A private‑sector plant manager in Gujarat, who had never touched his EPF account, found himself caught in a tax assessment after an errant data entry in his 2022 ITR listed Rs 9.6 lakh as EPF interest.
Under Section 10(11) of the Income Tax Act, only money received from a statutory provident fund is exempt; the taxpayer’s EPFO account showed no withdrawals, and the bank statements carried no such credit.
When the Income Tax Assessing Officer, unsatisfied with the evidence, added the amount to his taxable income on 11 March 2024, the taxpayer challenged the order in ITAT Mumbai.
Chartered Accountant Suresh Surana, representing the client, supplied Form 16, 26AS, EPFO statements, sworn affidavit, and reconciliations to prove that the Rs 9.6 lakh never entered his bank. The client, who has three children, feared that the added tax would strain his household.
ITAT Mumbai, after examining the documents, held that without evidence of receipt, the EPF interest entry could not be treated as exempt income and declared the addition void.
The decision, which restores the taxpayer’s original tax liability, signals that clerical errors in EPF reporting will not automatically trigger tax additions and may guide future ITAT rulings.