TRANSPEK INDUSTRY LIMITED, Vadodara V. Deputy Commissioner of ncome Tax, Circle-2(1)(1), Vadodara

ITA 1080/AHD/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 2082 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-05-2024
• Assessment Year: 2020-2021
• Appeal Filed On: 20-12-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Set aside
• Section: 154; 143(1)

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ, ‘बी’, अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD ] ] BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTNAT MEMBER ITA No. 1080/Ahd/2023 Assessment Year : 2020-21 Transpek Industry Limited 4 th Floor, Lilleria 1038, Gotri Sevasi Road, Vadodara-390021 Gujarat Vs Deputy Commissioner of Income Tax Circle-2(1)(1), Vadodara PAN: AAACT8639B अपीलाथȸ/ (Appellant) Ĥ× यथȸ/ (Respondent) Assessee by : Shri Vimal Desai, AR Revenue by : Shri Sudhendu Das, CIT-DR स ु नवाई कȧ तारȣख/Date of Hearing : 28/05/2024 घोषणा कȧ तारȣख /Date of Pronouncement: 30/05/2024 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER This appeal by the Assessee is directed against the order dated 26-10-2023 passed by the Commissioner of Income Tax (Appeals)-[National Faceless Appeal Centre (NFAC)] [hereinafter referred as “CIT(A)”], which upheld the order under section 154 of the Income Tax Act, 1961 (the Act) passed by the CPC, Bengaluru. 2. Assessee has taken following Grounds of appeal: 1. The order passed by the Hon'ble CIT(A) is bad in law and on facts and therefore requires to be quashed. ITA No.1080/Ahd/2023 Transpek Industry Ltd. vs. DCIT Asst. Year : 2020-21 2 1.1 The Hon'ble CIT(A) has erred on facts and in law in not considering and adjudicating the adjournment request submitted online by the appellant and passed the ex-parte order, thereby not providing sufficient opportunity to the appellant which is against the principle of natural justice and therefore, the order is required to be quashed. 2. The Hon'ble CIT(A) has erred on facts and in law in holding that the issues raised in the order would not fall in the category of apparent mistake from the records. 2.1 The Hon'ble CIT(A) has failed to appreciate that order under section 154 was suo-moto passed by the learned AO. 2.2 The Hon'ble CIT(A) has failed to appreciate that appellant has received the order under section 154 without receiving the order/intimation under section 143(1) which is against the provision of the law. 3. The Hon'ble CIT(A) has erred in not adjudicating and in confirming the addition of contingent liability amounting to Rs. 10,25,58, 110/-. 3.1 The Hon'ble CIT(A) has failed to appreciate that contingent liability of Rs. 10,25,58,110/- is not debited to the profit and loss account, therefore, question of its disallowance does not arise. 4. The Hon'ble CIT(A) has erred in not directing the learned AO to give credit of Dividend Distribution Tax of Rs. 2,29,62,609/- paid by the appellant. Facts of the Case: 3. The Assessee filed its return of income for the assessment year 2020-21 declaring total income of Rs. 69,79,91,980/-. The return of income was processed by the CPC Bengaluru and intimation u/s 143(1) was sent to the assessee. The said intimation was not received by the assessee due to some technical issues. The CPC passed order u/s 154 giving the particulars of mistake (page no.23 of the order) as “DDT BBS Whitelisted cases”. While passing the order u/s 154 of the act, CPC made an addition of Rs. ITA No.1080/Ahd/2023 Transpek Industry Ltd. vs. DCIT Asst. Year : 2020-21 3 10,25,58,102/- on account of “any liability of contingent nature” (page 30 of the order). 4. Aggrieved by the order of the CPC, the assessee preferred an appeal before the CIT(A). However, the CIT(A) passed an order stating that the impugned order does not fall under the category of a mistake apparent from the record and is not rectifiable and rejected the grounds. The CIT(A) allowed the ground of assessee relating to grant credit of DDT directing the assessee to file the request with jurisdictional AO to correct the assessment year in the challan to claim the credit. 5. Aggrieved by the order of the CIT(A), the Assessee is now in appeal before the Tribunal. On the grounds of appeal: 6. The learned Authorized Representative (AR) for the Assessee submitted that the CPC made the addition without any verification and merely based on the disclosures in the audit report and tax audit report. The AR contended that the addition under section 154 of the Act is unwarranted as there was no mistake apparent from the record, and the issue requires proper verification. The AR also argued that the CIT(A) passed the order without considering the merits of the case. 7. The learned Departmental Representative (DR) pointed out that the adjournment was granted, and fresh notice was issued to the assessee. Since no reply was received, the order was passed by the CIT(A) purely on the basis of material available on records. ITA No.1080/Ahd/2023 Transpek Industry Ltd. vs. DCIT Asst. Year : 2020-21 4 7.1. Since the opportunity of being heard was given by the CIT(A) after granting adjournment, Ground number 1 is dismissed. 8. On the ground number 2 and 3, the AR stated that the intimation u/s 143(1) was not received due to technical error and order u/s 154 dated 13- 07-2023 was passed by CPC suo-moto. We have gone through the material available on records and observed that the intimation u/s 143(1) with DIN – 2021202037031557573C which was sought to be rectified by CPC was passed on 29-12-2021. On 5-6-2023 assessee filed a grievance with CPC about non- receipt of intimation u/s 143(1) which was responded by CPC on 6-7-2023 with resolution remark “Dear Team, kindly look into the refund case”. The AR presented series of grievances raised with CPC which remain unresolved. Approach of CPC in resolving the grievance seems casual and need attention of the concerned authorities. 9. Now we deal with the addition made by CPC relating to contingent liabilities amounting to Rs. 10,25,58,110/-. It is observed that this addition was made by the CPC merely based on the disclosure in the clause 21(g) of the form 3CD i.e. tax audit report and without any verification. We have also noted that these amounts, as stated by the assessee, are not debited to profit and loss account. 10. It is a settled principle that for an addition to be made under section 154 of the Act, there should be a mistake apparent from the record. In the present case, the AO has not verified whether the contingent liabilities disclosed in the tax audit report are debited to profit and loss account and were actually liable to be added back to the total income of the Assessee. ITA No.1080/Ahd/2023 Transpek Industry Ltd. vs. DCIT Asst. Year : 2020-21 5 The amount which is not claimed as expenditure cannot be disallowed. This is against the principle of law and justice. 11. As per sub-section (3) of section 154, any amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made unless the authority concerned has given notice to the assessee of its intention so to do and has allowed the assessee a reasonable opportunity of being heard. In the present case, CPC has not issued notice to give any such opportunity to the assessee and has passed the order u/s 154 as a unilateral exercise. 12. Ld. DR, agreed to this and stated that it is necessary to verify whether these amounts are debited to profit and loss account. 13. In view of the above discussions, we are of the considered opinion that the matter requires proper verification by the AO. Therefore, we set aside the order passed by CIT(A) and restore the matter back to the file of the jurisdictional AO for verification and adjudication afresh. The AO is directed to verify the nature of the contingent liabilities disclosed in the tax audit report and determine whether they are liable to be added back to the total income of the Assessee after giving the Assessee a proper opportunity of being heard. If on facts, it is found that this amount has never been claimed by the assessee in its profit and loss account, then the assessee may be granted appropriate relief after carrying out necessary verification. 14. Ground number 4 relates to credit of Dividend Distribution Tax of Rs.2,29,62,609/- paid by the appellant. The same is not pressed for the assessee, hence not adjudicated. ITA No.1080/Ahd/2023 Transpek Industry Ltd. vs. DCIT Asst. Year : 2020-21 6 15. In the result, the appeal of the Assessee is allowed for statistical purposes. Order pronounced in the Open Court on 30 May, 2024 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER True Copy (MAKARAND V.MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad, Dated 30/05/2024 Rajesh आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंͬधत आयकर आय ु Èत / Concerned CIT 4. आयकर आय ु Èत)अपील (/ The CIT(A)- (NFAC), Delhi 5. ͪवभागीय ĤǓतǓनͬध ,आयकर अपीलȣय अͬधकरण,राजोकट/DR,ITAT, Ahmedabad, 6. गाड[ फाईल /Guard file. आदेशान ु सार/ BY ORDER, स×याͪपत ĤǓत //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलȣय अͬधकरण, ITAT, Ahmedabad