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Income Tax Appellate Tribunal, MUMBAI BENCH “K (SMC
Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI PRABHASH SHANKAR
Per : Narender Kumar Choudhry, Judicial Member:
These appeals have been preferred by the Assessee against the orders dated 13.02.2025 and 14.02.2025, impugned herein, passed by the Ld. Addl./Joint Commissioner of Income Tax (Appeals) (in short “Ld. Addl./Joint Commissioner”) under section 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Ys. 2019-20 & 2020-21.
& 1802/M/2025 M/s. Lintas Employees Hobbies and Craft Trust 2. Both the appeals are based on the almost identical facts except variation in amounts and having involved identical issues therefore for the sake of brevity, the same were heard together and are being disposed of by this composite order by taking into consideration the facts and circumstances and issues involved in as a lead case and result of the same would be applicable mutatis mutandis to both the appeals under consideration. we observe that the Assessing Officer (AO)/CPC vide intimation/order u/s 143(1) of the Act dated 01.05.2020 assessed the total income of the Assessee at Rs.20,64,260/- and made the addition of Rs.12,50,214/- in total (Rs.6,74,181/- being dividend from mutual funds which was claimed by the Assessee as exempt u/s 10(35) of the Act + Rs.5,76,033/- interest from tax free bonds which was claimed as exempt u/s 10(15) of the Act.
The Assessee, being aggrieved, challenged the said additions before the Ld. Addl./Joint Commissioner by filing first appeal, however, with the delay of 979 days in filing of the same. As observed above, the CPC/AO has passed the order/intimation on dated 01.05.2020 and that time Covid period has already been started and therefore considering the peculiar facts and circumstances the Hon’ble Apex Court, in suo-moto case in writ petition No.3 of 2020 & ors. decided on January 10, 2022, exempted the period from 15.03.2020 till 28.02.2022 and therefore, if we exclude the excluded period for filling of appeal, revision etc. as directed by the Hon’ble Apex Court and filing of appeal on dated 04.02.2023, the exact delay would come to 341 days.
& 1802/M/2025 M/s. Lintas Employees Hobbies and Craft Trust 4.1 Admittedly, the Assessee has as many as 12 trusts for welfare of its employees and in all the cases pertaining to A.Y. 2019-20 & 2020-21 to all the trusts the assessment/intimation orders were passed u/s 143(1) of the Act on dated 01.05.2020. And therefore the Assessee has claimed, as the time when the intimation/order was passed by the CPC on dated 01.05.2020, Covid period was going on and therefore only one manager namely Mr. Dinesh Kabra was available in office and the office for staff was closed entirely and thus such manager could not see the mails that arrived from the Department. However, once Mr. Kabra resumed office after a long time, he was able to see the mails about receipt of orders and consequently all appeals of 12 trusts were filed at a time around February 2023 before the CIT(A), along with condonation of delay varied from case to case. In all other cases, the Ld. CIT(A) has allowed the condonation of delay except in the instant case.
4.2 The Assessee, before this Court, has also submitted duly sworn affidavit dated 19.01.2023 of one of the trustees namely Mr. Shahrook Munsiff, wherein the reasons for delay are demonstrated as under:
1. I say that I am the Trustee of LINTAS EMPLOYEES HOBBIES AND CRAFTS TRUST, (hereinafter referred to as the Assessee Trust").
I say that MR. DINESH KABRA, aged 74 years, is the Administrator, and is in charge of the accounts and finance of the Assessee Trust. The Assessee Trust has been regularly filing the Income Tax Returns and looking after all the tax litigation matters of the Assessee Trust. For the AY. 2019-20, the Assessee Trust was in receipt of Intimation Order u/s. 143(1), which was passed on 01-05-2020.
4. Mr. Dinesh Kabra was having serious health issues due to covid along with pneumonia and was quite unwell. Due to the Covid Pandemic, he was attending to matters of the Assessee Trust only once a week and on urgent matters only. He was advised by the Doctors to take rest due to his ill health.
& 1802/M/2025 M/s. Lintas Employees Hobbies and Craft Trust 5. I say that I was unaware of the Intimation us. 143(1) being passed. When it was brought to my notice, I saw that there was a demand raised in the Intimation u/s. 143(1), against which we made several efforts to file rectification application u/s. 154 either online on the portal or in physical mode.
6. On 12-05-2020, an employee working from the accounts team of the Assessee Trust (who was working from home during the Covid Lock Down), filed an online response to the outstanding demand, on the I.Tax Portal and intimated about the mistake apparent on record of the Intimation u/s. 143(1). However till date no response has been received from the 1. Tax Department on this issue till date.
However, since the Income Tax Portal was completely upgraded and revamped was under construction for a long time, it seems that there was not and there is no tab to file rectification application u/s.
This caused immense delay in filing the appeal.
8. Accordingly, I contacted my lawyers who suggested that despite there merely being a mistake apparent on record which is clerical in nature, an appeal should be filed in order to get justice and equity.
Accordingly, an appeal has been filed against the Intimation Order u/s. 143(1), with a delay of 975 days (approximately).
10. Due to the ongoing pandemic scenario prevalent in India, the Assessee was unable to file the appeal within time limits prescribed.
However, since the Income tax website was under revamp/reconstruction, the appeal could not be filed on time due to various technical problems. Till date there are problems on the Income Tax Portal.
I humbly request you to kindly condone this delay and not treat the Assessee as a person in default and grant the opportunity to be heard on merits.
The delay is on account of the non-functional income tax website and the inability to file the appeal and the covid pandemic. The office was closed between April 2020 to June 2020 due to lock down like conditions and thereafter it was operational on an irregular basis and only to attend to very urgent work. Staff were advised to work from home.”
4.3 And therefore, on the aforesaid reasons, the Assessee has prayed that the delay of 341 days by considering as bonafide and un-intentional, may kindly be condoned.
On the contrary, the Ld. D.R. refuted the claim of the Assessee.
We have given thoughtful considerations to the peculiar facts and circumstances of the case. Admittedly, the then Ld. Addl./JCIT- 2, in other cases of the Assessee specifically for the A.Y. 2019-20 decided vide order dated 06.12.2023, has also taken into consideration the delay of about 975 days in filing of appeal before him as well as the identical affidavit as produced before us and ultimately considering the facts of that particular case and the details filed, condoned the delay in filing of the appeal before him. Even otherwise, the reason stated by the Assessee supported by duly sworn affidavit appears to be genuine, bonafide and unintentional and therefore, for substantial justice, we are inclined to condone the delay occurred in filing of first appeal before the Ld. Addl./Joint Commissioner. Thus, the delay is condoned.
7. Coming to the merits of the case, we observe that the Assessee had claimed the amounts of Rs.6,74,181/- on account of dividend from mutual funds and Rs.5,76,033/- on account of interest from tax free bonds as exempt from tax. We observe that the then Ld. Addl./JCIT-2 in the Assessee’s own case for the A.Y. 2021-22 has also dealt with identical issues, as involved in the instant case and deleted the identical additions /disallowance made on account of dividend from mutual funds and dividend from interest from tax free bonds which has been claimed by the Assessee as exempt, by holding as under:
“7. DECISION:
The submissions of the appellant have been gone through. Each ground of appeal is taken hereunder for adjudication:
7.1 Ground No. 1,2,3,4 and 6:
Ground No. 1 - Addition of Rs. 21,27,450/- under the head Business Income & 1802/M/2025 M/s. Lintas Employees Hobbies and Craft Trust 1. The learned AO/CPC in its Intimation Order u/s. 143(1) (without giving any show Cause Notice), erred in computing the Business Income at Rs.21,27,450/- as against NIL Income that is declared in the Return of Income.
2. The learned AO/CPC erred in making the above addition, although the income was already subject to tax under other heads of income and some part of it was exempt from tax, and therefore any further addition would amount to double taxation.
Interest from Ra.2,75,691/- Exempt from tax Tax Free Bonds 2. Capital Gains Rs.5,85,431/- LTCG of Rs.1,65,880/- (computed after taking indexation benefit) and set off against previous years losses 3. Dividend + Rs.12,66,328/- Income from Other Sources Interest Income Total Rs.21,27,450/-
Ground No. 2.: Addition of Rs. 4,04,081 (Exempt income)
The learned AO/CPC erred in making an addition of Rs.2,75,691/-, under the head Business Income, being the interest from Tax Free Bonds which is exempt from tax.
4. The learned AO/CPC although accepted the abovementioned income aa Exempt income in Line 5(c) of the Intimation Order u/s. 143(1), while totaling the same in Line 5(d), it stated the Total amount as '0' (without assigning any reason for the same), which resulted in an addition of Rs. 2,75,691/-
Ground No. 3: Addition of Rs. 1,97,603 under the head Capital Gain
5. The learned AO/CPC erred in computing the LTCG at Rs. 3,65,433/- instead of Rs. 1,65,880/-, and therefore consequently erred in disallowing the loss or Rs. 1,99,553/ arising on account on redemption from Tata Steel 11.80% Perpetual Bonds, without assigning any reasons for doing the same.
6. The learned AO/CPC erred in computing tax at special rates of tax on income of Rs. 1,99,553/-, although the concerned transaction (ie. redemption from Tata Steel 11.80% Perpetual Bonds) resulted in a loss of Rs. 1,99,553/- and not income and therefore the question of computing tax thereon does not arise at all.
Ground No. 5: Tax Credit as per Form 26AS of Rs.74,786/-
7. The learned AO/CPC erred in not allowing the Assessee TDS credit of Rs. 74,786/- on the ground that there is a mismatch with Form 26AS, although the same is clearly allowable.
Ground No. 6: No addition can be made u/s. 143(1) 8. The learned AO/CPC erred in making any addition which is beyond the scope of section 143(1).
9. The learned AO/CPC erred in making an adjustment in an Intimation Order u/s. 143(1) although the same should have been a matter of scrutiny proceedings.
7.1.1 Verdict: On perusal of details available on records it is noticed that no proposed adjustment issued by the CPC Bengaluru is found. It is also noticed that vide order u/s. 143(1) dated 28.12.2022 that against the declared income at Rs. Nil/- under the head of" Profit and gain from business or profession" by the appellant, the CPC Bengaluru has computed income at Rs. 21,27,450/- i.e. disallowance/addition of Rs. 21,27,450/-. Also against the income of Rs. 1,65,880/- declared by the appellant under the head of "Capital Gain", the CPC Bengaluru has computed income at Rs. 3,65,433/- i.e. disallowance/addition of Rs. 1,99,553/-. Accordingly, the CPC Bengaluru has computed total income at Rs. 35,93,330/- against the total income declared by the appellant at Rs. 12,66,330/- i.e. disallowance/addition of Rs.23,27,000/-. The aforesaid fact is evident from the screenshot of the said order which is reproduced hereunder for the sake of ready reference:
7.1.2 During the course of appellate proceedings, it is submitted by the appellant that: The Intimation u/s. 143(1) was issued on 28.12.2022, assessing the income at Rs. 35,93,330/-, by making an addition of Rs. 21,27,450/- to the head Business Income and Rs. 1,99,550/- to the head Capital Gains, without assigning any reasons.
In the intimation order u/s 143(1), the AO/CPC Bangalore has failed to capture the amounts to be disallowed and reduced from the Net profit as per P&L Account, because the same are either taxable under another head of income or are exempt in nature. This clearly appears to be a mistake apparent on record.
Kindly refer to following Points in the intimation order u/s 143(1), where the AO/CPC Bangalore has erroneously captured a 'NIL' amount (on account of totaling error), whereas the Assessee in its Return of Income rightly reduced them for reasons stated in Para 12 above: Point 3(b) on Page 95 of the PB - Point 3(c) on Page 95 of the PB - Point 5(d) on Page 97 of the PB.
Please find below detailed explanation of each stream of income that has been erroneously added under the head business income by the AO/CPC Bangalore instead of being treated under their respective heads of income, as rightly disclosed by the Assessee in its Return of Income.
7.1.3 The submissions/explanations offered by the appellant have been gone through. It is noticed from the Income/Expenditure account (Screenshot-1) that the impugned amounts of Rs. 2,75,691/- (Interest from tax free Bonds), Rs. 5,85,431/- (Capital Gains) and Rs. 12,66,328/- (Rs. 6,84,651/- + Rs. 5,81,677/-) has already been shown by the appellant at the Income side. Also, it is noticed from the computation of income that the appellant has considered the amounts in computation of income (Screenshot -2). For ease of reference, the screenshots of I & E A/c, and computation of income are reproduced hereunder: Screenshot-1 LINTAS EMPLOYEES HOBBIES AND CRAFTS TRUST INCOME & EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2021 INCOME Sch. For The For The Year Ended Year Ended & 1802/M/2025 M/s. Lintas Employees Hobbies and Craft Trust 31.03.2020 31.03.2021 Rs. Rs. Gross: 6,84,651 6,74,181 Dividends from Mutual Funds (Tax deducted at source Rs.51,662, Previous year Nil) Interest on Fixed Deposits 3,45,677 4,61,013 (Tax deducted at source Rs.24,839 Previous year Rs.46,102) Interest on Taxable Bonds- (Including Rs.117,030 in 2,36,000 3,53,030 Previous year in respect of earlier years) (Tax deducted at source Rs.Nil) Interest on Tax Free Bonds (Including Rs. 183,312 in 2,75,691 5,76,033 Previous year in respect of earlier years) Net Profit on Redemption of Investments 5,85,431 - 21,27,450 20,64,257 Screenshot -2 & 1802/M/2025 M/s. Lintas Employees Hobbies and Craft Trust The learned AO/CPC erred in not allowing the Assessee TDS credit of Rs. 74,786/-on the ground that there is a mismatch with Form 26AS, although the same is clearly allowable.
7.2.1 Verdict: The contention of the appellant has been gone through. During the course of assessment proceedings, it has been submitted by the appellant that:
The learned AO/CPC erred in not allowing the Assessee TDS credit of Rs. 74,786/- on the ground that there is a mismatch with Form 26AS, although the same is clearly allowable.
As per form 26AS (Page 87 & 88 of PB), the total Tax Deducted at Source by payers is Rs. 74,786/-. Such credit of TDS must be allowed against the total tax liability payable for the year, which has been rightly claimed by the assessee.
The AO/CPC Bangalore, however, has without any reasons, not allowed Tax Credit as per Form 26AS of Rs. 74,786/-, resulting in an additional tax liability to that extent.
7.2.3 On perusal of the intimation, it is noticed that the appellant has claimed TDS credit of Rs. 74,786/- however the same has not been granted by the CPC Bengaluru. It is also noticed from the records that no proposed adjustment had been communicated to the appellant as envisaged in the provisions of the section 143(1) of the Act. The screenshot of the said intimation is reproduced hereunder for ease of reference:
25 PRE-PAID (a) Advance tax 2,80,610 2,80,610 TAXES (b) TDS 74,786 0 (c) TCS 0 0 (d) Self assessment tax 52,000 52,000 (e) Total Tax Paid [e=(a+b+c+d)] Click 4,07,396 3,32,610 here for Variance details 26 TAX PAYABLE Balance payable [26=(24-25e)] 0 15,14,408
7.2.4 It is further noticed from the Form 26AS that the total TDS of Rs. 74,786/- has been deducted for the impugned assessment year. Hence, in the light of discussion in foregoing paras, the contention of the appellant is found correct that the CPC Bengaluru did not give credit of the said amount without intimating the appellant. Therefore, the assessing officer is directed to grant TDS credit of Rs.74,786/-.
& 1802/M/2025 M/s. Lintas Employees Hobbies and Craft Trust 7.2.5 During the course of appellate proceedings, the appellant has also relied upon three case laws viz. (i) Improvement trust, ludhiana vs. Ujagar singh & ors. [(2010) 6 sec 786]
(ii) Vijay vishin meghani vs. Dy. Cit [398 itr 250 (bom)] (iii) Sreenivas charitable trust vs dcit [2006 280 itr 357 mad]
7.2.6 In the light of factual and legal aspects of the case inclusive of case laws relied upon by the appellant, the contentions of the appellant that: • Addition of Rs. 21,27,450/- under the head Business Income is wrong • Addition of Rs. 4,04,081 (Exempt income) is wrong • Addition of Rs. 1,97,603 under the head Capital Gain is wrong • Computing tax on special income of Rs. 1,97,603/- is wrong and • No addition can be made u/s. 143(1) is found correct. Therefore, the assessing officer is directed to delete the addition made aggregating to Rs. 23,27,000/-.
In the result, appeal is ALLOWED.”
9. In the above case, the then Ld. Addl./JCIT has dealt with the identical issue as involved in the instant case and by considering the facts and circumstances in totality, ultimately deleted the identical additions. As the facts and issues as involved in this case and dealt with by the Ld. Addl./JCIT are exactly similar and there is no deviation, except variation in amounts and therefore the additions on account of disallowances as made and sustained by the Authorities below, are un-sustainable. Thus, the same are deleted.
In the result, the Assessee’s appeal stands allowed.
Order pronounced in the open court on 23.05.2025.