FAURECIA EMISSIONS CONTROL TECHNOLOGIES INDIA PRIVATE LIMITED,CHENNAI V. ASSISTANT / DEPUTY COMMISSIONER OF INCOME TAX - CORPORATE CIRCLE 1(1) CHE, CHENNAI

ITA 1223/CHNY/2025

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The case involves Faurecia Emissions Control Technologies India Pvt Ltd, the appellant, contesting an order from the Commissioner of Income Tax (Appeals) regarding the assessment year 2023-24. The primary contention was the violation of the principles of natural justice, specifically the right to be heard before adjustments were made to the assessee's declared income. The adjustments were based on discrepancies between the income reported in the tax return and the income reflected in Form 26AS, which is a tax credit statement. The Tribunal examined whether the adjustments made under section 143(1)(a) of the Income Tax Act without prior intimation or opportunity to the assessee were lawful.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 784217 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2023-2024
• Appeal Filed On: 29-04-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. ANITHA
• Assessee Lawyers: SIDDHESH CHAUGULA; A MODE
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice; TDS; FORM 26AS
• Section: 90; 139; 10AA; 92A

Judgement Text

" आयकर अपीलीय अधिकरण, ’सी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI माननीय श्री मनु क ुमार धिरर ,न्याधयक सदस्य एवं माननीय श्री अमिताभ शुक्ला, लेखा सदस्य क े सिक्ष BEFORE HON’BLE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND HON’BLE SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.1223/Chny/2025 Assessment Years: 2023-24 Faurecia Emissions Control Technologies India Pvt Ltd, 1st Floor, No.634, Karumuthu Center, Anna Salai, Nandanam, Chennai-600 035 [PAN: AAACA8450F] Assistant Commissioner of Income Tax, Corporate Circle-1(1), Chennai. (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr.Siddhesh Chaugula, C.A. प्रत्यर्थी की ओर से /Revenue by : Ms.R.Anitha, Addl.CIT सुनवाई की तारीख/Date of Hearing : 04.09.2025 घोषणा की तारीख /Date of Pronouncement : 14.11.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M : This appeal is filed by the assessee against the order bearing DIN & Order No.ITBA / APL / S / 250 / 2024-25 / 1073254005(1) dated 13.02.2025 of the Learned Commissioner of Income Tax [herein after “CIT(A), Addl / JCIT (A)-1, Kolkata for the assessment year 2023-24. The reference to the word “Act” in this order hereinafter shall mean the Income Tax Act, 1961 as amended from time to time. 2.0 In this case through its communication dated 07.08.2025 the assessee has filed an additional ground contesting violation of its right to Printed from counselvise.com ITA No.1223 /Chny/2025 Page - 2 - of 9 natural justice. It has been contested that the impugned adjustments of denial of tax credit of Rs.5,05,37,430/- did not precede issuance of an intimation u/s 143(1) of the Act. In support of admission of the additional ground the Ld.AR has placed reliance upon a plethora of judicial precedents. Upon consideration of the same we have decided to admit the impugned additional ground for admission. 3.0 As per brief factual matrix of the case Return of Income for AY- 2023-24 was processed u/s 143(1) on 08.01.2024 raising a demand of Rs.5,73,47,460/-. The impugned demand had arisen on account of non- credit of TDS claimed by the assessee amounting to Rs.5,05,37,430/-. The denial of TDS credit was based upon provisions of Rule-37BA as total receipts in Form-26AS were Rs.1567,40,67,611/- as against the receipts of Rs.930,01,55,214/-. The action of the Revenue was confirmed by the Ld.CIT(A). The assessee is assailing the appellate order on the premise that show cause u/s 143(1)(a) was not issued prior to making of the adjustment. 4.0 The Ld.DR vehemently argued in favour of the order of lower authorities. It was stated that higher receipts were appearing in Form- 26AS of the assessee as against those disclosed by the assessee in its Return of Income. The Ld.DR had argued that as per law TDS only can be allowed qua receipts which have been disclosed in the return and hence the Ld.AO had rightly made the impugned adjustments. It was Printed from counselvise.com ITA No.1223 /Chny/2025 Page - 3 - of 9 argued that actually no adjustment was made and that merely the information available on records of the assessee was utilized for making the addition and raising the corresponding tax demand. The Ld.DR also drew our attention to a report dated 14.08.2025 of the Ld.AO justifying the additions made in this case. It was also argued that the CPC had issued a communication dated 05.12.2023 to the assessee u/s 139(9) conveying defects in the Return of Income on the above lines and that the same can be construed as an opportunity given to the assessee. It was submitted that in the impugned communication dated 05.12.2023 to the assessee the defect of variance in receipts in 26AS viz a viz Return of income was clearly indicated. It is the case of the Revenue that the adjustment made is justified as the assessee chose not to avail the opportunity given to it u/s 139(9). 5.0 We have heard the rival submissions in the light of material available on records. Before proceeding further, we deem it appropriate to examine statutory prescription governing section 143(1) and section 139(9) which have been found seminal to the controversy. Section 143. (1) of the Act “…143. (1) Where a return has been made under section 139, or in re-sponse to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:- (a) the total income or loss shall be computed after making the following adjustments, namely:- (i) any arithmetical error in the return; 92[***] (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; Printed from counselvise.com ITA No.1223 /Chny/2025 Page - 4 - of 9 92a [ (iia) any such inconsistency in the return, with respect to the information in the return of any preceding previous year, as may be prescribed;] 93[(iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure 94[or increase in income] indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under 95[section 10AA or under any of the provisions of Chapter VI-A under the heading “C.-Deductions in respect of certain incomes”, if] the return is furnished beyond the due date specified under sub-section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return: Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode: Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made:] 96[Provided also that no adjustment shall be made under sub-clause (vi) in relation to a return furnished for the assessment year commencing on or after the 1st day of April, 2018;] (b) the tax 97[, interest and fee], if any, shall be computed on the basis of the total income computed under clause (a); (c) the sum payable by, or the amount of refund due to, the assessee shall be determined after adjustment of the tax 97[, interest and fee], if any, computed under clause (b) by any tax deducted at source, any tax collected at source, any advance tax paid, 98[any relief allowable under section 89,] any relief allowable under an agreement under section 90 or section 90A, or any relief allowable under section 91, any rebate allowa-ble under Part A of Chapter VIII, any tax paid on self-assessment and any amount paid otherwise by way of tax 99[, interest or fee]; (d) an intimation 1 shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to, the assessee under clause (c); and (e) the amount of refund due to the assessee in pursuance of the determination under clause (c) shall be granted to the assessee: Provided that an intimation shall also be sent to the assessee in a case where the loss declared in the return by the assessee is adjusted but no tax 1a[, interest or fee] is payable by, or no refund is due to, him: Provided further that no intimation under this sub-section shall be sent after the expiry of 2[nine months] from the end of the finan-cial year in which the return is made. Explanation.-For the purposes of this sub-section,- (a) “an incorrect claim apparent from any information in the return” shall mean a claim, on the basis of an entry, in the return,- (i) of an item, which is inconsistent with another entry of the same or some other item in such return; (ii) in respect of which the information required to be fur-nished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction; (b) the acknowledgement of the return shall be deemed to be the intimation in a case where no sum is payable by, or refund-able to, the assessee under clause (c), and where no adjustment has been made under clause (a). (1A) For the purposes of processing of returns under sub-section (1), the Board may make a scheme 3 for centralised processing of returns with a view to expeditiously determining the tax payable by, or the refund due to, the assessee as required under the said sub-section. (1B) Save as otherwise expressly provided, for the purpose of giving effect to the scheme 3 made under sub-section (1A), the Central Government may, by notification 3 in the Official Gazette, direct that any of the provisions of this Act relating to proc-essing of returns shall not Printed from counselvise.com ITA No.1223 /Chny/2025 Page - 5 - of 9 apply or shall apply with such excep-tions, modifications and adaptations as may be specified in that notification; so, however, that no direction shall be issued after the 31st day of March, 4[2012]. (1C) Every notification issued under sub-section (1B), along with the scheme made under sub-section (1A), shall, as soon as may be after the notification is issued, be laid before each House of Parliament.] 5[(1D) Notwithstanding anything contained in sub-section (1), the processing of a return shall not be necessary, where a notice has been issued to the assessee under sub-section (2): Provided that the provisions of this sub-section shall not apply to any return furnished for the assessment year commencing on or after the 1st day of April, 2017.] Section 139 (9) of the Act Return of income. 20 139. 21 22[(1) Every person,- (a)being a company 23[or a firm]; or (b)being a person other than a company 23[or a firm], if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year 24exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed 25 form and verified in the prescribed manner and setting forth such other particulars as may be prescribed :-------------------------- ----------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------- [(9) Where the 14[Assessing] Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the 14[Assessing] Officer may, in his discretion, allow; and if the defect is not rectified within the said period of fifteen days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, the return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return : Provided that where the assessee rectifies the defect after the expiry of the said period of fifteen days or the further period allowed, but before the assessment is made, the 14[Assessing] Officer may condone the delay and treat the return as a valid return. Explanation.-For the purposes of this sub-section, a return of income shall be regarded as defective unless all the following conditions are fulfilled, namely :- 15(a) the annexures, statements and columns in the return of income relating to computation of income chargeable under each head of income, computation of gross total income and total income have been duly filled in; (aa) 16[***] 17(b) the return is accompanied by a statement showing the computation of the tax payable on the basis of the return; 18[(bb) 17the return is accompanied by the report of the audit referred to in section 44AB, or, where the report has been furnished prior to the furnishing of the return, by a copy of such report together with proof of furnishing the report;] (c) 17the return is accompanied by proof of- (i) the tax, if any, claimed to have been deducted 19[or collected] at source 20[***] and the advance tax and tax on self-assessment, if any, claimed to have been paid : 21[Provided that where the return is not accompanied by proof of the tax, if any, claimed to have been deducted 22[or collected] at source, the return of income shall not be regarded as defective if- Printed from counselvise.com ITA No.1223 /Chny/2025 Page - 6 - of 9 23[(a) a certificate for tax deducted or collected was not furnished under section 203 or section 206C to the person furnishing his return of income;] (b) such certificate is produced within a period of two years specified under sub-section (14) of section 155;] (ii) the amount of compulsory deposit, if any, claimed to have been made under the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974 (38 of 1974)* ; 24[(ca) the return is accompanied by the proof of payment of tax as required under section 140B, if the return of income is a return furnished under sub-section (8A);] (d) where regular books of account are maintained by the assessee, the return is accompanied by copies of- (i) manufacturing account, trading account, profit and loss account or, as the case may be, income and expenditure account or any other similar account and balance sheet; (ii) in the case of a proprietary business or profession, the personal account of the proprietor; in the case of a firm, association of persons or body of individuals, personal accounts of the partners or members; and in the case of a partner or member of a firm, association of persons or body of individuals, also his personal account in the firm, association of persons or body of individuals; (e) where the accounts of the assessee have been audited, the return is accompanied by copies of the audited profit and loss account and balance sheet and the auditor’s report 25[and, where an audit of cost accounts of the assessee has been conducted, under section 233B 26 of the Companies Act, 1956 (1 of 1956), also the report under that section]; (f) where regular books of account are not maintained by the assessee, the return is accompanied by a statement indicating the amounts of turnover or, as the case may be, gross receipts, gross profit, expenses and net profit of the business or profession and the basis on which such amounts have been computed, and also disclosing the amounts of total sundry debtors, sundry creditors, stock-in-trade and cash balance as at the end of the previous year:] 27[Provided that the Board may, by notification in the Official Gazette, specify that any of the conditions specified in clauses (a) to (f) to the Explanation shall not apply to such class of assessees or shall apply with such modifications, as may be specified in such notification.] 28[(9A) Where any return of income is furnished in pursuance of an order under clause (b) of sub-section (2) of section 119, the provisions of this section shall apply.] (10) 29[Omitted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.]….” 6.0 The principal issue that deserves to be decided is firstly whether Revenue was required to have given an opportunity of being heard to the assessee u/s 143(1) before passing of order u/s 143(1)(a) and second whether the issuance of communication dated 05.12.2023 u/s 139(9) can be deemed to be taken as rendering of an opportunity in this direction. Printed from counselvise.com ITA No.1223 /Chny/2025 Page - 7 - of 9 As regards giving of an opportunity of being heard to the assessee u/s 143(1), we have noted that the statutory prescription is crystal clear. Section 143(1) extracted hereinabove clearly mandates that an opportunity of being heard is required to be given to an assessee in all cases where any adjustment is proposed to be made to the returned income before passing an order u/s 143(1)(a). It is trite law that when legal stipulations of a statute are unambiguously clear no different interpretations can be taken. We have noted that section 143(1)(a)(vi) postulates an adjustment to assessee total income based upon figures appearing in 26AS viz a viz income disclosed in return of income. Thus, as per the facts of the present case provisions of section 143(1)(a)(vi) were fully applicable. First proviso to section 143(1) postulates that an opportunity of being heard has to be given to the assessee by a mode including writing or electronic. The prescription of law is clear that no adjustment to the returned income can be made unless an opportunity is given to the assessee. In the instant case the same was not given and therefore the order of lower authorities cannot survive. 7.0 The Revenue has argued that the opportunity given u/s 139(9) can be construed as compliance of law. The arguments put forth have been found to be not connected with the facts on records. Both section 143(1) and section 139(9) operate in different fields. Whereas section 143(1) is regarding determination of income after making permissible Printed from counselvise.com ITA No.1223 /Chny/2025 Page - 8 - of 9 adjustments, if any, once a Return has been filed the section 139(9) postulates rejection of Return of income per se as invalid / non est if found defective. Thus, whereas the former disturbs the Returned income, the latter invalidates the Return per se. Therefore there is no similarly between the two. The communication dated 05.12.2023 issued by the Revenue u/s 139(9) cannot be construed as an opportunity of the type envisaged u/s 143(1). Actually, in this case as the assessee had not responded to the grant of opportunity u/s 139(9), the Revenue was entitled to declare the Return as non est or an invalid Return. The Revenue however did not have any authority to make adjustments u/s 143(1) to the Returned income. The argument of the Revenue therefore once again fails. 8.0 Accordingly, we are of the considered view that the Revenue was required to have given opportunity of being given to the assessee before making any adjustments u/s 143(1) of the Act. The arguments taken by the Ld.CIT(A) while dismissing the appeal of the assessee have therefore been found to be based upon inappropriate understanding of the facts and law governing the matter. We therefore set aside the order of the Ld.CIT(A) and direct the Ld.AO to delete the impugned demand of Rs.5,73,47,460/- u/s 143(1) which has arisen on account of non-credit of TDS claimed by the assessee amounting to Rs.5,05,37,430/-. The Printed from counselvise.com ITA No.1223 /Chny/2025 Page - 9 - of 9 additional ground of appeal raised by the assessee are therefore allowed. 9.0 As the assessee has succeeded before us qua the additional ground of appeal, all other grounds of appeal raised by the assessee qua merits of the addition have become purely academic in nature. 10.0 In the result, the appeal of the assessee is allowed. Order pronounced on 14th , November-2025 at Chennai. Sd/- (मनु क ुमार धिरर) (MANU KUMAR GIRI) न्याधयक सदस्य / Judicial Member Sd/- (अधमताभ शुक्ला) (AMITABH SHUKLA) लेखा सदस्य /Accountant Member चेन्नई/Chennai, धदनांक/Dated: 14th , November-2025. KB/- आदेश की प्रतितिति अग्रेतिि/Copy to: 1. अिीिार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT - Chennai/Coimbatore/Madurai/Salem. 4. तिभागीय प्रतितिति/DR 5. गार्ड फाईि/G Printed from counselvise.com "