NATURAL PANEL INDUSTRIES PRIVATE LIMITED,MARGHERITA vs. INCOME TAX OFFICER, WARD-1, DIGBOI

At the outset, ld. Counsel for the assessee submitted that no opportunity was provided by the Central Processing Centre before making the adjustments to the income of the assessee and thus there was a violation of principle of natural justice in the light of proviso to section 143(1)(a) of the Act, which renders the processing illegal and bad in law. Reliance was placed on the decision of the Coordinate Bench, Bangalore in the case of Neelam Pachisia –vs.- DCIT in dated 17.03.2020. Reference was also made to the screenshot of the e-proceeding portal under the PAN of the assessee.

On the other hand, ld. D.R. vehemently supported the order of the lower authorities.

We have heard the rival contentions and perused the relevant record placed before us. The assessee has raised the legal issue stating that there is a violation of principle of natural justice since no prior intimation was given to the assessee before making adjustment, which in this case was denial of deduction under section 80IE of the Act and not allowing tax credit as per provision of section 115JAA of the Act.

We observe that where a return is made under section 139 or in response to a notice under section (A.Y. 2020-2021) Natural Panel Industries Private Limited 142(1) of the Act, such return is processed as per the provisions of section 143(1)(a) of the Act and in this case, Central Processing Centre has to compute the income electronically. However, proviso to section 143(1)(a) provides that no such adjustment shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode. It is further provided that response received from the assessee, if any, shall be considered before making any adjustment and in a case, where no response is received within 30 days of the issue of such intimation, such adjustment shall be made.

In the instant case, the assessee has filed income tax return in Form No. 6 on 30.01.2021, but the due date of filing the return of income under section 139(1) of the Act was 31.10.2020. While processing the return, CPC has denied the claim of deduction under section 80IE of the Act. Before us, ld. Counsel for the assessee referring to the proviso to section 143(1)(a) of the Act and also referring to the proceedings taken for A.Y. 2020-21 in the case of income under section 143(1) of the Act as per the Income Tax Portal by way of placing copies of screen-shot of e-portal has contended that before making the alleged adjustment, the assessee was not provided any opportunity which is mandatory as per the provisions of section 143(1)(a) of the Act. In absence of any such opportunity being provided to the assessee, (A.Y. 2020-2021) Natural Panel Industries Private Limited there is a violation of principle of natural justice, which renders the proceedings infructuous and bad in law. Reliance has been placed on the recent decision of the Coordinate Bench, Bangalore in the case of Neelam Pachisia (supra), wherein this Tribunal has held as under:- “6. However, on the perusal of the provisions of sec.143(1), it was noticed that the following proviso was also inserted by Finance Act, 2016:- "Provided that no such adjustment shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode." When the bench asked as to whether any intimation was given to the assessee as contemplated under the above said proviso, the Ld A.R submitted that the assessee has not received any intimation as provided under the Proviso to sec. 143(1). Hence the Ld D.R was asked to find out as to whether any intimation was given to the assessee. The Ld D.R furnished a letter F. No.CPC/U-IV/Judicial/2019-20 dated 03-03- 2020, wherein it was stated that no intimation was given to the assessee. It was also stated that the year under consideration being AY 2016-17, no such intimation needs to be given.

7. We have noticed that the return of income of the assessee pertaining to AY 2016-17 was processed u/s 143(1) on 25.06.2017, i.e., after the date of insertion of clause (v) to sec. 143(1), i.e, after 1.4.2017. The contention of the revenue is that, if processing of return of income of any assessment year is done after 1.4.2017, then the provisions of clauses (Hi) to (vi) inserted w.e.f. 1.4.2017 can be applied. In that case, in our view, the proviso mandating giving of intimation to the assessee to the proposed adjustment should have also been followed by the revenue. It is so because, the said proviso was also inserted in sec.l43(l) along with clauses (iii) to (vi) by Finance Act, 2016. Since no such intimation was given to the assessee. the impugned adjustment is liable to be deleted. The Ld D.R invited our attention to the provisions of sec.80AC of the Act. However, the controversy here is related the power of the AO in processing return of income 4 (A.Y. 2020-2021) Natural Panel Industries Private Limited u/s 143(1) of the Act. Hence we are of the view that we need not examine the provisions of sec.80AC of the Act at this stage."

A perusal of the above finding of the Tribunal, we find that the facts of the case before us are identical and ld. D.R. failed to place on record any evidence, which could prove that opportunity was provided to the assessee prior to making the alleged adjustment. In absence of any such documentary evidence and inability of the revenue authorities, we are inclined to set aside the finding of ld. CIT(Appeals) and hold that the impugned adjustment is liable to be deleted. Thus the legal issue raised by the assessee in Ground No. 2 is allowed.

Grounds No. 3 & 4 are being consequential and need no adjudication.

Ground No. 5 is alternative in nature, which becomes infructuous since we have already allowed Ground No. 2 10. In the result, the appeal of the assessee is allowed as per the terms indicated above. Order pronounced in the open Court on 15th September, 2023. Sd/- Sd/- (Sonjoy Sarma) (Manish Borad) Judicial Member Accountant Member Kolkata, the 15th day of September, 2023 5 (A.Y. 2020-2021) Natural Panel Industries Private Limited Copies to :(1) Natural Panel Industries Private Limited, 1 No. Makum Pather, P.O. Margherita, Tinsukia-786181, Assam (2) Income Tax Officer, Ward-1, Digboi, Assam, Pin Code No. 786171