RAJENDRAKUMAR SHIVPRASAD JOSHI,BHARUCH V. DEPUTY DIRECTOR OF INCOME TAX, BENGALURU

ITA 33/SRT/2024

AI Insights

The case involves Khilav Rajendrakumar Joshi, the legal heir of the deceased Lt. Rajendrakumar Shivprasad Joshi, who appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The appeal was related to the assessment year 2022-23, where the assessee's return was processed with an adjustment of Rs. 8,66,510 on account of leave encashment claims. The primary contention was the alleged violation of section 143(1)(a) of the Income-tax Act, 1961, due to the non-issue and service of notice by the Assessing Officer before making the said adjustment. The Tribunal, referencing decisions from the ITAT, Ahmedabad Bench, and other precedents, held that the adjustments made without proper intimation were invalid, leading to the quashing of the intimation under section 143(1).

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473296 (ITAT-SURAT)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Next Hearing Date: 10-10-2024
• Assessment Year: 2022-2023
• Appeal Filed On: 13-01-2024
• Other Referred Cases: Devendra Singh Bhaskar vs. DCIT, Arham Pomps vs. DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: KRUTARTH DESAI
• Keywords: Principle of natural justice; Non passing of speaking order; FORM 26AS
• Section: 250; 143(1); 10; 10AA

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.33/SRT/2024 Assessment Year: (2022-23) (Physical Hearing) Khilav Rajendrakumar Joshi, (Legal Heir of Deceased Lt. Rajendrakumar Shivprasad Joshi, C/o Bhupendra C. Mehta, Advocate, 313, Silver Shrusti Appartment, Above SBI Link Road, Branch Bharuch - 392001 Vs. The DCIT, Central Processing Centre (CPC), Bangaluru èथायीलेखासं./जीआइआरसं./PAN/GIR No: ABZPJ5602K (Appellant) (Respondent) Appellant by Shri Krutarth Desai, Advocate with Ms. Disha Kharod, CA Respondent by Shri Mukesh Jain, Sr. DR Date of Hearing 10/10/2024 Date of Pronouncement 08/11/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 09.01.2024 by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2022-23. The original Form No.36 was filed on 13.01.2024 which was signed by Shri Rajendrakumar Shivprasad Joshi. Subsequently, revised Form No.36 was filed by the legal heir of deceased, Shri Khilav Rajendrakumar Joshi on 13.06.2024. 2. The grounds of appeal raised by the assessee are as under: 2 ITA No.33/SRT/2024/AY.2022-23 Rajendrakumar S. Joshi “1. The Learned CIT (Appeals) has grossly erred on the facts and in law in dismissing the appeal without adjudicating the preliminary issue raised regarding 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. 866508/-. 2. The Learned CIT (Appeals) grossly erred on facts and in law in dismissing the appeal without adjudicating the ground regarding non speaking order of the Learned AO passed us 143(1). 3. Section 10 10AA (ii) wrongly disallowed The Learned CIT(A) has grossly erred 254 in law and is not justified in confirming the addition made by the Learned 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.50588E dated 31.05.2002 issued by CBDT effective 01.04.1998. 4. Section 250(5) Addition alteration of ground of appeal your appellant craves leave to add, amend, alter any ground of appeal.” 3. Brief facts of the case are that the assessee had filed his return of income for AY.2022-23 on 30.07.2022, declaring total income of Rs.14,89,010/-. The return was processed u/s 143(1) on 31.01.2023 by making adjustment of Rs.8,66,510/- on account of leave encashment claim on retirement of the assessee. The total income was determined at Rs.23,55,520/- as against income of Rs.14,89,010/-. The assessee had claimed leave encashment u/s 10(10AA)(ii) at Rs.11,66,508/- against Rs.3,00,000/- allowed by employed. The DCIT, CPC, Bangaluru restricted the amount of allowance u/s 10(10AA)(ii) to the extent of Rs.3,00,000/- only and a sum of Rs.8,66,505/- was added without issuing any intimation to the assessee. The assessee filed appeal before the CIT(A) who vide order u/s 250 of the Act dated 09.01.2024 dismissed the appeal. He has not decided the jurisdictional issue of adjustment u/s 143(1) of the Act without issuing intimation to the assessee and has directly decided the issue of adjustment of leave encashment. 3 ITA No.33/SRT/2024/AY.2022-23 Rajendrakumar S. Joshi 4. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The Learned Authorized Representative (Ld. AR) filed written submission and relied on the decision of the ITAT, Ahmedabad Bench in ITA No. 431/Ahd/2022, dated 11.10.2023. He submitted that the CIT(A) has not considered the preliminary issue regarding violation of statutory provisions of section 143(1) of the Act in the form of non-issuing and non-service of notice by AO u/s 143(1)(a) of the Act before making adjustment of Rs.8,66,508/-. He further submitted that the claim u/s 10(10AA)(ii) was wrongly disallowed which has been confirmed by CIT(A). 5. On the other hand, Learned Senior Departmental Representative (Ld. Sr. DR) of the Revenue supported the order of lower authorities. In view of the contention of the Ld. AR that provisions of section 143(1)(a) has not been complied with, he promised to get the record verified by AO and inform the ITAT by 17.10.2024. 6. We have heard both the parties and perused the material available on record. We have also gone through the decision relied upon by the Ld. AR. The return was filed on 30.07.2022, declaring total income of Rs.14,89,010/-. The return was processed by the DCIT, CPC, Bangaluru on 31.10.2023 by making an adjustment of Rs.8,66,510/- on account of the claim of leave encashment u/s 10(10AA)(ii) of the Act. The Ld. AR contended that the AO has not given any intimation of such adjustment before processing the return. The Ld. Sr. DR has not informed about the issue of intimation to the assessee prior to adjustment 4 ITA No.33/SRT/2024/AY.2022-23 Rajendrakumar S. Joshi u/s 143(1) of the Act, as promised during the hearing. With this factual background, it would be proper to reproduce Section 143(1)(a) of the Act for ready reference and clarity: “143. Assessment. (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 [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 [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 sub-section (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: (emphasis supplied) 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;” 5 ITA No.33/SRT/2024/AY.2022-23 Rajendrakumar S. Joshi 7. It is, therefore, clear that the total income or loss shall be computed after making the adjustments as provided in sub-clauses (i) to (vi) provided that no adjustment shall be made unless an intimation is given to the assessee of such adjustment either in writing or in electronic mode. In the present case, the appellant has submitted that no such intimation was given by the AO before making adjustment of Rs.8,66,510/- on account of leave encashment. The appellant has raised grounds of appeal on this issue before the CIT(A) who has not decided the ground despite the specific ground and written submission in this regard. He has directly decided the ground relating to disallowance of claim of leave encashment of Rs.8,66,508/-. Therefore, it is cleared that there has been violation of statutory provisions, being proviso to section 143(1)(a) of the Act as well as the principles of natural justice. Therefore, the intimation issued u/s 143(1), dated 31.03.2023, is against the first proviso to section 143(1)(a) and, therefore, the entire proceedings u/s 143(1) is invalid in law. The Co- ordinate Bench of Ahmedabad in the case of Devendra Singh Bhaskar vs. DCIT, ITA No.431/Ahd/2022, dated 11.10.2023 has decided the issue in favour of assessee after following the earlier decision of the ITAT, Ahmedabad in case of Arham Pomps vs. DCIT, in ITA No.206/Ahd/2021, dated 27.04.2022. In view of the facts discussed above and the decisions cited supra, we hold that the entire proceedings u/s 143(1) is vitiated and is invalid in law. Consequently, the intimation u/s 143(1) of the Act by CPC is quashed. 6 ITA No.33/SRT/2024/AY.2022-23 Rajendrakumar S. Joshi 8. Since we have quashed the intimation u/s 143(1) of the Act, we are not adjudicating the other grounds on merits. 9. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 08/11/2024 Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 08/11/2024 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat "