JAI KUMAR KANKARIA(HUF),KOLKATA V. ACIT, CIR. 33, KOLKATA

ITA 556/KOL/2024

AI Insights

The case involves Jai Kumar Kankaria (HUF), who appealed against the order of the Commissioner of Income-tax (Appeals), which upheld the adjustment made by the AO under section 143(1) of the Income-tax Act, 1961. The adjustment pertained to capital gains income that was incorrectly assessed without considering the indexation benefit claimed by the assessee. The Tribunal found that the AO's action of adjusting the capital gains without indexation was erroneous and not supported by the facts, leading to an excess assessment of income by \\u20b927,11,790. The Tribunal emphasized that such adjustments require detailed scrutiny and cannot be made as a prima facie adjustment under section 143(1).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314562 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDAN DAS
• Assessee Lawyers: SOUMITRA CHOUDHURY; PRANABESH SARKAR

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No. 556/KOL/2024 (Assessment Year: 2018-19) Jai Kumar Kankaria (HUF) 6, Perkebunan Kankaria, Jalan Rusel Ubit, Kolkata, Benggala Barat-700071 Vs. ACIT, Cir. 33 Aayakar Bhawan P-7, Chowringhee Square, Kolkata, West Bengal, 700069 (Appellant) (Respondent) PAN No. AADHJ0930P Assessee by : Shri Soumitra Choudhury, & Shri Pranabesh Sarkar, AR Revenue by : Shri Chandan Das, DR Date of hearing: 26.02.2025 Date of pronouncement : 06.05.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), ADDL/JCIT(A)-1, Visakhapatnam (hereinafter referred to as the “Ld. CIT(A)”] dated 18.01.2024 for the AY 2018-19. 2. The issue raised in ground no.1 is general in nature and needs no specific adjudication. 3. The issue raised in ground no.2, is against the order of ld. CIT (A) upholding the order passed u/s 143(1) of the Income-tax Act, 1961 (the Act), thereby confirming the adjustment of ₹27,11,790/- made by the AO (CPC). Page | 2 ITA No. 556/KOL/2024 Jai Kumar Kankaria (HUF); 2018-19 4. The facts in brief are that the assessee filed the return of income on 29.09.2018, declaring total income at ₹1,08,56,910/-, which was processed u/s 143(1) of the Act vide order dated 13.12.2019, assessing the income at ₹1,35,68,700/-, thereby making an addition of ₹27,11,790/-. The ld. AO /CPC, while processing the return of income has committed a mistake by taking the capital gain amounting to ₹1,03,28,496/- shown in the profit and loss account , which was also considered by the assessee in the computation of income under the head capital gain after claiming the benefit of indexation. The said action of the AO/CPC has resulted in increase in the assessed income by ₹27,11,790/-. 5. In the appellate proceedings, the ld. CIT (A) affirmed the order of the ld. AO by mis-appreciating the facts of the assessee and justified the addition made by the AO/ CPC. 6. After hearing the rival contentions and perusing the materials available on record, we find that the assessee has shown income from capital gain amounting to ₹1,03,28,496/- as profit and loss account which was apparently before claiming the indexation benefit. We further note that the assessee while filing the return income assessee has duly taken the said amount of capital gain into account and computed the capital gain accordingly, after taking benefit of indexed cost. However, the ld. AO/ CPC ignored all these facts and picked up these figures without indexation which has resulted in excess amount of income assessed to the tune of ₹27,11,790/-, which in our opinion is wrong and against the facts on record. Even the ld. CIT (A) overlooked the correct facts and figures presented by the assessee. Thus we find merit in the contention of the assessee that the said adjustment made by the AO/ CPC was not a prima facie adjustment to be made u/s 143(1) of Page | 3 ITA No. 556/KOL/2024 Jai Kumar Kankaria (HUF); 2018-19 the Act as the issue involved/ required a lot of debate/ discussion and facts to be clarified and therefore, cannot be said to be a prima facie adjustment. In our opinion, if the AO/ CPC had any issue with regard to said capital gain the proper course would have been made to fix the scrutiny and to examine the amount of capital gain accordingly. Considering these facts and circumstances, we are inclined to quash the intimation passed u/s 143(1) of the Act as invalid on the ground that the AO / CPC has no such jurisdiction to make the adjustment of ₹27,11,790/-. The appeal of the assessee is allowed. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 06.05.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 06.05.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata "