ITAT Pune Clarifies: Genuine Chapter VI-A Deduction Must Be Verified Despite Earlier Wrong Claim

Background of the Dispute

The Pune Bench of the Income Tax Appellate Tribunal, in the case of Ashfak Kasam Patel Vs ITO, dealt with an important issue: whether a bona fide deduction under Chapter VI-A can be disallowed merely because the assessee had earlier admitted to having made incorrect claims in the original return and had refunded excess tax.

The controversy arose for Assessment Years (AYs) 2016-17 and 2017-18, where the assessee, a salaried employee of Bosch Ltd., had:

  • Filed original returns declaring salary income
  • Claimed loss under the head "house property"
  • Claimed deductions under Chapter VI-A, including Section 80C items
  • Received refunds based on those returns

Later, the assessee realized that some of the claims—especially relating to loss from house property and certain deductions—had been wrongly made by his tax consultant. Acting on this realization, he voluntarily deposited the excess refund along with interest back to the Government Treasury.

Despite this rectification, during reassessment the Assessing Officer (AO) denied the entire Chapter VI-A deduction for both years, citing the assessee’s own admission that the original claims were incorrect. The matter eventually reached the ITAT Pune.

Facts Presented Before the Tribunal

Employment and Income Details

  • The assessee is an individual in salaried employment with BOSH Ltd. (as referred to in the order).
  • For AY 2016-17 and AY 2017-18, regular returns were filed on 07.06.2016 and 04.07.2017 respectively.
  • In these returns, the assessee:
    • Declared income from salary
    • Declared loss under the head “house property”
    • Claimed deductions under Chapter VI-A
    • Sought and received refunds based on such computation

Subsequent Realisation and Voluntary Repayment

On later scrutiny of his own affairs, the assessee found that:

  • Certain claims made in the original returns, including loss from “house property” and some Chapter VI-A deductions, were wrongly computed or not actually eligible.
  • This had led to an excess refund being issued.

To correct the situation, the assessee:

  • Deposited the excess refund amount along with applicable interest back to the Government for both AYs 2016-17 and 2017-18.

Reassessment Proceedings

The case was subsequently reopened:

  • Valid notices under Section 148 were issued for AYs 2016-17 and 2017-18.
  • In response, the assessee filed returns again, offering:
    • Income from salary
    • Income from other sources
    • Deductions under Chapter VI-A

Crucially, the assessee argued that:

  • The Chapter VI-A deductions (including Section 80C components) were genuine and supported by Form No. 16 issued by the employer, Bosch Ltd.
  • These included amounts relating to:
    • Employee’s Provident Fund contributions
    • Life Insurance Premium
    • Tuition fees

However, during reassessment: