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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI V. DURGA RAO & SHRI G. MANJUNATHA
order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 30.09.2021 and pertains to assessment year 2019-20.
Brief facts of the case are that the assessee has filed return of income for the assessment year 2019-20 on 27.09.2019 declaring total income of Rs.5,86,94,000/-. The assessee has claimed deduction u/s.80JJAA of the Income Tax Act, 1961, for Rs.1,76,543/- for employing new employees
and such deduction has been claimed for the first time for the assessment year 2017-18. The ADIT, CPC, has completed assessment u/s.143(1) of the Income Tax Act, 1961, and determined total income of Rs.5,88,70,540/- and rejected deduction claimed u/s.80JJAA of the Act, on the ground that the assessee has not filed audit report, as required under the provisions of section 44AB of the Income Tax Act, 1961, in Form No.10DA. The assessee challenged the matter in appeal before the first appellate authority, but could not succeed. The learned CIT(A) for the reasons stated in his appellate order rejected arguments of the assessee and sustained additions made by the Assessing Officer on the ground that filing of audit report in Form No.10DA is a pre-condition for claiming deduction u/s.80JJAA of the Income Tax Act, 1961. Aggrieved by the learned CIT(A) order, the assessee is in appeal before us.
The learned A.R for the assessee submitted that the learned CIT(A) has erred in denying deduction claimed u/s.80JJAA of the Act, without appreciating fact that the assessee is not required to file audit report in Form 10DA for every year, when the assessee has claimed deduction under said provision in the previous financial year and has complied with necessary conditions, including filing of audit report in Form 10DA. The learned A.R further submitted that adjustment made by the Assessing Officer towards computation of total income in the intimation received u/s.143(1) is not correct, because as per provisions of section 143(1), only prima-facie adjustment can be made, but not on such issues which need verification and thus, argued that the Assessing Officer has completely erred in making adjustment towards disallowance of deduction claimed u/s.80JJAA of the Act.
The learned DR, on the other hand, supporting order of the learned CIT(A) submitted that filing of audit report in Form 10DA is a pre-condition for claiming deduction u/s.80JJAA of the Act and thus, there is no error in the reasons given by the learned CIT(A) to sustain additions made by the Assessing Officer and their orders should be upheld.
We have heard both the parties, perused material available on record and gone through orders of the authorities below. The Assessing Officer has made adjustment of total income computed in the intimation received u/s.143(1) of the Act, towards deduction claimed u/s.80JJAA of the Act, in respect of employment of new employees on the ground that the assessee has not satisfied conditions prescribed therein, including filing of audit report in Form 10DA. It was explanation of the assessee before the learned CIT(A) that only prima-facie mistakes in computation of income can be adjusted in intimation received u/s.143(1), but not on the issues which need discussion and deliberation, including verification of documents.
It is well settled principle of law by the decisions of various Courts, including decision of the Hon'ble Supreme Court in the case of CIT vs. Raghuvir Synthetics Ltd. (2017) 247 taxman.com 393(SC), if the issue involved is debatable, then same cannot be adjusted in intimation issued u/s.143(1) of the Income Tax Act, 1961. In this case, if you go through nature of adjustment made by the Assessing Officer towards deduction in respect of employment of new employees as per provisions of section 80JJAA of the Act, we find that the issue is highly debatable which can be resolved by deliberation, including verification of necessary documents and thus, we are of the considered view that the Assessing Officer cannot make adjustments towards deduction u/s.80JJAA of the Act, while processing return u/s.143(1) of the Income Tax Act, 1961.
Therefore, we direct the Assessing Officer to delete additions made towards disallowance of deduction claimed u/s.80JJAA of the Income Tax Act, 1961.