Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCH “E” MUMBAI
Before: SHRI VIKAS AWASTHY & SHRI OM PRAKASH KANT
PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 22/07/2022 passed by the Ld. Commissioner of income- tax(Appeals)-National Faceless Appeal Centre (NFAC), New Delhi [in short the Ld. CIT(A)] for assessment year 2020-21, arising from the intimation order passed u/s 143(1) of the Income-tax Act, 1961 (in
Tata Digital Private Limited 2 ITA No. 2334/M/2022
short ‘the Act’) by the Centra by the Centralised Processing Centre (CPC), lised Processing Centre (CPC), Bangluru. The grounds raised by the assessee Bangluru. The grounds raised by the assessee are are reproduced as under:
General Ground: General Ground:
On the facts and the circumstances of the case and in law, 1. On the facts and the circumstances of the case and in law, 1. On the facts and the circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal Unit 1) the Learned Commissioner of Income Tax (Appeal Unit 1) the Learned Commissioner of Income Tax (Appeal Unit 1) (hereinafter referred (hereinafter referred as "Ld CIT(A)") erred in making an as "Ld CIT(A)") erred in making an addition of Rs.5.44,65.784 to the total income/(loss) of the addition of Rs.5.44,65.784 to the total income/(loss) of the addition of Rs.5.44,65.784 to the total income/(loss) of the Appellant. 2. Ground 2 2. Ground 2 - Reduction in Carry forward losses of AY Reduction in Carry forward losses of AY 2020-21 2.1. The Ld CIT(A) erred in reducing the loss without 2.1. The Ld CIT(A) erred in reducing the loss without 2.1. The Ld CIT(A) erred in reducing the loss without providing reasonable opportunity providing reasonable opportunity of being heard through of being heard through virtual hearing to the Appellant, thereby violating the virtual hearing to the Appellant, thereby violating the virtual hearing to the Appellant, thereby violating the principles of natural justice and additional not following the principles of natural justice and additional not following the principles of natural justice and additional not following the point 12(3) of the notification no 139 of 2021 dated 28 point 12(3) of the notification no 139 of 2021 dated 28 point 12(3) of the notification no 139 of 2021 dated 28 December, 2021 laying down the requirement to provide an December, 2021 laying down the requirement to provide an December, 2021 laying down the requirement to provide an opportunity to the Appellant for virtual hearing. pportunity to the Appellant for virtual hearing. 2.2. On the facts and circumstances of the case and in law, 2.2. On the facts and circumstances of the case and in law, 2.2. On the facts and circumstances of the case and in law, the Ld CIT(A) erred in confirming the addition made by the Ld CIT(A) erred in confirming the addition made by the Ld CIT(A) erred in confirming the addition made by Centralized Processing Centre ("CPC*) of Rs. 5,44,65,784 as Centralized Processing Centre ("CPC*) of Rs. 5,44,65,784 as Centralized Processing Centre ("CPC*) of Rs. 5,44,65,784 as per the intimation w/s 143(1) of per the intimation w/s 143(1) of Income Tax Act, 1961 Income Tax Act, 1961 (hereinafter referred as "the Act") without appreciating the (hereinafter referred as "the Act") without appreciating the (hereinafter referred as "the Act") without appreciating the submissions made by the Appellant in this regard. submissions made by the Appellant in this regard. submissions made by the Appellant in this regard.
Tata Digital Private Limited 3 ITA No. 2334/M/2022
2.3. The Ld CIT(A) grossly erred in misinterpreting the 2.3. The Ld CIT(A) grossly erred in misinterpreting the 2.3. The Ld CIT(A) grossly erred in misinterpreting the provisions of section 71 of the Act to undertake additions of provisions of section 71 of the Act to undertake additions of provisions of section 71 of the Act to undertake additions of Rs. 5,44,65,784 to the total income/(loss) of the Appellant. ,44,65,784 to the total income/(loss) of the Appellant. ,44,65,784 to the total income/(loss) of the Appellant. 2.4. The Ld CIT(A) erred in not appreciating the fact that the 2.4. The Ld CIT(A) erred in not appreciating the fact that the 2.4. The Ld CIT(A) erred in not appreciating the fact that the intimation received w/s 143(1) of the Act has already intimation received w/s 143(1) of the Act has already intimation received w/s 143(1) of the Act has already allowed the set allowed the set-off of income from capital gains with the loss off of income from capital gains with the loss under the head profi under the head profits and gains from business and ts and gains from business and profession as per section 71(2) of the Aet and the same was profession as per section 71(2) of the Aet and the same was profession as per section 71(2) of the Aet and the same was not subject matter of dispute raised in the appeal filed. not subject matter of dispute raised in the appeal filed. not subject matter of dispute raised in the appeal filed. 2.5. The Ld CIT(A) has failed to appreciate that the ground of 2.5. The Ld CIT(A) has failed to appreciate that the ground of 2.5. The Ld CIT(A) has failed to appreciate that the ground of appeal before him was wrong amount of carrie appeal before him was wrong amount of carried forward of d forward of loss considered in intimation us 143(1) of the Act and not the loss considered in intimation us 143(1) of the Act and not the loss considered in intimation us 143(1) of the Act and not the question of set of inter head loss as adjudicated by him. question of set of inter head loss as adjudicated by him. question of set of inter head loss as adjudicated by him. 2.6. The Ld CIT(A) failed to appreciate the fact that the 2.6. The Ld CIT(A) failed to appreciate the fact that the 2.6. The Ld CIT(A) failed to appreciate the fact that the Appellant would be eligible for loss of Rs.55,24,98,770 Appellant would be eligible for loss of Rs.55,24,98,770 Appellant would be eligible for loss of Rs.55,24,98,770 instead of Rs. 49,80,32,986 to be carried forward to future of Rs. 49,80,32,986 to be carried forward to future of Rs. 49,80,32,986 to be carried forward to future years.
Briefly stated facts of the case are that the assessee filed its stated facts of the case are that the assessee filed its stated facts of the case are that the assessee filed its return of income for the year under consideration on 13/02/2021 return of income for the year under consideration on 13/02/2021 return of income for the year under consideration on 13/02/2021 declaring loss of ₹55,24,98, 55,24,98,770/-. In the intimation order under . In the intimation order under section 143(1) of the Act of the Act dated 28/07/2021 issued by the CPC ed 28/07/2021 issued by the CPC, the loss of current year to be carried forward was restricted to ₹ loss of current year to be carried forward was restricted to loss of current year to be carried forward was restricted to 49,80,32,986/-. Aggrieved with the adjustment made by the CPC, . Aggrieved with the adjustment made by the CPC, . Aggrieved with the adjustment made by the CPC, the assessee filed application for rectification before the Assessing the assessee filed application for rectification before the Assessing the assessee filed application for rectification before the Assessing
Tata Digital Private Limited 4 ITA No. 2334/M/2022
Officer, on 13/08/2021, however in view of the no response from Officer, on 13/08/2021, however in view of the no response from Officer, on 13/08/2021, however in view of the no response from the Assessing Officer, the Assessing Officer, the assessee preferred appeal before the L preferred appeal before the Ld. CIT(A), but the Ld. CIT(A) in the impugned order dated 20/07/2022 CIT(A), but the Ld. CIT(A) in the impugned order dated 20/07/2022 CIT(A), but the Ld. CIT(A) in the impugned order dated 20/07/2022 has adjudicated the issue of int adjudicated the issue of intra-head adjustment of short head adjustment of short-term capital gain against the business loss by the assessee. The relevant capital gain against the business loss by the assessee. The relevant capital gain against the business loss by the assessee. The relevant finding of the Ld. CIT(A) is reproduced as under finding of the Ld. CIT(A) is reproduced as under:
“5.4. The replylexplanation given by the appellant and the 4. The replylexplanation given by the appellant and the 4. The replylexplanation given by the appellant and the entries available in the electronically filed IT 6 dated entries available in the electronically filed IT 6 dated entries available in the electronically filed IT 6 dated 13.02.2021 have duly been considered 13.02.2021 have duly been considered. 5.5. As the explanation given by the appellant and the 5.5. As the explanation given by the appellant and the 5.5. As the explanation given by the appellant and the entries available in the electronically filed IT 6 entries available in the electronically filed IT 6 are sufficient are sufficient to decide the appeal, the appeal is decided without giving to decide the appeal, the appeal is decided without giving to decide the appeal, the appeal is decided without giving any further opportunity. any further opportunity. 5.6. A s may be seen from the IT 6 dated 13.02.2021 the 5.6. A s may be seen from the IT 6 dated 13.02.2021 the 5.6. A s may be seen from the IT 6 dated 13.02.2021 the appellant has adjusted/set off STCG appellant has adjusted/set off STCG-short term capital gain short term capital gain of of Rs.3,97,84,884/ Rs.3,97,84,884/- with with the the business business loss lo of Rs.59,22,83,654/ Rs.59,22,83,654/-. ref-Sch BP, Sch-CG & Sch-CYLA). CYLA). 5.7.1. As per the provisions of Sec.71 losses under the head 5.7.1. As per the provisions of Sec.71 losses under the head 5.7.1. As per the provisions of Sec.71 losses under the head "capital gain" cannot be set off against income from other "capital gain" cannot be set off against income from other "capital gain" cannot be set off against income from other heads of income heads of income 5.7.2. As per the provisions sec.74 of the Income Tax Act, 5.7.2. As per the provisions sec.74 of the Income Tax Act, 5.7.2. As per the provisions sec.74 of the Income Tax Act, where the net result of computation under the head "capital e the net result of computation under the head "capital e the net result of computation under the head "capital gain" is a loss, such loss shall be carried forward to the gain" is a loss, such loss shall be carried forward to the gain" is a loss, such loss shall be carried forward to the
Tata Digital Private Limited 5 ITA No. 2334/M/2022
following assessment year and it can be set off against any following assessment year and it can be set off against any following assessment year and it can be set off against any income under the head "capital gain" as follows income under the head "capital gain" as follows- (i) From the assessment year 200 ) From the assessment year 2003-04, long term capital loss 04, long term capital loss can be set off only against long term capital gain set off only against long term capital gain (ii) Short term capital loss can be set of against any capital ) Short term capital loss can be set of against any capital ) Short term capital loss can be set of against any capital gains (STCG/LTCG) gains (STCG/LTCG) (iii)ST/LT capital loss can be carried forward for 8 LT capital loss can be carried forward for 8 LT capital loss can be carried forward for 8 assessment years. (iv) such loss cannot be (iv) such loss cannot be carried forward unless the return is carried forward unless the return is filed within the time limit of section 139(1). filed within the time limit of section 139(1). 5.7.3. . As per the provisions sec.72 of the Income Tax Act, 5.7.3. . As per the provisions sec.72 of the Income Tax Act, 5.7.3. . As per the provisions sec.72 of the Income Tax Act, the carried forward and set off of loss arising in a business the carried forward and set off of loss arising in a business the carried forward and set off of loss arising in a business is subject to the following restrictions is subject to the following restrictions (i) the business loss can be carried forward and set off business loss can be carried forward and set off business loss can be carried forward and set off against the profits of any business in a subsequent year against the profits of any business in a subsequent year against the profits of any business in a subsequent year (ii) loss cannot be carried forward for more than 8 ) loss cannot be carried forward for more than 8 ) loss cannot be carried forward for more than 8 assessment years. The time limit of 8 years is not applicable assessment years. The time limit of 8 years is not applicable assessment years. The time limit of 8 years is not applicable in in the the case case of of unabsorbed unabsorbed depreciation depreciat ion allowance, allowance, unabsorbed capital expenditure on scientific research and unabsorbed capital expenditure on scientific research and unabsorbed capital expenditure on scientific research and unabsorbed capital expenditure on family planning unabsorbed capital expenditure on family planning unabsorbed capital expenditure on family planning (iii) such loss cannot be carried forward unless the return is (iii) such loss cannot be carried forward unless the return is (iii) such loss cannot be carried forward unless the return is filed within the time limit of section 139(1). filed within the time limit of section 139(1). (iv)Business loss can (iv)Business loss can be carried forward and set off against be carried forward and set off against any business profit and such a business loss can be carried any business profit and such a business loss can be carried any business profit and such a business loss can be carried forward for 8 years. forward for 8 years.
Tata Digital Private Limited 6 ITA No. 2334/M/2022
5.8.As may be seen from the IT 6 dated 13.02.2021, the 5.8.As may be seen from the IT 6 dated 13.02.2021, the 5.8.As may be seen from the IT 6 dated 13.02.2021, the appellant has adjusted/set off STCG appellant has adjusted/set off STCG-short term capital gain short term capital gain of Rs.3,97,84,884/-with Rs.3,97,84,884/ with the the business business loss loss of of Rs.59,22,83,654/ Rs.59,22,83,654/-.( ref- Sch BP, Sch-CG & Sch CG & Sch- CYLA) ,Which is not correct/permissible, as per the ,Which is not correct/permissible, as per the provisions of provisions of Sec.72,71 and 74 of the Income Tax Act. As the addition Sec.72,71 and 74 of the Income Tax Act. As the addition Sec.72,71 and 74 of the Income Tax Act. As the addition made in the order u/s 143(1) dated 28.07.2021 made in the order u/s 143(1) dated 28.07.2021 made in the order u/s 143(1) dated 28.07.2021 is in tune with the statute, the same is hereby CONFIRMED. with the statute, the same is hereby CONFIRMED. with the statute, the same is hereby CONFIRMED. 5.9. In result, the appeal is DISMISSED. 5.9. In result, the appeal is DISMISSED.”
Aggrieved, the assessee is in assessee is in appeal before the appeal before the ITAT by way of raising grounds as reproduced above. s reproduced above.
3.1 In the grounds raised the sole plea of the ass In the grounds raised the sole plea of the ass In the grounds raised the sole plea of the assessee is that claim of carryforward of the loss has been reduced by an amount of claim of carryforward of the loss has been reduced by an amount of claim of carryforward of the loss has been reduced by an amount of ₹5,44,65,784/- without being provided an opportunity to the without being provided an opportunity to the without being provided an opportunity to the assessee .
We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant mater dispute and perused the relevant material on record. Before us the ial on record. Before us the Ld. counsel of the assessee has referred to various decisions in of the assessee has referred to various decisions in of the assessee has referred to various decisions in support of his contention that the support of his contention that the Ld. Assessing Officer has not Assessing Officer has not followed the requirement of issuing show cause notice prior to followed the requirement of issuing show cause notice prior to followed the requirement of issuing show cause notice prior to issuing intimation vide amendment issuing intimation vide amendment to section 143(1) of the to section 143(1) of the Act:
Tata Digital Private Limited 7 ITA No. 2334/M/2022
Arham Pumps [(2022) 195 ITD 6791 (Ahmedabad Tribunal) Arham Pumps [(2022) 195 ITD 6791 (Ahmedabad Tribunal) Arham Pumps [(2022) 195 ITD 6791 (Ahmedabad Tribunal) Khatau Junkar Ltd. & Anr. v. K.S. Pthania, DCIT & Anr. Khatau Junkar Ltd. & Anr. v. K.S. Pthania, DCIT & Anr. Khatau Junkar Ltd. & Anr. v. K.S. Pthania, DCIT & Anr. (1992) 196 ITR 55 (Bom HC) (1992) 196 ITR 55 (Bom HC) ACIT v. Som Distilleries & Breweries Limited (ITA No. ACIT v. Som Distilleries & Breweries Limited (ITA No. ACIT v. Som Distilleries & Breweries Limited (ITA No. 248/Ind/2012 dated 13 July 2017). 248/Ind/2012 dated 13 July 2017). 4.1 The relevant extract of first provision to section 143 (1) is The relevant extract of first provision to section 143 (1) is The relevant extract of first provision to section 143 (1) is reproduced for ready reference as under : reproduced for ready reference as under :
[(1) Where a return has been made under section 139, [(1) Where a return has been made under section 139, [(1) Where a return has been made under section 139, or in response to a notice under sub or in response to a notice under sub-section (1) of section section (1) of section 142, such return shall be proc 142, such return shall be processed in the following essed in the following manner, namely : manner, namely :-
(a) the total income or loss shall be computed after making (a) the total income or loss shall be computed after making (a) the total income or loss shall be computed after making the following adjustments, namely: the following adjustments, namely:-
(i)any arithmetical error in the return; 22***] any arithmetical error in the return; 22***]
(ii) an incorrect claim, if such incorrect claim is apparent ) an incorrect claim, if such incorrect claim is apparent ) an incorrect claim, if such incorrect claim is apparent from any information in the return; nformation in the return;
(iii) disallowance of loss claimed, if return of the previous ) disallowance of loss claimed, if return of the previous ) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished year for which set off of loss is claimed was furnished year for which set off of loss is claimed was furnished beyond the due date beyond the due date specified under sub-section (1) of section (1) of section 139;
(iv) disallowance of expenditure 2 or increa (iv) disallowance of expenditure 2 or increase in income] se in income] indicated in the audit report but not taken into account in indicated in the audit report but not taken into account in indicated in the audit report but not taken into account in computing the total income in the return; computing the total income in the return;
(v) disallowance of deduction claimed under 23[section (v) disallowance of deduction claimed under 23[section (v) disallowance of deduction claimed under 23[section 10AA or under any of the provisions of Chapter VI 10AA or under any of the provisions of Chapter VI 10AA or under any of the provisions of Chapter VI-A under
Tata Digital Private Limited 8 ITA No. 2334/M/2022
the heading "C. -Deductions in respect of certain incomes*, in respect of certain incomes*, if] the return is if] the return is furnished beyond the due date specified furnished beyond the due date specified under sub-section (1) of section 139; or section (1) of section 139; or
(vi) addition of income appearing in Form 26AS or Form 16A (vi) addition of income appearing in Form 26AS or Form 16A (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the 16 which has not been included in computing the 16 which has not been included in computing the total income in the return: income in the return:
Provided that no such adjustments shall be made Provided that no such adjustments shall be made Provided that no such adjustments shall be made unless an intimation is given to the assessee of such unless an intimation is given to the assessee of such unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode: adjustments either in writing or in electronic mode: adjustments either in writing or in electronic mode:
Provided further that the response received fusmthe Provided further that the response received fusmthe Provided further that the response received fusmthe assessee, if any shall be assessee, if any shall be considered before making considered before making any ad ustment, and in a cay. where no response is any ad ustment, and in a cay. where no response is any ad ustment, and in a cay. where no response is received within thirty days of the issue of suc received within thirty days of the issue of suc received within thirty days of the issue of such intimation, such adjustments shall be made: intimation, such adjustments shall be made:
(emphasis supplied eternally) (emphasis supplied eternally)
4.2 Thus it is clear that provisions of the law provide f it is clear that provisions of the law provide for it is clear that provisions of the law provide f adjustment under section 143 (1) of the adjustment under section 143 (1) of the Act subject to prior notice subject to prior notice to the assessee either in writing or in electronic mode and to the assessee either in writing or in electronic mode and to the assessee either in writing or in electronic mode and adjustment could be considered if no response is received within 30 adjustment could be considered if no response is received within 30 adjustment could be considered if no response is received within 30 days from the issue of such intimation or notice. days from the issue of such intimation or notice. Accordi Accordingly, the Ld. Department Representative Department Representative was asked to file copy of any notice was asked to file copy of any notice or intimation issued by the Assessing Officer prior to adjustment to or intimation issued by the Assessing Officer prior to adjustment to or intimation issued by the Assessing Officer prior to adjustment to
Tata Digital Private Limited 9 ITA No. 2334/M/2022
the amount of carryforward of loss by the assessee. carryforward of loss by the assessee. carryforward of loss by the assessee. The Ld. DR expressed his inability in producing the said record. We also note expressed his inability in producing the said record. We also note expressed his inability in producing the said record. We also note that the Ld. CIT(A) has also not adjudicated issue raised by the that the Ld. CIT(A) has also not adjudicated issue raised by the that the Ld. CIT(A) has also not adjudicated issue raised by the assessee in the appeal. From para seven of the written submission assessee in the appeal. From para seven of the written submission assessee in the appeal. From para seven of the written submission of the assessee also of the assessee also we find that this case was find that this case was subsequently selected for scrutiny and order under section selected for scrutiny and order under section 143 (3) of 143 (3) of the Act has been passed. The Ld. Counsel of the assessee has apprised as of the The Ld. Counsel of the assessee has apprised as of the The Ld. Counsel of the assessee has apprised as of the fact that the Assessing Officer has that the Assessing Officer has till date not responded to the not responded to the rectification application filed by the assessee rectification application filed by the assessee. Thus the grievance of Thus the grievance of the assessee has neither been attended by the Assessing Officer nor the assessee has neither been attended by the Assessin the assessee has neither been attended by the Assessin by the Ld. CIT(A). In the facts and circumstances of the case, we feel . In the facts and circumstances of the case, we feel . In the facts and circumstances of the case, we feel it appropriate to restore the matter of amount of loss for which the it appropriate to restore the matter of amount of loss for which the it appropriate to restore the matter of amount of loss for which the assessee is eligible for assessee is eligible for carryforward to the file of the carryforward to the file of the Ld. Assessing Officer for avoiding multiplicity of the proceedings, because Officer for avoiding multiplicity of the proceedings, because Officer for avoiding multiplicity of the proceedings, because rectification proceeding of the assessee are already pending before rectification proceeding of the assessee are already pending before rectification proceeding of the assessee are already pending before the Assessing Officer. It is needless to mention that the assessee the Assessing Officer. It is needless to mention that the assessee the Assessing Officer. It is needless to mention that the assessee shall be afforded adequate opportunity of being heard. rded adequate opportunity of being heard. rded adequate opportunity of being heard.
Tata Digital Private Limited 10 ITA No. 2334/M/2022
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced Order pronounced in the open Court/under Rule 34(4 under Rule 34(4) of the ITAT Rules, 1963 on the ITAT Rules, 1963 on 29/12/2022. Sd/- Sd/- Sd/ (VIKAS AWASTHY VIKAS AWASTHY) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 29 /12/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, BY ORDER, //True Copy// (Sr. Private Secretary) (Sr. Private Secretary) ITAT, Mumbai ITAT, Mumbai
Tata Digital Private Limited 11 ITA No. 2334/M/2022
Date Initials Original dictation pad is enclosed at Original dictation pad is enclosed at the end of file 1. Draft dictated on: Draft dictated on: 26.12.2022 Sr. PS/PS 2. Draft placed before author: Draft placed before author: 26.12.2022 Sr. PS/PS 3. Draft proposed & placed before the Draft proposed & placed before the JM/AM second member: 4. Draft discussed/approved by Second Draft discussed/approved by Second JM/AM Member: 5. Approved Draft comes to the Sr. Approved Draft comes to the Sr. Sr. PS/PS PS/PS: 6. Order pronounced on: Order pronounced on: Sr. PS/PS 7. File sent to the Bench Clerk: File sent to the Bench Clerk: 8. Date on which file goes to the Head which file goes to the Head Sr. PS/PS Clerk: 9. Date on which file goes to AR Date on which file goes to AR