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Facts
The assessee filed a nil return for A.Y. 2020-21, which was processed by the CPC u/s 143(1) making an adjustment of Rs. 20,89,660/- regarding exemptions claimed u/s 10/11. A subsequent rectification application u/s 154 was rejected by the CPC, and the assessee's appeal before the JCIT(A) against this dismissal was also dismissed due to non-compliance.
Held
The Tribunal noted the assessee's non-compliance before the JCIT(A) and imposed a cost of Rs. 5,000/-. However, observing that the JCIT(A) dismissed the appeal without examining its merits, the Tribunal set aside the matter to the JCIT(A) to provide another opportunity to the assessee and to examine the adjustments made by the CPC on merits.
Key Issues
The primary issue is whether the CIT(A) erred in dismissing the appeal due to non-compliance without addressing the merits of the CPC's adjustment regarding exemptions claimed under Sections 10/11 and the validity of the rectification rejection under Section 154.
Sections Cited
10, 11, 143(1), 154
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: MS. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
This appeal is filed by the assessee against the order of the Commissioner of Income Tax, Appeal, Addl/JCIT(A)-1, Mumbai [hereinafter referred as ‘JCIT(A)’] dated 04.11.2024 for the Assessment Year (A.Y.) 2020-21.
The brief facts of the case are that the assessee filed its return of income for the A.Y. 2020-21 on 15/02/2021 declaring Nil income. The return was processed by the CPC u/s 143(1) of the Act on 25/12/2021 wherein adjustment of Rs.20,89,660/- was made in respect of exemption claimed u/s 10/11 of the Income Tax Act (hereinafter referred as ‘the Act’). Thereafter, the assessee had filed a rectification application u/s 154 of the Act to rectify the mistake apparent in the intimation u/s 143(1) of the Act. The said application was rejected by the CPC vide order u/s 154 of the Act dated 16/09/2022.
Aggrieved with the order u/s 154 dated 16/09/2022 passed by the CPC, the assessee had filed an appeal before the First Appellate Authority which was decided vide the impugned order and appeal of the assessee was dismissed.
The assessee is now in second appeal before us. The following grounds have been taken in this appeal: -
“1. That the Ld. CIT(A) has grievously erred in confirming the adjustment made by Ld. CPC in assessing the returned income of Rs. NIL at a taxable income of Rs.20,89,660/- and bringing to tax the gross income of the appellant without allowing for the expenditure incurred by the appellant.
2. That the Ld. CIT(A) has grievously erred in contending that the adjustment so made u/s.154 r.w.s. 143(1) by the Ld. CPC was within the jurisdiction vested u/s.143(1).
3. That the Ld. CIT(A) has grievously erred in failing to confirm that the Ld. CPC has contravened the provisions of first proviso to Section 143(1) of the Act.
4. That the appellant craves for leave to add, amend and/or modify the grounds of appeal.”
5. Shri Gaurav R Sanghvi, Ld. AR of the assessee submitted that the Ld. JCIT(A) has dismissed the appeal of the assessee without examining the merits of the adjustment made while processing the return and also without considering the merits of the rectification application. He explained that no compliance could be made by the assessee before the Ld. JCIT(A) and for this reason the appeal was dismissed. He, therefore, requested that the assessee may be allowed another opportunity to explain the wrong adjustments and the matter may be set aside to the file of the Ld. JCIT(A).
Per contra, Ms. Bhavnasingh Gupta, Ld. SR-DR had no objection if the matter was set aside to allow another opportunity to the assessee.
We have considered the rival submissions. The undisputed fact is that the assessee didn’t comply before the Ld. JCIT(A) in spite of four opportunities provided by him. No explanation has been given by the assessee for the non-compliance made before the JCIT(A). We, therefore, deem it proper to impose a cost of Rs.5,000/- on the assessee which should be paid to the Income Tax Department within 15 days of the receipt of this order. At the same time the Ld. JCIT(A) has dismissed the appeal of the assessee without examining the matter on merits. We, therefore, deem it proper to set aside the matter to the file of the First Appellate Authority to allow another opportunity to the assessee to explain the wrong adjustments made while processing the return. The Ld. JCIT(A) is also directed to examine the adjustments made by the CPC on its merits and give a categorical finding on their correctness or otherwise. The assessee is also directed to make compliance before the First Appellate Authority and not to seek any unnecessary adjournment.
In the result, appeal of the assessee is allowed for statistical purpose.
This Order pronounced on 08/05/2025
Sd/- Sd/- (SUCHITRA KAMBLE) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 08/05/2025 आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��थ� / The Respondent. 2. संबंिधत आयकर आयु� / Concerned CIT 3. 4. आयकर आयु�(अपील) / The CIT(A)- िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड% फाईल / Guard file. आदेशानुसार/ BY ORDER,