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Income Tax Appellate Tribunal, DELHI “C” BENCH: NEW DELHI
Before: SHRI KUL BHARAT & SHRI PRADIP KUMAR KEDIA
per the assessee, same amount had already been offered to tax under the head income from Capital Gains.
Ld. Counsel for the assessee submitted that during the year under consideration, the assessee received maturity proceeds from Star Union Di-Ichi amounting to Rs.8,94,930/- against the investment of Rs.5,50,000/-. He further submitted that the indexed cost of investment was Rs.8,03,132/- thus, the assessee offered Rs.91,798/- as taxable income under the head income from Capital Gains and paid tax @ 20% on the same amounting to Rs.18,360/-. He submitted that these facts were duly disclosed in the income tax return filed by the assessee. He further submitted that as per Form 26AS, the amount on which tax was deducted u/s 194DA by Star Union Di-Ichi was also stated at Rs.8,94,930/- which tallies with the income reflected in the income tax return under the head income from capital gains. In support of this, he drew our attention to Paper Book and a chart filed by the assessee. He further made reliance on the decision of the Tribunal rendered in the case of Anita Seth vs DCIT in for Assessment Year 2017-18 to buttress the contention that the issue being debatable is beyond the purview of section 143(1) of the Act for making adjustments.
On the contrary, Ld. Sr. DR opposed these submissions and supported the orders of the authorities below.
We have heard the contentions of Ld. Authorized Representatives of the parties and perused the material available on records and gone through the orders of the authorities below. The issue in question is whether the authorities below were justified in sustaining the adjustment made by CPC u/s Page | 3 143(1)(a)(vi) of the Act. Ld.CIT(A) decided the issue in paras 6.4 & 6.5 of the impugned order by observing as under:_
6.4. “The appellant has also claimed that as per form 26AS the amount of income on which tax is deducted under section 194DA by Star Union Di-Ichi for Rs.8,94,930/- was reflected in the income tax return under the head income From capital gains. For this the appellant has also filed rectification application u/s 154 of the Act before Assessing officer on 09.05.2019 but the Assessing Officer passed rectification order dated 6.2.2020 in which addition of Rs. 8,94,930/- was not deleted by him and the whole amount of sale proceeds was taken under the head Income from other sources once again. From this, it is apparent that the appellant has approached Assessing Officer against the order of CPC dated 29.04.2019 and AO after considering the facts on record has rejected the plea of the appellant. Surprisingly this order of Assessing Officer dated 06.02.2020 has not been challenged by appellant and the original order of CPC dated 29.04.2019 has been challenged by the appellant belatedly in this appeal. 6.5. In this light, CPC is justified in making the addition of Rs.8,80174/- u/s 143(1)(a)(vi) of the Act as TDS has not been deducted under section 194DA by Star Union DI-Ichi of Rs.8,94,930/-. In the light of the above, ground of appeal no.1 to 4 are dismissed.”
10. However, we find under the identical facts that the Tribunal in the case of Shri Arthur Bernard Sebastine Pais vs DCIT in for Assessment Year 2017-18 has held under:-
13. “I have given a careful consideration to the rival submissions. The disputed adjustment to the total income declared by the Assessee has been done by the CPC in exercise of powers under section 143(1)(a)(vi) of the Act. It is not in dispute before us that the income of Rs.15,00,000/- was offered to tax in the return of income. In the Page | 4 show cause notice issued by the CPC before making the adjustment, the CPC has proceeded on the basis that the sum of Rs.15,00,000/- offered under section 44AD of the Act ought to have been offered to tax under section 44ADA of the Act. Accordingly, the sum offered to tax under section 44ADA of the Act was taxed under section 44ADA of the Act. As we have already seen the presumptive income under section 44AD is only 8% of the gross receipts, whereas under section 44ADA, 50% of the gross receipts is the presumptive income. It is thus clear from the show cause notice that the AO has not found income appearing in Form 26AS not having been included in computing the total income declared in the return of income filed by the Assessee. The adjustment under section 143(1)(a)(vi) of the Act can be resorted to only when the sum of Rs.15,00,000/- is not included in computing the total income declared in the return of income. The CBDT’s instruction No.10/2017 dated 15.11.2017 has clearly laid down that only when receipts are completely omitted to be declared in the return of income can there be an addition for invoking 143(1)(a)(vi) of the Act. The submissions made by the Assessee in this regard have not been considered by the CIT(A) in the impugned order. The addition that the income appearing in Form 26AS not having been included in the return of income filed is sine qua non for invoking the provisions of section 143(1)(a)(vi) since the same is absent in the present case. We are of the view that the CPC ought not to have made the impugned adjustment. The addition made is liable to be deleted on this basis alone. The issue whether income earned by the Assessee has to be taxed u/s.44AD or Sec.44ADA of the Act cannot be subject matter of decision in processing u/s.143(1) (a) of the Act. In view of the above conclusions, we are not going to the question whether the income of the Assessee is assessable under section 44ADA or 44AD of the Act. The issue is left open without any decision.
In the result, the appeal by the Assessee is allowed.”
The Revenue has not brought to our notice any other binding precedents on this issue. Therefore, respectfully following the decision of the Tribunal in the case of Shri Arthur Bernard Sebastine Pais vs DCIT (supra), we hold that the impugned addition is not justified and it was beyond the purview of CPC for making such adjustment. However, we are not answering the question whether the income of the assessee is chargeable to tax under the head capital gain or income from other sources. This is left open. Thus, the grounds raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 03rd August, 2022.