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Facts
The appellant was aggrieved by an intimation order under Section 143(1) levying interest under Section 234A. The CIT(A) dismissed the appeal as not maintainable, stating the CPC made no adjustments and accepted the returned income. The appellant argued the CIT(A) erred in not adjudicating the issue on merits, especially concerning additional claims.
Held
The Tribunal, noting the similarity of facts to a previous case (Ajay Jaisinghani), decided to remit the issue back to the CIT(A). The CIT(A) is directed to adjudicate the appeal on its merits.
Key Issues
Whether the CIT(A) correctly dismissed the appeal as not maintainable, or if the matter should be adjudicated on its merits, especially concerning additional claims on capital gains and interest.
Sections Cited
234A, 143(1), 55(2)(ac), 55(2)(aa)(iiia)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Mumbai “B” Bench, Mumbai.
Before: Shri Narender Kumar Choudhry (JM) & Shri Omkareshwar Chidara (AM)
Per Omkareshwar Chidara (AM) :- In the above appeal, the appellant claims that interest under section 234A of the I.T. Act is not chargeable as per the 143(1) order passed by Central Processing Centre (Bangaluru) and the following grounds of appeal are taken accordingly :- Based on the facts and circumstances of the case, Mr. Bharat Jaisinghani (hereinafter referred to as the 'Appellant') craves leave to prefer an appeal against the order passed by the learned Commissioner of Income-Tax (Appeals) - 53, Mumbai ['learned CIT(A)] in relation to the appeal against intimation order passed under section 143(1) of the Act dated
1. 20. March 2021 by the Centralized Processing Center, Bengaluru ('learned AO') on the following grounds, each of which are without prejudice to one another. On the facts and in the circumstances of the case and in law: General: 1. the learned CIT(A) has erred in dismissing the Appellant's appeal against order u/s 143(1) of the Act, as not maintainable, as returned income is accepted in the order under section 143(1) of the Act; 2. the learned CIT(A) ought to have considered that additional claim made before the assessing officer post passing of the intimation order under section 143(1) of the Act and since the CIT(A)'s jurisdiction is co- terminus with that of the assessing officer, ought to have adjudicated upon the additional claim;
The learned CIT(A), failed to consider the fact that the ground of appeal on erroneous levy of interest under section 234A of the Act had been validly raised and therefore, the appeal ought to have been considered as maintainable; Capital gains not chargeable to tax of Rs. 2,66,97,108:
Not admitting the Appellant's additional claim: 4. the learned CIT(A) erred in not admitting the Appellant's additional claim in respect of non-chargeability of his capital gains income amounting to Rs. 2,66,97,108 filed by way of a 'ground of appeal';
the learned CIT(A) failed to appreciate the fact that additional claim made by the Appellant being a legal claim, the Appellate authority ought to have admitted the same and adjudicated judiciously and on merits in the course of the Appellate Proceedings;
Provisions of Explanation to section 55(2)(ac) of the Act as applicable at the time when the impugned OFS transactions was entered into should be applied: 6. the learned CIT(A) failed to appreciate the fact that since, the additional claim made by the AO in respect of non-chargeability of capital gains arising on shares offered under Offer for Sale ('OFS') ought to have been allowed, as the computation mechanism in relation to determination of cost as per section 55(2)(ac) of the Act fails, by virtue of which the capital gains cannot be computed and hence there can be no levy of capital gains tax; Without prejudice, cost of acquisition of the shares may be computed using the fair market value as on 31 January 2018:
7. without prejudice to the above, the learned CIT(A) ought to have considered alternate legal claim of the Appellant that the cost of shares of Polycab India Ltd offered by assessee under the OFS should be considered to be Fair Market Value ('FMV') of shares as on 31 January 2018 for the purpose of computation of capital gains; Without prejudice, provisions of section 55(2KaaWiia) of the Act cannot be imported into the provisions of section 55(21 (ac1) of the Act:
without prejudice to the above, failed to appreciate that the provisions of section 55(2)(aa)(iiia) of the Act providing for cost of acquisition of bonus shares to be Nil cannot be imported into the provisions of section 55(2)(ac) of the Act and it has to be considered as per grand-fathering provisions i.e. fair market value as on 31 January 2018 should be adopted; Without prejudice, adjudication on the additional claim by the IT AT:
the Hon'ble Tribunal ought to admit the Appellant's additional claim and adjudicate upon the following issues in relation OFS transaction:
3 • Provisions of Explanation to section 55(2)(ac) of the Act as applicable at the time when the impugned OFS transactions was entered into should be applied; • Amended provisions of Explanation to section 55(2)(ac) of the Act cannot be applied retrospectively; • Without prejudice, cost of acquisition of the shares may be computed using the fair market value as on 31 January 2018, • Cost of acquisition of bonus shares cannot be considered as Nil; Each of the above ground is independent and without prejudice to one another. The Assessee craves leave to add, to alter, to amend or to delete any or all of the above grounds of appeal
, at or prior to hearing of the appeal, so as to enable your Honour to decide the appeal according to law.”
3. The assessment of appellant was processed by CPC and interest under section 234A was levied by CPC while sending the intimation to the appellant company. Aggrieved by the order of CPC, and appeal was filed before Ld. CIT(A). The Ld. CIT(A) has dismissed the appeal of appellant stating that the CPC did not make any adjustment and accepted the income returned by appellant. Hence, the appellant cannot have any grievance when his income was accepted as returned. As the grounds raised by the appellant before CPC were not emanating from 143(1) order/intimation passed by CPC, the Ld. CIT(A) adjudicated that the appeal is not maintainable. Hence, Ld. CIT(A) decided that the appeal of appellant was dismissed.
Aggrieved by the order of Ld. CIT(A), the appellant filed an appeal before the ITAT with the grounds of appeal mentioned in pages No. 1 & 2 of this order.
5. During the proceedings before the ITAT, the Ld. AR of the appellant has filed detailed written submissions and relied on several cases-law for the proposition that a new claim can be made before the appellate authorities for the first time also. It was argued that the decision of NTPC Ltd. 299 ITR 383 (SC) and Goetze India Ltd. (284 ITR 323) (SC) support his view. Reliance was placed by the appellant on the decision of Nirmala L. Mehta (267 ITR 1) (Bombay) for the proposition that the tax authorities should correctly compute the income and consequent tax liability. Thus, it was argued that 4 the Ld. CIT(A) is not correct in dismissing the appeal by adjudicating that the appeal is not maintainable in view of the above decisions. It was submitted that Ld. CIT(A) should have decided the matter on merits. The Ld. AR of the appellant has also mentioned that in the case of Ajay Jaisinghani (ITA No. 972/2025) in similar circumstances, the Hon'ble ITAT, Mumbai has directed the Ld. CIT(A) to decide the issue on merits and adjudicated that the appeal before Ld. CIT(A) is maintainable. Thus, the circumstances being similar, the Ld. AR of the appellant pleaded that the issue may be remanded back to the Ld. CIT(A) in this case also and a direction may be given to Ld. CIT(A) to adjudicate the issue on merits.
The Ld. DR relied on the order of Ld. CIT(A).
Heard both sides. The facts in the case of Ajay Singhani (supra) being the same, it is decided to remit the issue to the file of Ld. CIT(A) directing him to adjudicate the issue on merits.
8. The appeal of appellant is allowed for statistical purposes. Order pronounced in the open Court on 25/07/2025.