ADITYA BIRLA GLOBAL TRADING (INDIA) EMPLOYEES GRATUITY FUND,NOIDA vs. ITO EXEM. WARD 2(3), MUMBAI

VIOLATION OF PRINCIPLES OF NATURAL JUSTICE:

1 On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 33,44,569/- made by the Ld. AO.

2 The Ld. CIT(A) failed to appreciate that the Ld. AO erred in passing the intimation u/s. 143(1) of the Act without granting the Appellant the statutory period of 30 days to respond to the proposed adjustment, thereby violating the provisos to section 143(1)(a) of the Act.

3 The Ld. CIT(A) also failed to appreciate that the adjustment could not have been made before expiry of the period contemplated under section 143(1)(a) of the Act.

4 The Appellant therefore prays that the intimation passed by the Ld. AO u/s. 143(1) of the Act be held as void-ab-initio and bad in law and be quashed. WITHOUT PREJUDICE TO THE ABOVE

INCOME OF APPROVED GRATUITY FUND IS EXEMPT U/S. 10(25)(iv) OF THE ACT:

On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the Ld. AO in assessing the income of the Appellant at Rs. 33,44,569/-.

The Ld. CIT(A) failed to appreciate and ought to have held that: The Appellant is an approved gratuity fund; and The income of an approved gratuity fund is exempt u/s, 10(25)(iv) of the Act.

The Id, CIT(A) erred in holding that the Appellant's claim could not be entertained merely because it was not made through a revised return by placing reliance on the decision of Goetze (India) Ltd. v. CIT, without appreciating that appellate authorities are empowered to admit and adjudicate claims arising from the facts already on record.

The Appellant therefore prays that the addition of Rs. 33,44,569/- to the income Appellant be deleted.

LEVY OF INTEREST U/S. 234B OF THE ACT AMOUNTING TO Rs. 1,69,700/-:

1 On the facts and circumstances of the case and in law, the ld. CIT(A) erred in upholding the action of the Ld. AO in levying interest u/s. 234B of the Act amounting to Rs. 1,69,700/-,

2 The Appellant prays that the Ld. AO be directed to delete / appropriately reduce the interest u/s. 234B of the Act, being consequential in nature.

LEVY OF INTEREST U/S. 234C OF THE ACT AMOUNTING TO Rs. 42,849/-:

1 On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the Ld. AO levying excess interest u/s. 234C of the Act amounting to Rs. 42,849/-of the Act.

2 The Ld. CIT(A) and Ld. AO failed to appreciate that interest u/s. 234C of the Act is to be levied on the returned income and not assessed income.

3 The Appellant prays that the Ld. AO be directed to delete the interest u/s. 234C of the Act.

Brief facts of the case are that the assessee filed return of income for the relevant assessment year declaring Nil which was processed u/s 143(1) of the Act by determining the total income at Rs. 33,44,569/-making addition on account of Gratuity fund which was claimed to be exempt.

In the subsequent appeal, it was contended by the assessee that before making any proposed adjustment to the returned income, the assessee was not granted a time of atleast 30 days' for filing of response against the proposed adjustment to be made as per second proviso to section 143(1)(a) of the Act. The adjustment proposed to be made to the income was communicated by the AO on December 23, 2022 as per first proviso to section 143(1)(a) of the Act. Further, the time limit available to the Appellant to object to such proposed adjustment was of 30 days as per the second proviso to section 143(1)(a) of the Act. However, in the P a g e | 4 A.Y. 2021-22 Aditya Birla Global Trading (India) Employees Gratuity Fund case under consideration, merely 4 days' time was given to it to respond. Therefore, sufficient and reasonable opportunity to present its case was not afforded to the assessee, thereby violating the principles of natural justice. It was further submitted that merely because a section under which exemption is claimed was incorrectly stated in the return of income, exemption to which even otherwise entitled to, the said exemption could not be denied. In this connection, reliance was placed on the decision of Hon'ble Bombay High Court in the case of Balmukund Acharya v. DCIT [2009] 310 ITR 310 (Bom).

The ld.CIT(A) observed that section 143(1) of the Act provides for summary processing of return based on apparent errors or incorrect claims discernible from the return and accompanying documents. The adjustment in the present case had been made on the basis of information furnished by the assessee in the return itself and was arithmetical / prima facie in nature. As regard the contention relating to the 30-day period, the requirement of issuing an intimation was intended to provide an opportunity to respond to proposed adjustments. However, violation of procedural requirement does not ipso facto render an action void unless prejudice is demonstrated. In the present case, the assessee had not demonstrated that any response was filed which remained unconsidered.Even assuming that the time available was P a g e | 5 A.Y. 2021-22 Aditya Birla Global Trading (India) Employees Gratuity Fund shorter than 30 days, no substantive prejudice had been established. Accordingly, the contention regarding violation of natural justice was rejected.

1 As regard merits of the addition, he observed that the assessee submitted that it is an approved Gratuity Fund eligible to claim its entire income as exempt u/s. 10(25) (iv) of the Act. For the captioned year, it has earned income of Rs. 33,44,569/-, the same had inadvertently been claimed as exempt income u/s. 11 instead of section 10(25) (iv) of the Act by the Appellant in the ROI. Merely because a section under which exemption is claimed was incorrectly stated in the return of income, exemption to which the Appellant is even otherwise entitled to, the said exemption cannot be denied. The ld.CIT(A) concluded that as the assessee had not filed a revised return to rectify the mistakes made in the original return in view of the principle is in line with the decision of the Hon'ble Supreme Court in Goetze (India) Ltd. v. CIT (2006) 284 ITR 323 (SC), the said claim for exemption under Section 10(25)(iv) raised during the appellate proceedings could not be entertained, as it was not included in the original return. Accordingly, the ground was also dismissed.

Before us, the ld.AR has reiterated the same contentions as made before the appellate authority claiming that since adequate opportunity was not granted by the CPC before passing the intimation u/s. 143(1), the additions made therein deserve to be deleted. Without prejudice to the same, it is pleaded to restore thematter to the file of the Jurisdictional Assessing Officer so as to enable it to place on record all relevant material demonstrating that it is an approved gratuity fund entitled to exemption u/s. 10(25)(iv) of the Act. Granting such an opportunity would serve the ends of justice.

On careful consideration of all the relevant facts, we are of the considered view that the issue requires to be considered afresh by the authorities below as nothing has been demonstrated that the claim of the assessee was not permissible at all. The matter does not appear to have been adjudicated and considered in objective manner. Therefore, following the principles of natural justice and fairplay, we deem appropriate to remit the issue to Jurisdictional Assessing Officer to examine the claim of the assessee allowing it opportunity of hearing in this regard and pass de novo order in accordance with the provisions of the Act.

In the result, the appeal of the assessee is allowed for statistical purposes.