ULTRAMARINE & PIGMENTS LTD,MUMBAI vs. ACIT, CIRCLE 8(3)(1), MUMBAI

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ITA 5997/MUM/2025Status: DisposedITAT Mumbai12 May 2026AY 2021-224 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the disallowance made under section 143(1) was not in conformity with the first proviso to section 143(1)(a) as no intimation was given to the assessee regarding this specific adjustment. Therefore, the adjustment was deleted.

What were the facts?

The assessee claimed a bad debt deduction of Rs. 2,90,920/-. The CPC processed the return under section 143(1) and made a disallowance for this amount, which was confirmed by the CIT(A). The assessee argued that PAN is not required for bad debt claims under Section 36(1)(vii).

What were the issues?

Whether the disallowance made under section 143(1) without issuing a prior intimation to the assessee is valid. Whether PAN is mandatory for claiming bad debts under Section 36(1)(vii).

Which sections of the Income-tax Act were involved?

Section 143(1),Section 36(1)(vii),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “F” BENCH, MUMBAI

Before: SHRI SANDEEP SINGH KARHAILSHRI BIJAYANANDA PRUSETH

For Appellant: Shri Dharan Gandhi
For Respondent: Shri Vikas Chandra, Sr.DR

IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER

ITA No. 5997/Mum./2025 (Assessment Year : 2021-22) Ultramarine & Pigments Ltd. Plot No. 101/102, 2nd Floor Thirumalai House, Road No.29, Sion (East), Mumbai - 400022 ……………. Appellant PAN : AAACU0718Q v/s

Assistant Commissioner of Income Tax, Circle – 8(3)(1), Room No.615, 6th Floor, ……………. Respondent Aayakar Bhavan, Maharishi Karve Road, Mumbai – 400020 Assessee by : Shri Dharan Gandhi Revenue by : Shri Vikas Chandra, Sr.DR

Date of Hearing – 21/04/2026 Date of Order – 12/05/2026

O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal against the impugned order dated 25.07.2025 passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Additional/Joint Commissioner of Income Tax (Appeals)-1, Guwahati [“learned Addl./Joint CIT(A)”], which in turn arose from the intimation issued under section 143(1) of the Act, for the assessment year 2021-22.

2.

In this appeal, the assessee has raised the following grounds: - “1. The intimation order passed u/s 143(1) dated 25.07.2025 is bad in law.

2 ITA No. 5997/Mum/2025 (A.Y. 2021-22)

2.

The CIT(A), erred in confirming disallowance of a sum of Rs. 2,90,920/- made by the Ld. CPC. 3. The Ld. AO erred in confirming the levy of interest u/s. 234A, 234B and 234C of the Act.”

3.

We have considered the submissions of both sides and perused the material available on the record. The brief facts of the case are that the assessee is a manufacturer of chemical products, soap and detergents. For the year under consideration, the assessee filed its return of income on 14.03.2022, declaring a total income of Rs. 72,43,17,684/-. The return filed by the assessee was processed vide intimation dated 13.11.2022, issued under section 143(1) of the Act, assessing the total income of the assessee at Rs. 72,87,04,130/-, inter alia, after making a disallowance of Rs. 2,90,920/- on account of bad debts. In its appeal before the learned CIT(A), the assessee submitted that the said amount was mentioned in respect of a claim of bad debts where PAN is not available. It was further submitted that there is no requirement under section 36(1)(vii) of the Act to disclose the PAN to claim bad debts. The Addl./Joint CIT(A), vide impugned order, confirmed the disallowance of Rs. 2,90,920/- on the basis that the assessee has not furnished a copy of the ledger account of the party in respect of whom the debts were claimed as bad. Being aggrieved, the assessee is in appeal before us.

4.

From the perusal of the intimation issued under section 143(1) of the Act, we find that the intimation of the proposed adjustment under section 143(1)(a) was only qua the following issues: -

3 ITA No. 5997/Mum/2025 (A.Y. 2021-22)

“1. There is inconsistency in Any sum payable to an employee as bonus or commission for services rendered claimed in return and audit report. 2. There is inconsistency in Any sum payable towards leave encashment claimed in return and audit report. 3. There is inconsistency in Any amount disallowed under section 43B in any preceding previous year but allowable during the previous year claimed in return and audit report. 4. There is inconsistency in Any amount debited to profit and loss account of the previous year but disallowable under section 43B claimed in return and audit report. 5. There is inconsistency in 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)] claimed in return in schedule OI and audit report.” 5. Thus, it is evident that no notice was issued to the assessee seeking its response regarding the disallowance of Rs. 2,90,920/- made under section 36(1)(vii) of the Act. In this regard, it is relevant to note that the first proviso to section 143(1)(a) specifically provides that no adjustment shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode. Since no intimation was issued to the assessee qua the disallowance made under section 36(1)(vii), we are of the considered view that the said adjustment was not in conformity with the provisions of the first proviso to section 143(1)(a) of the Act. Accordingly, the said adjustment is deleted. As a result, grounds raised by the assessee are allowed.

6.

In the result, the appeal by the assessee is allowed. Order pronounced in the open Court on 12/05/2026

Sd/- Sd/- SANDEEP SINGH KARHAIL BIJAYANANDA PRUSETH JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 12/05/2026

4 ITA No. 5997/Mum/2025 (A.Y. 2021-22)

Prabhat Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order

Assistant Registrar ITAT, Mumbai

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