SAMSUNG C AND T CORPORATION INDIA PVT. LTD. ,GURGAON V. DCIT CIRCLE 22(2), NEW DELHI

ITA 2183/DEL/2023

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The case involves Samsung C And T Corporation India Pvt. Ltd., which appealed against the order of the National Faceless Appeal Centre (NFAC) confirming the adjustments made by the Deputy Commissioner of Income Tax, Central Processing Centre (CPC), Bangalore, under section 143(1) of the Income Tax Act, 1961 for the Assessment Year 2017-18. The adjustments included disallowances and additions totaling Rs.74,08,038, primarily concerning club membership fees, provision for gratuity, and belated remittance of provident fund. The Tribunal admitted an additional ground of appeal, which argued that the intimation under section 143(1) was issued without the required 30-day response period, violating principles of natural justice and statutory provisions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 398027 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2017-2018
• Other Referred Cases: NTPC Limited vs CIT 229 ITR 383(SC), Aashirvad Villa Limited in ITA No.1372/Kol/2023, Income Tax Officer (Exemption) \\u2013vs.- Camellia Educare Trust reported in [2023] 152 taxmann.com 304 (Kolkata-Trib.)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAHIL KUMAR BANSAL
• Assessee Lawyers: ASHOK JAIN; ASHU GOYAL
• Keywords: Set aside; Principle of natural justice; FORM 26AS
• Section: 234B; 37; 139(5)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘G’: NEW DELHI BEFORE SHRI YOGESH KUMAR US, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER ITA No.2183/Del/2023 [Assessment Year: 2017-18] Samsung C And T Corporation India Pvt. Ltd. 19th Floor, Epitome, Building No.5, Tower-A, DLF Cyber City, Haryana-122010 Vs Deputy Commissioner of Income Tax, Circle-22(2), C.R. Building, New Delhi PAN-AARCS9192B Assessee Revenue Assessee by Shri Ashok Jain, Adv. & Shri Ashu Goyal, CA Revenue by Shri Sahil Kumar Bansal, Sr. DR Date of Hearing 10.03.2025 Date of Pronouncement 06.06.2025 ORDER PER BRAJESH KUMAR SINGH, AM, This appeal by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi/ Ld. CIT(A) dated 31.05.2023, arising out of intimation u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’), dated 30.03.2019 for Assessment Year 2017-18. 2. Ground of appeal raised by the assessee are as under:- 1. That the order of Ld. CIT (A) is against the law, facts, principles of natural justice and all other principles and rules of law and therefore liable to be set aside. 2. That Ld CIT(A) is not justified in confirming the order of Ld. DCIT, Central Processing Centre (CPC), Bangalore which is bad in law, contrary to facts, provision of law and against the principles of natural justice as such deserves to be quashed. 2 ITA No.2183/Del/2023 3. That Ld CIT(A) is not justified in confirming the order passed by Ld. DCIT, CPC passed U/s 143(1) of the Income Tax Act, 1961 by making adjustment of Rs.74,08,038/- after issuance of notice U/s 143(2) of the Income Tax Act, 1961 which is void ab initio and needs to be quashed 4. That Ld CIT(A) is not justified in confirming the adjustment of Rs. Rs.16,97,151 made by Ld. DCIT CPC, Bangalore on account of followings: a). Inconsistency in Total amount of disallowance under sec 37 of Rs.15,31,712/- and b). Any sum received from employees as contribution to any provident fund or superannuation fund or any fund set up under ESI Act or any other fund for the welfare of employees to the extent not credited to the employees account on or before the due date (36(1)(va)) of Rs. 1,65,439/- in computing the income U/s 143(1) of the Income Tax Act, 1961 which is based on surmises and conjectures and not permitted U/s 143(1)(a) of the Income Tax Act, 1961. As such computation made U/s 143(1) by Ld DCI T, CPC Bangalore making adjustment of Rs. 16,97,151/- needs to be quashed being contrary to provisions of law. 5. That Ld CIT(A) is not justified in confirming the adjustment made by Ld. CPC, Bangalore by disallowing and taxing Rs. 15,31,712/- on account of Membership/Entrance Fee paid for services availed for business purpose only. Hence, the adjustment is based on surmises, conjectures and same is contrary to the facts and provisions of law and liable to be reversed. 6. That Ld CIT(A) is not justified in confirming the adjustment made by Ld. CPC, Bangalore of Rs.1,65,439/- by taxing Employees share of contribution to Provident F und deposited after due date of the relevant Act but before filing of return of Income under the Income Tax Act, Act,1961 is based on surmises, conjectures and is contrary to the facts and provisions of law and ratio laid down by the jurisdictional High Court/Supreme Court and hence, is liable to be reversed. 7. That Ld. CPC, Bangalore is not justified in charging interest U/s 234B and 234C of the Inco me Tax Act which is contrary to facts borne on record and provisions of law. As such interest levied by Ld. CPC, Bangalore U/s 234B and 234C needs to be deleted.” 3. Brief facts of the case:- The assessee company filed its return of income u/s 139(1) of the Act on 29.11.2017 at NIL income which was revised u/s 139(5) on 22.03.2018. The return was processed u/s 143(1) on 3 ITA No.2183/Del/2023 30.03.2019 at an income of Rs.74,08,040/-. Following addition/disallowances were made vide intimation u/s 143(1). i. Disallowance of club membership/entrance fee Rs.15,31,712/- ii. Addition towards provision for gratuity Rs.57,10,887/- iii. Belated remittance of P.F. Rs.1,65,439/- Total Rs.74,08,038/- 4. Aggrieved by the assessment order, the assessee filed an appeal before the ld. CIT(A). The Ld. CIT(A) dismissed the appeal of the assessee. 5. At the outset, the ld. Counsel for the assessee drew our attention to ground no.9 of appeal being filed as additional ground of appeal vide letter dated 09.05.2024. In this case, notice u/s 143(1)(a) of the Act was issued on 23.03.2019 proposing adjustment of Rs.74,08,038/-, which was passed vide order under section 143(1) dated 30.03.2019. In this regard, by the additional ground, it is contended that the intimation u/s 143(1) dated 30.03.2019 was passed without providing a period of 30 days to the assessee to submit its response as mandated under second proviso to Sec 143(1)(a) and therefore the said adjustment is against the principles of natural justice and contrary to provisions of law and therefore, the intimation order passed u/s 143(1) dated 30.03.2019 by the ld. DCIT, CPC, Bangalore needs to be quashed being void-ab-initio. The said additional ground no.9 is reproduced hereunder:- Ground No.9 That Ld. CIT (A) (NFAC) is not justified in upholding order passed by Ld DCIT (CPC) Bangalore by making adjustment of Rs. 74,08,038/- without providing a period of 30 days to appellant to submit its response as mandated under second proviso to Sec 143(1)(a) and before the expiry of 30 days from 4 ITA No.2183/Del/2023 the date of intimation given to appellant proposing said adjustment is against the principles of natural justice and contrary to provisions of law. As such the action of CIT(A) (NFAC) needs to be undone and intimation order passed Us 143(1) by Ld DCIT (CPC) needs to be quashed being void ab initio. 6. The additional ground raised by the assessee is purely legal in nature and goes to the root of the matter. All the facts for deciding this additional ground of appeal are available on the records. Hence, in view of the decision of the Hon’ble Supreme Court in the case of NTPC Limited vs CIT 229 ITR 383(SC), the additional ground is hereby admitted and taken up for adjudication. 7. The assessee filed a list of dates on page no.1 of the paper book, which is reproduced as under:- 5 ITA No.2183/Del/2023 8. Further, in support of the additional ground of appeal no.9, one of the Director of the company filed an affidavit dated 06.05.2024 stating that the order u/s 143(1) was passed on 30.03.2019 much before mandatory time available for filing the response within 30 days of the notice dated 23.03.2019 u/s 143(1)(a) of the Act, which was going to expire on 22.04.2019. The affidavit of the assessee is reproduced as under:- 6 ITA No.2183/Del/2023 8.1. It was further submitted that the Income Tax Portal due to some technical glitch showed that the “response submitted date as 23.03.2019” by the assessee, whereas, the assessee did not submit any such response. The assessee also filed the screenshot of the ITBA portal showing the response dated as 23rd March, 2019 for Assessment Year 2017-18, enclosed as Annexure-1 to the affidavit and also placed at pages 2-3 of the paper book showing that the ITBA portal was still showing ‘submit response’. Further, it was submitted in the affidavit by placing the screenshot of ITBA portal for Assessment Year 2022-23 in the case of the assessee as Annexure-2 of the affidavit and also placed at page number 5 of the paper book, wherein the screenshot states ‘view response’, where the assessee had submitted its response for assessment year 2022-23 in response to similar notice for proposed adjustment u/s 143(1)(a) dated 14.12.2022. In this 7 ITA No.2183/Del/2023 regard, the assessee relied upon the decision of the Tribunal of the Kolkata Bench, in the case of Aashirvad Villa Limited in ITA No.1372/Kol/2023, wherein, the documentary evidences placed on record and the e-proceedings downloaded from the Income Tax Portal, nowhere suggested that the time limit of 30 days available to the assessee to submit its response as per second proviso to section 143(1)(a) of the Act was followed and it was held that such an intimation to the assessee was held to be bad in law. In view of the order of the Tribunal, the assessee submitted that section 143(1) of the Act dated 30.03.2019 passed in the case of the assessee for AY 2017-18 should be treated as bad in law and be quashed. 9. The ld. DR could not controvert the facts stated by the ld. Counsel for the assessee and relied upon the order of the authorities below. 10. We have heard the rival submissions and perused the materials available on record. On the basis of facts available, it is seen that intimation u/s 143(1) of the Act was passed by the CPC, Bangalore on 30.03.2019, wherein, notice u/s 143(1)(a) of the Act was given by the Assessing Officer vide notice dated 23.03.2019. Therefore, thirty days time for filing response by the assessee in this case would have expired on 22.04.2019. We agree with the assessee that screenshot showing that the response by the assessee having been submitted on 23.03.2019 is not correct, because both date of issue and the response submit date is very unlikely to be the same and also in view of the fact that the screenshot on page no.4 of the paper book for AY 2017-18 still displayed ‘submit response’ instead of ‘view response’ as appearing on page no.5 of the paper book on similar response submitted by the assessee for AY 2022-23 against the 8 ITA No.2183/Del/2023 notice u/s 143(1)(a) of the Act dated 14.12.2022. In this regard, the relevant extract of the provisions of section u/s 143(1)(a) of the Act is reproduced as under:- 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; 13[***] (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; 14[(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 indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or section 80-IE, 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: 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;] 11. As stated above, the adjustment was made on 30.03.2019 without receiving the response of the assessee and also before the time available to the assessee i.e. 22.04.2019 to submit the response by the assessee to the 9 ITA No.2183/Del/2023 notice u/s 143(1)(a) of the Act dated 23.03.2019. On similar facts, the Kolkata Bench of the Tribunal in the case relied by the assessee held as under:- 6. We have heard the rival contentions and perused the records placed before us. The assessee has adjusted intra- head loss with the gain of long-term capital gain during the assessment year under consideration. The assessee has claimed this loss in the return of income, which was rejected by the ld. Assessing Officer without giving reasonable opportunity to the assessee and issued intimation under section 143(1). The ld. D.R. relied on the order of this Tribunal dated 30th May, 2023 in the case of Income Tax Officer (Exemption) –vs.- Camellia Educare Trust reported in [2023] 152 taxmann.com 304 (Kolkata-Trib.), . “Considering the facts on record and the perusal of the provisions contained in sec. 143(1)(a) of the Act, we find that on both the aspects, the revenue fails. This position has not been controverted by Ld. Sr. DR also. Even if we assume for a moment that such an intimation was given to the assessee in accordance with the 1st proviso, then the second proviso stipulates that if any response is received from the assessee then, the same should be considered before making any adjustment or disallowance. In case, where there is no response received from the assessee then, within thirty days of the issue of such intimation, department is free to make such adjustment or disallowance. The documentary evidence placed on record and the e-proceedings downloaded from the Income-tax portal, no where suggests that such a process has been followed. Thus, we find that the impugned intimation issued u/s. 143(1)(a) of the Act, dated 30-11-2021 is not in compliance with the 1st proviso to section 143(1)(a) of the Act and thus, the impugned intimation is invalid under the Act.” Here, the Bench has taken the same view that without giving reasonable opportunity, the rejection is bad in law. Accordingly, we rely on the order of this Tribunal in the case of Camellia Educare Trust (supra) and treated the intimation, passed by the ld. Assessing Officer under section 143(1) as bad in law. In our considered view, the loss claimed by the assessee amounting to Rs.87,143/- is liable to be allowed.” 10 ITA No.2183/Del/2023 12. The facts are similar in this case as the intimation u/s 143(1) of the Act has been passed on 30.03.2019, without waiting for the response of the assessee for which time available to the assessee was 22.04.2019, as evident from the copy of the notice under section 143(1)(a) dated 23.03.2019 (placed at page number 137 to 138 of the paper book) and the so called response submitted by the assessee on 23.03.2019, being not correct as discussed above. Therefore, relying on the above decision, we hold that intimation order u/s 143(1) of the Act dated 30.03.2019 is bad in law and therefore the disallowance of Rs.74,08,038/- made by the Assessing Officer vide the said order is deleted. Additional ground no.9 of the appeal is allowed. 13. In view of the additional ground no.9 being allowed, the other grounds of appeal became academic and are not adjudicated. 14. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 06th June, 2025. Sd/- Sd/- [YOGESH KUMAR US] [BRAJESH KUMAR SINGH] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 06.06.2025 f{x~{tÜ f{x~{tÜ f{x~{tÜ f{x~{tÜ Copy forwarded to: 1. Assessee 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "