SHIV SHAKTI STEEL PRIVATE LIMITED,KOLKATA vs. ACIT CIRCLE 1(1), KOLKATA

The only issue raised in ground no.1 is against the order of ld. CIT (A) affirming the order of AO/CPC in not granting benefit of Section 115BAA of the Income-tax Act, 1961 (the Act) and invoking the provisions of Section 115JB of the Act by ignoring the fact that the form 10-IC was duly filed in the preceding assessment year. Whereas in ground no.2, the issue raised was against the invalid order passed by AO/CPC which was upheld/ affirmed by the ld. CIT (A) thereby confirming the adjustment u/s 143(1) of the Act by ignoring the fact that the said

The facts in brief are that the assessee filed the return of income on 15.03.2022, which was processed u/s 143(1) of the Act on 31.12.2023, wherein the AO/CPC denied the benefit of Sections 115BAA and invoked the provisions of Section 115JB of the Act. Pertinent to state that the assessee has opted in the preceding assessment year for lower tax rate by filing form 10-IC. The assessee filed the appeal before the ld. CIT (A) which was also dismissed by upholding the order of AO/ CPC. 04. After hearing the rival contentions and perusing the materials available on record, we find that assessee was not given any show cause notice by the AO/CPC before making rejecting the benefit benefit claimed by the assessee under section 115BAA of the Income-tax Act, 1961 (the Act) and invoking the provisions of Section 115JB of the Act. We note that in this case, the assessee has filed form no.10-IC in the preceding assessment year and has already opted for the lower tax regime. In our opinion, the action of the ld. AO/CPC is beyond the provisions of Section 143(1) of the Act as the issue involved in the present case is debatable issue and therefore, could not have been subject matter of the order passed u/s 143(1) of the Act. Besides it is mandatory to issue show cause notice to the assessee before making any adjustment in rejecting the benefit claimed by the assessee which was never issued. Accordingly, we hold that the order passed u/s 143(1) of the Act is invalid and cannot be sustained. Consequently, we quash the intimation passed u/s 143(1) of the Act.

In the result, the appeal of the assessee is allowed.