworn affidavit showing that no payment was received.

3. What should taxpayers do after finding an error in their ITR?
They should correct it through a revised return, if permitted, and retain documents supporting the correct income and transaction details.