Devendra Singh Bhaskar, Ahmedabad V. The Dy.CIT, Circle-2(1)(1), Vadodara

ITA 431/AHD/2022

AI Insights

This case involves an appeal by Devendra Singh Bhaskar against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, which arose from an intimation under section 143(1) of the Income Tax Act, 1961, for the Assessment Year 2020-21. The CPC had made adjustments to the assessee's declared income without providing the necessary statutory notice as required by the Act. The Tribunal noted that the assessee was not given any intimation regarding the disallowances proposed by the CPC before the adjustments were made. The Tribunal referenced a similar case, Arham Pumps Vs. DCIT, to support its decision to quash the intimation and allow the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114086 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-08-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 13-11-2022
• Other Referred Cases: Arham Pumps Vs DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: WAY OF AN M.A. NO
• Keywords: Principle of natural justice; Non passing of speaking order; TDS; FORM 26AS
• Section: 10; 154; 244A; 10(10AA); 10AA; 143(1); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before: Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member Devendra Singh Bhaskar, A-19, Krishna Bunglows-1 Sabarmati, Motera (Gujarat) PAN: ACLPB9945N (Appellant) Vs The DCIT, Circle-2(1)(1), Vadodara (Respondent) Assessee Represented: (Written Submission) Revenue Represented: Shri Sanjay Kumar, Sr. D.R. Date of hearing : 09-08-2023 Date of pronouncement : 11-10-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the order dated 17.08.2022 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “NFAC”), arising out of the Intimation passed under section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2020-21. ITA No. 431/Ahd/2022 Assessment Year 2020-21 I.T.A No. 431/Ahd/2022 A.Y. 2020-21 Page No Devendra Singh Bhaskar Vs. DCIT 2 2. The Registry has noted that there is delay of 27 days in filing the above appeal. The assessee explained by way affidavit that he filed e-appeal in Form No. 36 on 14-10-2022 which is well within 60 days time limit. However the assessee filed physical copy of the appeal on 14-11-2022, thereby the registry has noted that there is delay of 27 days in filing the above appeal. The assessee was bona fide impression that once e-appeal is filed in time, following that filing of physical copy of appeal is also in time. This bona fide (wrong) impression may kindly be treated as sufficient cause, reason for the above delay of 27 days and the same be kindly condoned. 3. The Ld. Sr. D.R. Shri Sanjay Kumar appearing for the Revenue has no objection in condoning the delay in filing. Hence, the delay in filing the physical appeal of 27 days is hereby condoned and the appeal is taken for adjudication. 4. The brief facts of the case is that the assessee is an individual and retired from ONGC Ltd. and derives income under the head salary and other sources. For the Assessment Year 2020-21, the assessee filed his Return of Income on 26-12-2020 declaring total income of Rs. 67,36,780/-. The return was processed by Centralized Processing Centre and intimation u/s. 143(1) dated 15.07.2021 determining the total income of the assessee at Rs. 74,78,390/-. While doing so, the CPC assessed the income under the head “salaries’ at Rs. 73,18,713/- as against Rs. 65,77,098/- disclosed by the assessee. Thus there is an addition of Rs. I.T.A No. 431/Ahd/2022 A.Y. 2020-21 Page No Devendra Singh Bhaskar Vs. DCIT 3 7,41,615/- towards leave encashment u/s. 10(10AA) of the Act was made by CPC. 5. Aggrieved against the same, the assessee filed an appeal before Ld. NFAC and raised a ground that the assessee was not given any statutory notice required as per proviso appended to section 143(1)(a) of the Act. The assessee also raised grounds on merits on the disallowance made u/s. 10(10AA) of the Act. 6. Ld. NFAC considered the written submission filed by the assessee which is also reproduced in para 6.2 of the impugned order. However while adjudicating the appeal, the Ld. NFAC has not addressed Ground no. 1 raised by the assessee, but only adjudicated on merits of the case, thereby upheld the disallowance made u/s. 10(10AA) of the Act and dismissed the assessee appeal. 7. Aggrieved against the same, the assessee is in appeal before us raising the following Grounds of Appeal: 1. 143(1)(a) The Ld CIT A grossly erred on facts and in law in dismissing the appeal without adjudicating the preliminary issue raised regarding the violation of statutory provision of See 143(1)(a) of the Income tax Act 1961 the Act in the form of non-issue and service of the notice by the AO us 143(1)(a) of the Act before making the adjustment of Rs. 7,41,610/-. 2. 143(1)(a) The Ld. CIT A grossly erred on facts and in law in dismissing the appeal without adjudicating the ground regarding non speaking order of the Ld. AO passed us 143(1). 3. Sec 10 10AA(ii) wrongly disallowed The Ld. CIT(A) has grossly erred 254 in law and is not justified in confirming the addition made by the Ld. AO and not allowing the exemption exceeding Rs. 3 lakhs u/s. 10 10 AA(ii) of the Act considering the invalid Gazette Notification No 50588 E dated 31.05.2002 issued by CBDT effective 01.04.1998. 4. Sec 89(1) wrongly disallowed The relief on the LE amount exceeding RS 3,00,000/- The Ld. CIT A grossly erred on facts and in law and is not I.T.A No. 431/Ahd/2022 A.Y. 2020-21 Page No Devendra Singh Bhaskar Vs. DCIT 4 justified in not treating the taxable portion of income of leave encashment qualifying for relief u/s. 89(1) of the Act. 5. Sec 250(5) Addition alteration of ground of appeal Your appellant craves leave to add amend alter any ground of appeal. 8. None appeared on behalf of the assessee, however a detailed written submission is filed by the assessee. The crux of the written submission and more particularly relating to ground no. 1 & 2 before us are as follows: “4) The appellant respectfully submits that the challenge to the order passed under the provisions of section 143(1) of the Act is mainly on two grounds: Non observance of principles of natural justice in as much as non- granting of intimation for the proposed addition by way of notice statutorily required to be given u/s 143(1)(a) of the Act before making adjustment and raising demand under section 143(1) of the Act. The interpretation of section 10(10AA) (ii) and applicability of notification No 50588(E) dated 31/05/2002 which is pending before the Hon'ble High Court of Delhi in writ petition No 11846 of 2019. 5) Section 143 (1) (a): The appellant submits that it is the settled position of law that any action by way of passing of order must be by way of issuing notice and after conferring opportunity of hearing to the appellant. The appellant submits that the present respondent has not looked into the fundamental principles of "audi alterm partem" which has not been provided to the appellant as per the 1st proviso of section 143(1) of the act, but proceeded with the case on merits and CIT(A) also confirmed the addition made by CPC. The present respondent is therefore erred in conducting the faceless appeal proceedings in a more mechanical manner without application of mind. Therefore, the present assessment order passed under section 143(1) may kindly be deleted in the best interest of justice. Reliance is placed on Order of this Hon'ble Court dated 27/04/2022 in the case of Arham Pumps Vs DCIT, CPC having ITA No 206/Ahd/2021.” 8.1. Further the assessee also has given a detailed written submission on the merits of the case. First we will deal with the Ground Nos. 1 & 2, as it goes to the root of the matter. I.T.A No. 431/Ahd/2022 A.Y. 2020-21 Page No Devendra Singh Bhaskar Vs. DCIT 5 9. The Ld. Sr. D.R. Shri Sanjay Kumar appearing for the Revenue supported the orders passed by the Lower Authorities and he could not bring to our notice that any communication in writing or in electronic mode was served by CPC to the assessee before making adjustment u/s. 143(1) of the Act. 10. We have given our thoughtful consideration and perused the materials available on record including the written submission filed by the assessee. From perusal of 143(1) intimation dated 20.09.2021, the assessee’s claim of refund of Rs. 3,40,120/- was reduced to Rs. 85,600/- by making addition in the total income. We notice from the footnote at Page No. 13 of the intimation order which reads as follows: NOTE: 1. Interest u/s 244A of the Income Tax Act, 1961 is computed up to the date of issue of the refund. 2. The refund determined in this intimation, along with interest u/s 244A is subject to adjustment of arrear demand, if any, u/s. 245 3. The Refund is issued by the State Bank of India (Refund Banker) on behalf of the Income Tax Department. The details of the status of the Refund can be obtained from website (www.tin-nsdl.com) under "Status of Tax Refunds. In case of any difficulty or delay in the receipt of refund, kindly call the State Bank of India Call Center number 18004259760 to know the status of refund. 4. If you consider that any part of this intimation requires to be rectified, you may request for a rectification u/s 154 of the Income Tax Act 1961. 10.1. We further notice from Page No. 14 of the intimation order in Table-B that there is a mismatch of Rs. 2 only in the TDS claimed by the assessee with that of the 26AS report. Thus it appears that the assessee was not put to notice the disallowances proposed by CPC before initiating u/s. 143(1) proceedings. For better I.T.A No. 431/Ahd/2022 A.Y. 2020-21 Page No Devendra Singh Bhaskar Vs. DCIT 6 understanding the powers available to an A.O. while processing the intimation u/s. 143(1), the same is reproduced as follows: “143. (1) Where a return has been made under section 139, or in response 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; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (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 82[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 83[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 subsection (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: (underline is ours) 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: 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; I.T.A No. 431/Ahd/2022 A.Y. 2020-21 Page No Devendra Singh Bhaskar Vs. DCIT 7 10.2. As per first proviso to section 143(1)(a), the total income or loss shall be computed after making following adjustments namely (i) arithmetical error in the return, (ii) incorrect claim which is apparent from any information in the return, then CPC is entitled to make adjustments as per 1 st proviso of Section 143(1)(a) by giving an intimation to the assessee either in writing or in electronic mode before making such adjustments. In response to first proviso, when the assessee replies the same shall be considered before making any adjustments u/s. 143(1)(a) and in case, the assessee fails to response within 30 days of issue of such intimation, the CPC is empowered to make such adjustments. Here, in this case, the assessee was not given any intimation as per 1 st proviso to section 143(1)(a) of the Act and CPC straight away made adjustments in 143(1) proceedings and communicated to the assessee by reducing the refund claimed by the assessee. The assessee in his written submission also relied upon Co-ordinate Bench decision in the case of Arham Pumps Vs. DCIT in ITA No. 206/Ahd/2021 dated 27-04-2022 wherein it is held as follows: “....8. On going through the above intimation made under section 143(1), CPC has not followed the above provisos by giving proper opportunity to the assessee to defend its case as per the first proviso to section 143(1)(a) . Further, the NFAC order is also silent about the intimation to the assessee. Therefore, we find that intimation issued under section 143(1) dated 19.10.2019 is against first proviso to section 143(1)(a), and therefore, the entire 143(1) proceedings is invalid in law. 9. We also observe that the ld.NAFC has not looked into this fundamental principle of “audi alterm partem”, which has not been provided to the assessee as per the 1st proviso of section 143(1) of the Act, but proceeded with the case on merits and also confirmed the addition made by the CPC. The ld.NAFC is thus erred in conducting the faceless appeal proceedings in a more mechanical manner without application of mind. We therefore hereby quash the intimation issued by the CPC and allow the appeal filed by the assessee.” I.T.A No. 431/Ahd/2022 A.Y. 2020-21 Page No Devendra Singh Bhaskar Vs. DCIT 8 11. Respectfully following the above decision of ours which was again challenged by the Revenue by way of an M.A. No. 59/Ahd/2022. The same was also dismissed by this Bench vide order dated 03-05-2023. Even in the present case, we notice that the intimation passed u/s. 143(1) dated 15-07-2021 is violation of 1 st proviso to section 143(1)(a) of the Act by not offering hearing to the assessee. Therefore the entire proceedings u/s. 143(1) is vitiated and invalid in law. Consequently the intimation passed by CPC is hereby quashed. Thus we are not adjudicating the other grounds raised on merits of the case. 12. In the result, the appeal filed by the Assessee is allowed. Order pronounced in the open court on 11-10-2023 Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 11/10/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद