Aditya Builders And Developers , Jodhpur V. CPC, Bengaluru / ACIT, Circle-3, Jodhpur

ITA 11/JODH/2022

AI Insights

The case involves Aditya Builders and Developers appealing against an order from the National Faceless Appeal Centre (NFAC), which upheld an addition of Rs. 13,73,140 to the assessee's income for the assessment year 2019-20. This addition was initially made by the Central Processing Centre (CPC), Bengaluru, under section 143(1) of the Income Tax Act, treating exempt dividend income as business income. The assessee argued that the addition was due to a typographical error in reporting the income in the tax return, which was not considered by the NFAC. The Tribunal found merit in the assessee's argument that the issue needed a detailed examination and thus remanded the matter back to the assessing officer.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122817 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-07-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 24-01-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Opportunity of being heard; Principle of natural justice; Earning of tax free income; Bonafide mistake
• Section: 10; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR VIRTUAL HEARING BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM ITA No. 11/Jodh/2022 (ASSESSMENT YEAR- 2019-20) Aditya Builders and Developers 96, Nehru Park, Jodhpur Vs CPC Bengaluru (Appellant) (Respondent) PAN NO. AAZFA 4296 K Assessee By Smt. Raksha Birla, Adv. Revenue By Sh. S. M. Joshi, JCIT-DR Date of hearing 11/07/2023 Date of Pronouncement 03/08/2023 O R D E R PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by assessee and is arising out of the order of the National Faceless Appeal Centre, Delhi dated 26.11.2021 [here in after (NFAC)] for assessment year 2019-20 which in turn arise from the order dated 01.05.2020 passed under section 143(1) of the Income Tax Act, by CPC Bengaluru. 2 ITA No. 11/Jodh/2022 Aditya Builders and Developers 2. The assessee has marched this appeal on the following grounds:- “1. That on the facts and in the circumstances of the case, the CIT(A)/NFAC has grossly erred in violating the principal of faceless appeal as announced for justice of honest taxpayers and to avoid litigation as created unnecessary by AO. 2. That on the facts and in the circumstances of the case the Ld. CIT(A), NFAC erred in upholding the validity of order passed by the Ld. CPC u/s 143(1) of the Act. 3. That on the facts and in the circumstances of the case the Ld. CIT(A), NFAC ought to have considered the technical or bonafide mistake of the assessee apparent from record and allowed the claim in judicial manner. 4. That on the facts and in the circumstances of the case the Ld. CIT(A) grossly erred in confirming the addition of Rs. 13,73,140/- by holding the exempt income from dividend as business income of the assessee. 5. That on the facts and in the circumstances of the case the Ld. CIT(A) grossly erred in not appreciating the contention of the assessee in right perspective and judicial manner as such action of ld. CIT(A) is wholly unwarranted in law and also legalize injustice on technical ground. 8. That on the facts and in the circumstances of the case the CIT(A) NFAC grossly erred in sustaining arbitrary addition in a hypothetical way contrary to the law settled by the Hon’ble Supreme Court, Hon’ble Courts and Hon’ble CBDT and also again the principle of natural justice. 9. That the petitioner may kindly be permitted to raise any additional or alternative grounds at or before the time of hearing. 10. The petitioner prays for justice & relief.” 3. The fact as culled out from the records is that the appellant filed the return of income for the A.Y 2019-20 on 26.10.2019 declaring total income Rs. 20,13,720/-. Thereafter, the return was processed u/s 3 ITA No. 11/Jodh/2022 Aditya Builders and Developers 143(1) by CPC, Bengaluru dated 01.05.2020 determining the total income at Rs. 33,86,868/- by making an addition of Rs. 13,73,140/- and raised a demand of Rs. 4,36,940/-. The appellant has filed the appeal against the intimation u/s 143(1) of CPC, initially, before CIT(A), Jodhpur-2. Subsequently, the appeal was migrated to the National Faceless Appeal Centre in terms of Notification No. 76 of 2020 dated 25.09.2020 in S.O. 3296(E) issued from the CBDT (A & J Division). 4. The appeal of the assessee decided by the NFAC where the NFAC has confirmed the finding given in the intimidation. A propose to the grounds so raised by the assessee the relevant finding of the ld. CIT(A)/NFAC is reproduced here in below : “Further, as per Schedule-BP, A. 5c., the appellant has not filled up anything with respect to any other exempt income. The Income Tax Return has been duly verified and signed by the appellant. The legislature has given due importance to the verification column and even prosecution proceedings are applicable for wrong verification and therefore whatever is filled in the ITR is to be considered as such, especially for the proceedings u/s. 143(1). Therefore, no credence can be given to the contention of the appellant that the same is a typographical mistake. The CPC is very well competent to make the adjustments on the basis of the columns filled by in t the appellant in the ITR and in the case under consideration, the appellant has filled up such income of Rs. 13,73,140/- as income from other sources in Schedule BP Sl. No. A. 3c. It is once again reiterated that this appeal is against the intimation u/s. 143(1) and is not against scrutiny assessment u/s. 143(3). Only prima facie mistake apparent from record can be considered and on perusal of the ITR, it is seen that the CPC has rightly made adjustments 4 ITA No. 11/Jodh/2022 Aditya Builders and Developers based on the contents of the ITR. Therefore, I do not find any reason to interfere with the findings of the CPC. Accordingly, these grounds of appeal are dismissed.” 5. Feeling dissatisfied the assessee preferred the present appeal on the grounds raised and reproduced here in above para 2. The ld. AR appearing on behalf of the assessee has placed their written submission to support the grounds so raised and the same is extracted here in below; “The appellant has presented this appeal against the order u/s 143(1) passed by CPC. The submission in respect of each ground of appeal raised in the memo of appeal: - 1] As regards ground of appeal No. 3 to 6 relating to addition of Rs. 13,73,140/- by treating the exempt dividend income as business income. a] That on 26/10/2019 the assessee company had filed the return of income and disclosed the gross total income of Rs. 2017934/- and after claiming the deduction under chapter VIA of Rs. 4215/- had declared the total income of Rs. 2013720/- in the return of income. The income so declared in following manner in return of income as:- S.no Particulars of income Amount Heads under which such income to be taxed in ITR 1. Income from business & profession 949000/- Schedule BP (P.B. Page no. 25 to 29) 2. Income from Capital Gain(Short term) 1068934/ - Schedule Capital Gain (P.B. Page no. 35 & 36) 3. Dividend from mutual Fund as exempt income u/s 10 of the Act. 1373140/ - Schedule EI (P.B. Page no. 55 & 56) b] It is submitted that While uploading ITR due to typical or technical mistake assessee company had wrongly reported the exempt income of dividend from mutual fund amounting to Rs. 13,73,140/- in schedule BP Sl. No. A. 3c. “Income/ receipts credited to profit and loss account considered under other heads of income/chargeable u/s 115BBF/ chargeable u/s 115BBG- other Sources” whereas the correct reporting 5 ITA No. 11/Jodh/2022 Aditya Builders and Developers should be made in schedule BP Sl. No. A. 5c. Income credited to Profit and Loss account (included in 1)which is exempt- Any other exempt income (Specify nature and amount”. c] Since the assessee had disclosed such income in ITR under the relevant source of heads in which same is liable for taxation i.e Details of Exempt income Schedule in ITR [Page No. 55 & 56 of P.B.]. However due to bonafide or typical mistake, furnishing the information of exempt income under wrong clause of BP Schedule as discussed above the Ld CPC had found the inconsistency in same and computed the income of Rs. 13,73,140/- while processing the return of income u/s 143(1) and made adjustment/addition of Rs. 1373140/- in the returned income as declared by the assessee. d] The addition of Rs. 1373140 /- is legally not valid and only due to bonafide mistaken the information has been wrongly reported in ITR and on the basis of such mistake the addition made by the ld CPC and changing the head of income from exempt income to business income is not only contrary to the provision of law but also against the principle of natural justice. Further the copy of ITR &computation of income is enclosed herewith at P.B. Page No. 1 to 65. e] That the mistake as committed are bonafide and technical and looking to principal of natural justice and substantial justice, I request your honour to take justice oriented approach while deciding the matter and deleted the addition made by the Ld CPC & oblige.” 5.1 The ld. AR of the assessee fairly admitted that while filling the return the assessee has wrongly reported the exempt income of dividend from mutual fund amounting to Rs. 13,73,140/- in Schedule BP sr. No. A. 3c. whereas the correct reporting should be made in schedule BP Sl. No. A. 5c. This mistake is apparent and since the same is not demonstrated before the ld. AO as the same was processed u/s. 143(1), assessee prayed to set a side this issue before the AO because the ld. CIT(A) also confirmed the finding based on the 6 ITA No. 11/Jodh/2022 Aditya Builders and Developers ITR filed. Therefore, in interest of justice the assessee was required an opportunity of being heard in the matter to decide the chargeability of the disputed income. 6. On the other hand, the ld. DR is heard who relied on the findings of the lower authorities and submitted the decision has been given based on the ITR filed only by the assessee. 7. We have heard the rival contentions and perused the material placed on record. It is not disputed the adjustment made in the return of income is made u/s. 143(1) of the Act. Before us the assessee fairly admitted that w hile uploading ITR due to typical or technical mistake assessee company had wrongly reported the exempt income of dividend from mutual fund amounting to Rs. 13,73,140/- in schedule BP Sl. No. A. 3c. “Income/ receipts credited to profit and loss account considered under other heads of income/chargeable u/s 115BBF/ chargeable u/s 115BBG- other Sources” whereas the correct reporting should be made in schedule BP Sl. No. A. 5c. Income credited to Profit and Loss account (included in 1)which is exempt. This issue is not considered on the merits and the assessee is also required to substantiate the claim so made before the ld. AO. Thus, based on these arguments the bench feels that if given a chance the assessee can 7 ITA No. 11/Jodh/2022 Aditya Builders and Developers demonstrate the merits of the case and on the contentions and the orders of the lower authorities are not passed based on this merits. Therefore, we find force in the arguments advanced by the ld. AR of the assessee and therefore, we are of the considered view that the assessing officer should hear the assessee’s submission on merits after affording proper opportunity of being heard and pass speaking order in the matter. Based on these observations the issue is set a side to the file of the learned assessing office. At the same time assessee is directed to represent and present all the facts before the assessing officer and should not ask for the adjournment on frivols grounds. At this stage we remand back the issues raised without commenting upon the merits of the case and the ld. AO is directed to complete the assessment in accordance with the law. In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board. Sd/- Sd/- (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) Judcial Member Accountant Member 8 ITA No. 11/Jodh/2022 Aditya Builders and Developers D at e d : 0 3 / 08 /2 02 3 *G an es h K u m a r , P S Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR 6. Guard File Assistant Registrar Jodhpur Bench