PRAGATHI POLYPLAST INDIA PVT LTD,MEDAK vs. INCOME TAX OFFICER, WARD-16(1), HYDERABAD

The brief facts of the case are that, the assessee is engaged in the business of manufacturing plastic drums and barrels filed its return of income for the A.Y.2013-14 on 31.10.2013, admitting total income of Rs.11,48,920/-. The return of income was processed by CPC u/s 143(1) of Income Pragathi Polyplast India Pvt.Ltd. Tax Act, 1961 (“the Act”), after adding an amount of Rs.13,75,665/- to the returned income and assessed total income at Rs.25,24,583/- vide intimation u/s 143(1) dated 14.03.2015 and the said intimation was received by the assessee by mail on 20.10.2016. The assessee has filed online, a rectification application on 17.02.2021 and the application filed by the assessee has been rejected by the CPC on 05.03.2021 on the ground that, there is no prima facie error and further right of rectification has been transferred to the jurisdictional Assessing Officer (JAO). Thereafter, the assessee has filed petition u/s 154 of the Act before the JAO on 27.04.2021 and the petition filed by the assessee has been rejected on the ground that, it is barred by limitation, as it is filed after four years. The assessee filed an appeal against the order passed u/s143(1) dated 14.03.2015 and challenged the additions made by the Assessing Officer/CPC, towards other expenses of Rs.13,75,665/-, on the ground that the assessee has reported the said expenses in ITR Form in column 38. However, the particulars are not appearing in the inner column of the form, but, totalling of other expenses was shown at Rs.9619,684/-. But, the Assessing Officer , considering only three items reported in column 38, assumed that there is difference between expenses incurred by the assessee and claimed in the ITR and added back difference to the total income. The Ld.CIT(A) after considering the relevant submissions of the assessee, upheld the additions made by the Assessing Officer/CPC, on the ground that the assessee could have Pragathi Polyplast India Pvt.Ltd. disclosed all the expenditure under the head ‘other expenditure’ and claimed in ITR. Further, the assessee could have filed revised return of income and rectified the mistake. Since the assessee has not availed the opportunities available in the Act, by filing revised return or application u/s 154 of the Act, within time period, the pleading of the assessee, that a direction may be given to the Assessing Officer to consider the rectification application filed before the Assessing Officer to rectify the mistake is not as per law and therefore, rejected the explanation of the assessee and dismissed the appeal.

Aggrieved by the order of the Ld.CIT(A), the assessee is now in appeal before the Tribunal.

The learned counsel for the assessee submitted that the Ld.CIT(A) erred in dismissing the appeal filed by the assessee on different grounds, even though the assessee has challenged the order passed by the Assessing Officer u/s 143(1) of the Act dated 14.03.2015, received on 20.10.2016. The learned counsel for the assessee, further, referring to paper book filed by the assessee, explained the inconsistencies in other expenditure, reported in ITR form in inner columns and outer column and argued that because of the technical errors, other expenses reported in ITR form is not visible, however, total of expenditure is matching with the expenditure claimed by the assessee, as per the financial statement filed for the relevant assessment

Ld.Sr.AR on the other hand, supporting the order of the Ld.CIT(A), submitted that, the assessee has reported incorrect expenditure in ITR form filed for the assessment year in question. Further, the assessee could have filed rectification application within the time allowed under the Act. Since the assessee could not explain the difference in expenditure reported under ‘other expenditure’ and further the application filed by the assessee is barred by limitation, the Ld.CIT(A) has rightly rejected the appeal filed by the assessee, therefore the order of the Ld.CIT(A) should be upheld..

We have heard both the parties, perused the material on record and gone through the orders of the authorities below. There is inconsistency in the grounds raised by the assessee before the Ld.CIT(A) and the finding given by the Ld.CIT(A) in his appellate order dated 19.09.2024, which is evident from para 1 of Ld.CIT(A) order and subsequent finding given in para 4.1 to 4.6. Admittedly, the assessee has filed appeal against the order u/s 143(1) dated 14.03.2015 received on 20.10.2016 and this fact has been admitted by the Ld.CIT(A) in para 1 and also condoned the delay in filing of the appeal. However, while adjudicating the issue, the Ld.CIT(A) dismissed the appeal filed by the assessee on a different ground that the application filed by the assessee u/s 154 is beyond four years from the end of Pragathi Polyplast India Pvt.Ltd. the relevant assessment year and therefore, not maintainable and further, the assessee should have rectified the mistake by filing the revised return u/s 139(5) of the Act. In our considered view, the Ld.CIT(A) grossly erred in dismissing the appeal filed by the assessee on different ground, even though the challenge before the Ld.CIT(A) by way of grounds of appeal of the assessee is on additions made towards difference in other expenditure reported in ITR form. In our considered view, the Ld.CIT(A), having admitted the appeal filed by the assessee against the order passed u/s 143(1) dated 14.03.2015, should have decided the issue involved on merits instead of dismissing the appeal on technical grounds. Further the issue before the Ld.CIT(A) is challenge for 143(1) order, but not for the order passed u/s 154 of the Act, because, the assessee has filed separate appeals before the Ld.CIT(A) against the order passed by the Assessing Officer u/s 154 of the Act dated 27.04.2021 by filing separate appeal and the same is yet to be disposed of by the first appellate authority. Therefore, in our considered view, to this extent, the findings given by the Ld.CIT(A) to dismiss the appeal filed by the assessee is correct.

In the result, appeal filed by the assessee is allowed for statistical purpose.