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Facts
The assessee filed an Income Tax Return for AY 2018-19, which was processed under Section 143(1) of the Income Tax Act, resulting in an addition of ₹27,11,790/-. The AO/CPC mistakenly included capital gain from the profit and loss account without considering the indexation benefit already claimed by the assessee. The CIT(A) subsequently upheld this adjustment.
Held
The Tribunal held that the adjustment made by the AO/CPC under Section 143(1) was not a prima facie adjustment, as it required detailed debate, discussion, and clarification of facts, particularly regarding the indexation benefit for capital gains. Therefore, the AO/CPC lacked the jurisdiction to make such an adjustment under Section 143(1), and the intimation was quashed.
Key Issues
Whether an adjustment concerning the capital gains indexation benefit, requiring detailed scrutiny and clarification of facts, can be validly made under Section 143(1) of the Income Tax Act.
Sections Cited
143(1)
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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), ADDL/JCIT(A)-1, Visakhapatnam (hereinafter referred to as the “Ld. CIT(A)”] dated 18.01.2024 for the AY 2018-19.
The issue raised in ground no.1 is general in nature and needs no specific adjudication.
The issue raised in ground no.2, is against the order of ld. CIT (A) upholding the order passed u/s 143(1) of the Income-tax Act, 1961 (the Act), thereby confirming the adjustment of ₹27,11,790/- made by the AO (CPC).
In the appellate proceedings, the ld. CIT (A) affirmed the order of the ld. AO by mis-appreciating the facts of the assessee and justified the addition made by the AO/ CPC.
After hearing the rival contentions and perusing the materials available on record, we find that the assessee has shown income from capital gain amounting to ₹1,03,28,496/- as profit and loss account which was apparently before claiming the indexation benefit. We further note that the assessee while filing the return income assessee has duly taken the said amount of capital gain into account and computed the capital gain accordingly, after taking benefit of indexed cost. However, the ld. AO/ CPC ignored all these facts and picked up these figures without indexation which has resulted in excess amount of income assessed to the tune of ₹27,11,790/-, which in our opinion is wrong and against the facts on record. Even the ld. CIT (A) overlooked the correct facts and figures presented by the assessee. Thus we find merit in the contention of the assessee that the said adjustment made by the AO/ CPC was not a prima facie adjustment to be made u/s 143(1) of
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 06.05.2025.