Kailash Chander Kochar, New Delhi V. DCIT CPC, Bengaluru

ITA 310/DEL/2021

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 0850 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Appeal Filed On: 24-03-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Presumptive income; Rectification of order; Principle of natural justice; Revised return; TDS; Capital Gains; FORM 26AS
• Section: 154; 44AD; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “C” BENCH: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA No.310/Del/2021 [Assessment Year : 2017-18] Kailash Chander Kochhar, A-1/198, Paschim Vihar, New Delhi-110063. PAN-AAHPK7721K vs DCIT, CPC, Bengaluru. APPELLANT RESPONDENT Appellant by Shri Ranjan Chopra, CA Respondent by Shri Anuj Garg, Sr. DR Date of Hearing 03.08.2022 Date of Pronouncement 03.08.2022 ORDER PER KUL BHARAT, JM : This appeal filed by the assessee for the assessment year 2017-18 is directed against the order of Ld. CIT(A)-I, New Delhi dated 31.08.2020. 2. The assessee has raised following grounds of appeal:- “1. That the order of Ld. CIT(A) is perverse, erroneous on facts and law and is contrary to principles of natural justice and deserves to be set aside. 2. That the Ld. CIT (A) has erred in confirming an addition of Rs.894930 /- on account of amount received from Star Union Di-Ichi under the head income from other sources whereas the same amount has already been offered to tax under the head Income From Capital Gains, this addition being arbitrary and contrary to the facts and provisions of law and is liable to be deleted. 3. That the Ld CIT (A) is not justified in making adjustments u/s 143(l)(a)(vi) of the Income Tax Act 1961 while computing total income, this adjustment is being arbitrary and contrary to the facts and provisions of law and is liable to be deleted. Page | 2 4. The Ld. CIT (A) has acted arbitrarily, perversely and on presumption basis, contrary to the principles of natural justice, facts and provision of law in conducting the proceeding and framing the order and same stands vitiated being bad in law and liable to be quashed. 5. The appellant craves to amend, modify, alter or forego any ground of appeal at any time before or during the hearing of this appeal.” FACTS OF THE CASE 3. Brief facts of the case are that the assessee filed his revised return of income for Assessment Year 2017-18 on 19.05.2018. Thereafter, the assessee received an intimation u/s 143(1) of the Income Tax Act, 1961 (“the Act”) from Central Processing Centre, Bengaluru (“CPC”) thereby, it was proposed for making certain adjustments. The assessee duly filed explanation. However, the explanation was not acceptable to the CPC and a demand of Rs.5,80,730/- was raised vide order dated 29.04.2019 thereby, making adjustment of Rs.8,94,930/- under head income from other sources and disallowing the TDS credit of Rs.3,50,000/-. A rectification application u/s 154 of the Act was also filed. However, the addition of Rs.8,94,930/- was sustained by CPC. 4. Aggrieved against this, the assessee preferred appeal before Ld.CIT(A) who after considering the submissions, dismissed the appeal of the assessee. 5. Aggrieved against the order of Ld.CIT(A), the assessee is in appeal before this Tribunal. 6. The only effective ground in this appeal raised by the assessee is against the confirmation of addition of Rs.8,94,930/- on account of amount received from Star Union Di-Ichi under the head income from other sources. Whereas as Page | 3 per the assessee, same amount had already been offered to tax under the head income from Capital Gains. 7. Ld. Counsel for the assessee submitted that during the year under consideration, the assessee received maturity proceeds from Star Union Di-Ichi amounting to Rs.8,94,930/- against the investment of Rs.5,50,000/-. He further submitted that the indexed cost of investment was Rs.8,03,132/- thus, the assessee offered Rs.91,798/- as taxable income under the head income from Capital Gains and paid tax @ 20% on the same amounting to Rs.18,360/-. He submitted that these facts were duly disclosed in the income tax return filed by the assessee. He further submitted that as per Form 26AS, the amount on which tax was deducted u/s 194DA by Star Union Di-Ichi was also stated at Rs.8,94,930/- which tallies with the income reflected in the income tax return under the head income from capital gains. In support of this, he drew our attention to Paper Book and a chart filed by the assessee. He further made reliance on the decision of the Tribunal rendered in the case of Anita Seth vs DCIT in ITA No.109/Kol/2022 for Assessment Year 2017-18 to buttress the contention that the issue being debatable is beyond the purview of section 143(1) of the Act for making adjustments. 8. On the contrary, Ld. Sr. DR opposed these submissions and supported the orders of the authorities below. 9. We have heard the contentions of Ld. Authorized Representatives of the parties and perused the material available on records and gone through the orders of the authorities below. The issue in question is whether the authorities below were justified in sustaining the adjustment made by CPC u/s Page | 4 143(1)(a)(vi) of the Act. Ld.CIT(A) decided the issue in paras 6.4 & 6.5 of the impugned order by observing as under:_ 6.4. “The appellant has also claimed that as per form 26AS the amount of income on which tax is deducted under section 194DA by Star Union Di-Ichi for Rs.8,94,930/- was reflected in the income tax return under the head income From capital gains. For this the appellant has also filed rectification application u/s 154 of the Act before Assessing officer on 09.05.2019 but the Assessing Officer passed rectification order dated 6.2.2020 in which addition of Rs. 8,94,930/- was not deleted by him and the whole amount of sale proceeds was taken under the head Income from other sources once again. From this, it is apparent that the appellant has approached Assessing Officer against the order of CPC dated 29.04.2019 and AO after considering the facts on record has rejected the plea of the appellant. Surprisingly this order of Assessing Officer dated 06.02.2020 has not been challenged by appellant and the original order of CPC dated 29.04.2019 has been challenged by the appellant belatedly in this appeal. 6.5. In this light, CPC is justified in making the addition of Rs.8,80174/- u/s 143(1)(a)(vi) of the Act as TDS has not been deducted under section 194DA by Star Union DI-Ichi of Rs.8,94,930/-. In the light of the above, ground of appeal no.1 to 4 are dismissed.” 10. However, we find under the identical facts that the Tribunal in the case of Shri Arthur Bernard Sebastine Pais vs DCIT in ITA No.1683/Bang/2019 for Assessment Year 2017-18 has held under:- 13. “I have given a careful consideration to the rival submissions. The disputed adjustment to the total income declared by the Assessee has been done by the CPC in exercise of powers under section 143(1)(a)(vi) of the Act. It is not in dispute before us that the income of Rs.15,00,000/- was offered to tax in the return of income. In the Page | 5 show cause notice issued by the CPC before making the adjustment, the CPC has proceeded on the basis that the sum of Rs.15,00,000/- offered under section 44AD of the Act ought to have been offered to tax under section 44ADA of the Act. Accordingly, the sum offered to tax under section 44ADA of the Act was taxed under section 44ADA of the Act. As we have already seen the presumptive income under section 44AD is only 8% of the gross receipts, whereas under section 44ADA, 50% of the gross receipts is the presumptive income. It is thus clear from the show cause notice that the AO has not found income appearing in Form 26AS not having been included in computing the total income declared in the return of income filed by the Assessee. The adjustment under section 143(1)(a)(vi) of the Act can be resorted to only when the sum of Rs.15,00,000/- is not included in computing the total income declared in the return of income. The CBDT’s instruction No.10/2017 dated 15.11.2017 has clearly laid down that only when receipts are completely omitted to be declared in the return of income can there be an addition for invoking 143(1)(a)(vi) of the Act. The submissions made by the Assessee in this regard have not been considered by the CIT(A) in the impugned order. The addition that the income appearing in Form 26AS not having been included in the return of income filed is sine qua non for invoking the provisions of section 143(1)(a)(vi) since the same is absent in the present case. We are of the view that the CPC ought not to have made the impugned adjustment. The addition made is liable to be deleted on this basis alone. The issue whether income earned by the Assessee has to be taxed u/s.44AD or Sec.44ADA of the Act cannot be subject matter of decision in processing u/s.143(1) (a) of the Act. In view of the above conclusions, we are not going to the question whether the income of the Assessee is assessable under section 44ADA or 44AD of the Act. The issue is left open without any decision. 14. In the result, the appeal by the Assessee is allowed.” Page | 6 11. The Revenue has not brought to our notice any other binding precedents on this issue. Therefore, respectfully following the decision of the Tribunal in the case of Shri Arthur Bernard Sebastine Pais vs DCIT (supra), we hold that the impugned addition is not justified and it was beyond the purview of CPC for making such adjustment. However, we are not answering the question whether the income of the assessee is chargeable to tax under the head capital gain or income from other sources. This is left open. Thus, the grounds raised by the assessee are allowed. 12. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 03 rd August, 2022. Sd/- Sd/- (PRADIP KUMAR KEDIA) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER * Amit Kumar * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI