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Facts
The assessee filed revised returns for AY 2020-21 and 2021-22, facing rectification orders under Section 154 for disallowing depreciation and late payment of Provident Fund. The CIT(A) partly allowed the appeals. The assessee appealed against the disallowance of late payment of Provident Fund.
Held
The Tribunal held that the rectification order under Section 154 was invalid as the prerequisite intimation under Section 143(1) was not properly served and lacked a DIN. Therefore, the additions made were deleted, and the refund claim was allowed.
Key Issues
Whether a rectification order under Section 154 is valid if the prerequisite intimation under Section 143(1) was not properly served and lacked a DIN?
Sections Cited
154, 41, 36(1)(va), 143(1)
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Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH
Before: Shri T.R. Senthil Kumar & Shri Makarand Vasant Mahadeokar
Aculife Healthcare Asst. Commissioner of Pvt. Ltd. Income Tax, B-505, Commerce Vs Circle-1(1)(1), House-V, Ahmedabad Prahladnagar Corporate Road, Ahmedabad-380051 PAN: AAMCA8542Q (Respondent) (Appellant) Assessee Represented: Shri Hemanshu Shah, A.R. Revenue Represented: Shri Santosh Kumar, Sr. D.R. Date of hearing : 09-04-2025 Date of pronouncement : 17-04-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
These two appeals are filed by the Assessee as against two separate appellate orders both dated 30.09.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the rectification orders passed under section 154 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Years 2020-21 & 2021-22. Since common issue is & 1997/Ahd/2024 A.Ys. 2020-21 & 2021-22 Page No 2 Aculife Healthcare Pvt. Ltd. vs. ACIT involved in both the cases for the sake of convenience the same are disposed of by this common order.
Brief facts of the case is that the assessee filed a Revised Return of Income for the Asst. Year 2020-21 on 31-03-2024 declaring total income Nil and claiming refund of Rs.53,57,317/-. The CPC computed the refund at Rs.52,96,280/-. Subsequently a rectification order was passed u/s. 154 of Act on 15-12-2022 assessing the total income at Rs.2,25,24,390/- thereby disallowing depreciation of Rs.2,20,85,844/- and late payment of Provident Fund of Rs.2,38,540/-.
Aggrieved against the same, assessee filed an appeal before Ld. CIT(A) who allowed the claim of depreciation but confirmed the disallowance on late payment of provident fund following Hon’ble Supreme Court Judgment in the case of Checkmate Services Pvt. Ltd. vs. CIT [2022] 143 taxmann.com 178 (SC).
Aggrieved against the rectification order, the assessee is in appeal before us that the Ld. CIT(A) erred in confirming the disallowance of late payment of Provident Fund. At the time of hearing, the Ld. Counsel Mr. Hemanshu Shah appearing for the assessee fairly conceded that this issue is covered against the assessee by the Hon’ble Supreme Court judgment in the case of Checkmate Services Pvt. Ltd. rendered on 12-10-2022.
& 1997/Ahd/2024 A.Ys. 2020-21 & 2021-22 Page No 3 Aculife Healthcare Pvt. Ltd. vs. ACIT for A.Y. 2021-22.
Brief facts of the case is that the assessee filed its original Return of Income for the Asst. Year 2011-12 on 25-02-2022 declaring total income Nil and claiming refund of Rs.45,76,848/-. The assessee filed Revised Return of Income on 29-03-2022. The CPC vide communication dated 14-04-2022 informed the assessee that there is inconsistency in the amount of profit of Rs.1,07,54,026/- chargeable to tax u/s. 41 of the Act. In response, vide email dated 15-04-2022 the assessee clarified the amount of profit chargeable to tax u/s. 41 of the Act of Rs.1,07,54,026/- as per Para 25 of Tax Audit Report is derived of “Other Income”. Note 29 in the Profit & Loss account for A.Y. 2020-21, the income of Rs.1,07,54,026/- is not excluded from business income. Thus income of Rs.1,07,54,026/- is offered to tax in the return filed for A.Y. 2021-22. Hence, there is no inconsistency. Thereafter the assessee was not served with any intimation u/s. 143(1) but rectification order u/s. 154 of the Act dated 08-11-2022 was passed reducing the refund claim to Rs.11,07,620/- as against the claim of Rs.45,76,850/- by making disallowance: (a) Business income u/s. 41 of the Act Rs. 1,07,54,026/- (b) Diallowance u/s. 36(1)(va) Rs. 33,25,771/-.
Aggrieved against the rectification order, assessee filed an appeal before Ld. CIT(A) who was partly allowed the appeal by deleting the & 1997/Ahd/2024 A.Ys. 2020-21 & 2021-22 Page No 4 Aculife Healthcare Pvt. Ltd. vs. ACIT disallowance made u/s. 41 of the Act, however confirmed the addition on late payment of Provident Fund of Rs.33,25,771/-.
Aggrieved against the same, the assessee in appeal before us raising the following Grounds of Appeal:
1. In law and in facts and circumstances of the Appellant’s case, the Learned Commissioner of Income-tax (Appeals) has grossly erred in points of law and facts.
2. In law and in facts and circumstances of the Appellant’s case, the Learned Commissioner of Income-tax (Appeals) has grossly erred in confirming the disallowance of employee’s contribution towards Provident Fund amounting to Rs.2,38,540/-.
3. Your appellant reserves the right to add, alter, amend all or any of the above grounds of appeal as may be advised from time to time.
Ld. Counsel for the assessee submitted that the assessee was not served with the intimation order u/s. 143(1) so called dated 26- 07-2022 but passed the rectification order u/s. 154 of the Act dated 08-11-2022 reducing the refund to Rs.11,07,620/-. During the course of hearing, the Revenue was requested to verify and report the service of 143(1) order dated 26-07-2022 by the CPC, Bangalore
The Ld. Sr. D.R. replied by his letter dated 01-04-2025 as follows: “3 Further, the DDIT, CPC, Bengaluru in e-mail has mentioned that: "Please find enclosed her with intimation u/s 143(1)/154 which are available as per CPC portal in aforesaid case for AY 2020-21 & 2021-22 Due to migration of CPC 1.0 to CPC 2.0 intimation u/s 143(1) for AY. 2021 22 could not be obtained. Once the same is made available by technical team of CPC, it will be forwarded to the AO"
& 1997/Ahd/2024 A.Ys. 2020-21 & 2021-22 Page No 5 Aculife Healthcare Pvt. Ltd. vs. ACIT
We have perused the rectification order dated 08-11-2022 in that there is a column “details of previous order to be rectified” wherein it is mentioned as “143(1) dated 26-07-2022” but it is without DIN number. This makes it very clear since there is no DIN allotted to the 143(1) intimation, the same to be treated as not passed and therefore not served on the assessee.
11.1. As per 2nd proviso to Section 143(1) of the Act no intimation under sub-section shall be sent after the expiry of nine months from the end of the financial year in which the return was filed. Further as per 1st proviso to Section 143(1) of the Act, the intimation shall be sent to the assessee declaring the loss assessed/adjusted but no tax, interest or fee payable or no refund due to the assessee. Since the intimation made u/s. 143(1) of the Act was not served on the assessee, therefore, there cannot be adjustment or rectification u/s.154 of the Act, consequently the additions made by CPC are liable to be deleted and the refund claimed by the assessee is to be allowed.
In the result, the appeal filed by the assessee is hereby allowed.
Order pronounced in the open court on 17 -04-2025 Sd/- Sd/- (MAKARAND VASANT MAHADEOKAR) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 17/04/2025 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue & 1997/Ahd/2024 A.Ys. 2020-21 & 2021-22 Page No 6 Aculife Healthcare Pvt. Ltd. vs. ACIT