ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(1), BILASPUR, BILASPUR vs. MAA PARWATI TRANSPORT, KORBA

At the time of hearing none appeared for the assessee. However, an adjournment petition has been filed which is rejected. The matter is heard after recording the submissions of the Ld. CIT-DR and on careful perusal of the materials available on record.

The relevant facts in this case are that the assessee is a partnership firm and engaged in the business of transportation. That on the basis of audited accounts, the return of income for A.Y.2024-25 was filed on 09.10.2024 declaring a total income of Rs.1,65,05,460/-. The return was processed u/s.143(1) of the Income Tax Act, 1961 (for short ‘the Act’) by the CPC, Bangalore on 19.12.2025. That as per intimation u/s.143(1) of the Act, the income assessed was Rs.8,92,86,430/- as against returned income at Rs.1,65,05,460/- thereby raising a demand of Rs.3,05,94,250/-. The CPC, Bangalore has made disallowance of Rs.7,00,00,000/- ignoring the fact that the impugned contingent liability of Rs.7,00,00,000/- has not been debited in profit and loss account but only mentioned in 3CD report, hence, no addition is called for.

The Ld. CIT(Appeals)/NFAC observed that the CPC, Bangalore made addition of Rs.7,00,00,000/- based on information provided in the tax audit report (Form 3CD) regarding a contingent liability. The First Appellate Authority after verifying the financials of the assesse had observed that while the amount was mentioned in the 3CD report, it was not debited to the profit and loss account nor claimed as an expenditure in the return of income filed by the assessee. It was observed by the Ld. CIT(Appeals)/NFAC that as per legal principle u/s.143(1)(a) of the Act, adjustments are restricted to arithmetical error or “incorrect claims” apparent from the return. In the present case, the assessee never claimed the amount of Rs.7,00,00,000/- as deduction from income, therefore, there is no ‘incorrect claim” to be disallowed. The Ld. CIT(Appeals)/NFAC had further relied on judicial precedent wherein it was held that entry in a tax audit report regarding an amount not actually debited to the profit and loss account cannot form the legal basis for an addition under summary processing through intimation u/s.143(1) of the Act. Therefore, the addition of Rs.7,00,00,000/- was held unjustified since it was never claimed as expenses and the A.O/CPC was therefore directed to delete the said addition and re-calculate the tax liability and interest accordingly and the appeal of the assessee was allowed. We do not find any infirmity with

In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on 8th May, 2026.