NESCO EMPLOYEES GRATUITY FUND TRUST,BALASORE vs. ITO, WARD-1, BALASORE, BALASORE

3 ITA No.159/CTK/2025 dismissed the appeal of the assessee. Now, the assessee is in further appeal before us. 3. Ld. Counsel for the assessee submitted that the ld. CIT(A) without admitting the appeal of the assessee held that the appeal of the assessee has become infructuous whereas the order passed u/s.154 of the Act is not appealable without appreciating that the order u/s.154 of the Act arises out of the order passed u/s.143(1) of the Act. Ld. Counsel further submitted that the income of the assesse is exempted u/s 10(25(iii) of the Act, therefore, rejection of rectification petition filed u/s 154 of the Act by not considering the exemption is bad in law. Ld. Counsel also submitted that no show cause notice nor any communication has been issued to the assessee before proposing the adjustment which is in violation of the provisions of Section 143(1) of the Act. Thus, the ld. AR submitted that order passed by both the authorities below deserve to be set aside and the assessee may be allowed the exemption as claimed for. To substantiate its claim, the assessee has filed its written submissions which read as under :- WRITTEN SUBMISSION BEFORE THE HON. ITAT CUTTACK BENCH, CUTTACK Name of the Assessee : NESCO EMPLOYEES GRATUITY FUND TRUST PAN : AAATN5003G Asst. Year : 2016-17 The return of income for the Asst. Year 2016-17 filed by the assessee was processed u/s 143(1) of the Act on dtd. 02.01.2018 after making one adjustments, viz. disallowance of exemption claimed in the return of income. Against this Intimation u/s 143(1), the assessee submitted an application for rectification u/s 154 of the Act to the CPC and CPC passed the rectification order on dtd. 16.07.2019. Subsequently, the assessee submitted an application for rectification u/s 154 of the Act to the JAO and JAO passed the rectification order on dtd. 16.10.2023. The application filed by the

4 ITA No.159/CTK/2025 assessee was rejected by the Ld JAO. . Being aggrieved by this order of rectification u/s 154, the assesse filed an appeal to Ld. CIT(A). The Ld. CIT(A), however, dismissed the appeal of assessee in limine. Against the order of Ld. CIT(A), the assessee has preferred this appeal . 1. W.R.T. Ground No. 1 For that, on the facts and circumstance of the case, the Ld. CIT(A) has erred in law by not admitting the appeal of the assessee considering that the appeal is infructuous since the order passed u/s 154 is not appealable without appreciating that the order u/s 154 arises out of the order u/s 143(1) and is a appealable order u/s 250. Further Ld. CIT(A) relied upon the judgement in case of ed Areca Trust ITA NO 433/Bang/2023 dt 26.07.2023 is not applicable to the present facts of the case under appeal. The Copy is enclosed herewith in Pg No. 33-38) Therefore we request to set aside the order passed by the Ld. CIT(A). Submission The return of income for the Asst. Year 2016-17 filed by the assessee was processed u/s 143(1) of the Act on dtd. 02.01.2018 after making one adjustments, viz. disallowance of exemption claimed in the return of income. Against this Intimation u/s 143(1), the assessee submitted an application for rectification u/s 154 of the Act to the CPC and CPC passed the rectification order on dtd. 16.07.2019. Subsequently, the assessee submitted an application for rectification u/s 154 of the Act to the JAO within the time permissible u/s 154 for seeking redressal of the grievances arising out the above adjustment . The Ld. AO, however, rejected the application filed by the assessee. Being aggrieved by rejection, the assessee filed appeal to Ld. CIT(A) and technically such appeal happened to be against the order of rectification u/s 154 and not against the original Intimation u/s 143(1). The Ld. CIT(A) dismissed the appeal of assessee in limine by observing in Para No. 5 to 6 of his order as under: “6.0 I have given my due consideration to the submissions. To begin with, there is no dispute that the assessee filed the ITR claiming exemption under an incorrect section i.e. section 10(24). Therefore, there is no apparent mistake in disallowing the claim u/s 143(1) of the Act. Of course, the CPC ought to have provided the assessee an opportunity before the adjustment u/s 143(1)(a),which as per the assessee, was not afforded. As far as the petition u/s 154 is concerned, it is for the limited purpose of correcting mistakes apparent from the record and hence it is beyond the scope to seek remedy under this section, particularly when the claim in the ITR is itself wrong.

5 ITA No.159/CTK/2025 More importantly, the returned income and the tax liability were computed in the summary assessment u/s 143(1) which is an appealable order u/s 246A. The cause of action for the assessee arises against the intimation u/s 143(1) and not against the impugned order u/s 154 which was rejected merely stating that the adjustments in the intimation u/s 143(1) were valid. This is evident from ground no 1 of the appeal which is relevant to intimation u/s 143(1) and not the impugned order. The assessee cannot use proceedings u/s 154 to file an appeal against the order passed u/s 143(1) of the Act which is appealable u/s 246A of the Act. The ITAT, Bangalore while dealing with a similar matter in the case of Areca Trust ITA NO 433/Bang/2023 dt 26.07.2023 also held a similar view. Therefore, the appeal is treated as infructuous and dismissed. “ The assessee has two remedies against the Intimation u/s 143(1), viz. (i) file rectification application u/s 154, or (ii) file appeal u/s 246A. However the assessee filed a rectification-application u/s 154 which is not only one of the available remedy. Further rectification- application u/s 154 against the Intimation u/s 143(1) is not barred in the scheme of Act. The assessee is very much entitled to the exemption u/s 10(25(iii) and the assessee is not required to file the appeal as per the income Tax Act. The assessee had made a wrong section in the return since the section 10(25(iii) was not available in the ITR to claim exemption. Further as per the Income tax Act, the assessee claiming the exemption u/s 10(25(iii) is not required to file the income Tax return u/s 139. Therefore the assessee can prefer an appeal against sec. 154 which is arises out of Sec.143(1). Further as per Sec. 246A(1)(C) order passed under Sec154 is an appealable order. Further the Ld. CIT (A) relied upon a judgement where facts of the said judgement are not similar to the facts of the present case. We rely upon the judgement in case of Shivganga Drillers Private Ltd. Vs. CPC, Income Tax, Bangalore ( ITA No.174/Ind/2021 ). The Copy is enclosed herewith in Pg No. 39 to 52). The relevant portion is as follows ; “ 9. We have considered the rival submissions of both sides and also perused the record. We are very much aware of the recent decision of ITAT, Jodhpur Bench in the case of Akbar Mohammad, Nagaur Vs. ACIT, CPC, Bangalore ITA No. 108 & 109/Jodh/2021 order dated 31.01.2012 in which the Hon’ble Co-ordinate Bench had resolved an identical controversy by holding as under:

6 ITA No.159/CTK/2025 “6.1 Of course, it is a case in point that the assessee did not file any appeal against the intimations passed us 143(1) of the Act and the Ld. Sr. DR is right to the extent that the assessee cannot be given relief for that reason. However, it is also a settled law that the assessee cannot be taxed on an amount on which tax is not legally imposable. Although, the assessee might have chosen a wrong channel for redressal of his grievance, all the same, it is incumbent upon the Tax authorities to burden the assessee only with correct amount of tax and not to unjustly benefit at the cost of tax payer. Therefore, in the interest of substantial justice, we deem it expedient to restore the issue to the file of the Assessing officer with a direction to pass appropriate orders deleting the addition / disallowance after duly considering the settled judicial position in this regard, which have been decided in the three cases as enumerated above in Para 5.” During hearing, we have apprised both sides about this recent decision of the Hon’ble Co-ordinate Bench. 10. Therefore, respectfully following the decision of Hon’ble Co- ordinate Bench, we are inclined to accept the request of assessee. Therefore, Ground No. 2 is allowed. “ Therefore we request to set aside the order passed by the Ld. CIT(A). 2. W.R.T. Ground No. 2 For that, on the facts and circumstance of the case, the Ld. CIT(A) has erred in law by not considering the technical ground raised by the assessee and passed the order as infructuous without considering that the return is processed u/s 143(1) without communication of the proposed adjustment u/s 143(1)(a) to the assessee even though the same is admitted by the Ld. CIT(A). Therefore processing the return u/s 143(1) is arbitrary, unjustified, illegal on the facts and circumstances of the case. Therefore processing the return u/s 143(1) is null and void. Therefore the order passed by the Ld. CIT(A) is liable to be set aside. Submission The Ld. CIT(A) accepted the contention of the assessee about the return is processed u/s 143(1) without communication of the roposed adjustment u/s 143(1)(a) to the assessee. The Ld. CIT(A) mentioned the same in his order which is as follows: “6.0 I have given my due consideration to the submissions. To begin with, there is no dispute that the assessee filed the ITR claiming exemption under an incorrect section i.e. section 10(24). Therefore, there is no apparent mistake in disallowing the claim u/s 143(1) of the Act. Of course, the CPC ought to have provided the assessee

7 ITA No.159/CTK/2025 an opportunity before the adjustment u/s 143(1)(a),which as per the assessee, was not afforded. As far as the petition u/s 154 is concerned, it is for the limited purpose of correcting mistakes apparent from the record and hence it is beyond the scope to seek remedy under this section, particularly when the claim in the ITR is itself wrong.” The Ld. CIT(A) has gone through the matter in merits/technical ground and found that the appeal should have been allowable on some ground and then reject the appeal in limline,. Therefore the issue of maintainability of the Petition should be decided first and then the issues on merit should be considered if the Petition is held maintainable. Therefore it is a settled law that once Ld. CIT(A) go through the matter on merits/technical grounds, it can not go back to the root of the appeal to treat the appeal as infructuous and dismissed. Therefore we request to set aside the order passed by the Ld. CIT(A). 3. W.R.T. Ground No. 3 For that, on the facts and circumstance of the case, the Ld. CIT(A) has erred in law by passing the order as infructuous without appreciating that rejecting the rectification application by the Ld. AO without considering the fact that the income of the assesse is exempted u/s 10(25(iii). Therefore rejection of rectification u/s 154 by not considering the exemption is bad in law. Therefore the order passed by the Ld. CIT(A) is liable to be set aside. Submission The assessee had made a wrong section in the return since the section 10(25(iii) was not available in the ITR to claim the exemption. Therefore the assessee could not claim the said exemption. Therefore rejecting the rectification application by the Ld. AO without appreciating the fact that the income of the assesse is exempted u/s 10(25(iii) and the intimation u/s 143(1) was passed without issuing any notice for the proposed adjustment is bad in law. Therefore we request to be set aside the order passed by the Ld. CIT(A). 4. W.R.T. Ground No. 4

For that, on the facts and circumstance of the case, the Ld. CIT(A) has erred in law by passing the order as infructuous without appreciating that rejecting the rectification application by the Ld. AO without considering the fact that the Assessee is not required to file income Tax Return U/s 139(1). Therefore rejection of rectification u/s 154 by not considering that the assesse is not required to file the

8 ITA No.159/CTK/2025 Return is bad in law. Therefore the order passed by the Ld. CIT(A) is liable to be set aside. Submission As per the Income tax Act, the assessee claiming the exemption u/s 10(25(iii) is not required to file the income Tax return u/s 139. Therefore rejecting the rectification application by the Ld. AO without appreciating the fact that the the assessee is not required to file the Income Tax return and the intimation u/s 143(1) was passed without issuing any notice for the proposed adjustment is bad in law. Therefore we request to be set aside the order passed by the Ld. CIT(A). 5. W.R.T. Ground No. 5 For that , the appellant may add, alter, amend any other grounds of appeal at time of hearing. Submission Not pressed Nihar Ranjan Biswal (A/R of NESCO EMPLOYEES GRATUITY FUND TRUST) 4. On the other hand, ld. Sr. DR relied on the orders of the ld. AO and ld.CIT(A) and submitted that there is no apparent mistake in disallowing the claim of the assessee u/s.143(1) of the Act. The assessee has filed appeal before the ld. CIT(A) against the order passed u/s.143(1) of the Act not against the order passed u/s.154 of the Act. Thus, the ld. Sr. DR submitted that the appeal of the assessee is not maintainable. 5. We have considered the rival submission of the parties and perused the material available on record. At the outset, on perusal of the impugned order passed by the ld. CIT(A), we find that appeal of the assessee has been dismissed on account of the fact that the appeal was filed against the order passed u/s.143(1) of the Act, however, the assessee preferred the appeal before the ld. CIT(A) against the rejection order passed by the AO

9 ITA No.159/CTK/2025 u/s.154 of the Act. It is also a fact that the assessee has filed the rectification application u/s.154 of the Act stating that the assessee has claimed exemption wrongly u/s.10(24) of the Act instead of Section 10(25)(iv) of the Act. In one hand, the ld. CIT(A) has not accepted the appeal of the assessee stating that the appeal preferred by the assessee is not maintainable, however, on the other hand, ld. CIT(A) in its finding recorded in para 6.0 has accepted that the CPC before making adjustment has not provided an opportunity to the assessee. If it is so, the ld. CIT(A) ought to have set aside the matter to the CPC for verification and examination of the claim of the assessee, that has not been done by the ld. CIT(A). Simply dismissing the appeal of the assessee without appreciating the fact that the assessee has filed an rectification u/s.154 of the Act claiming exemption u/s.10(25)(iii) of the Act, will hit the principle of natural justice. Without going much into the merits of the case, as the ld. CIT(A) has himself observed that the assessee was deprived of any opportunity before making the adjustment u/s.143(1) of the Act by the CPC, we are of the opinion that this is a fit case to remit the matter back to the ld. CIT(A) for fresh adjudication upon granting an opportunity of being heard to the assessee and upon considering the evidences on record or any other evidence which the assessee may choose to file at the time of hearing of the matter. At the same breath, I also hereby caution the assessee to promptly co-operate with the proceedings before the ld. CIT(A), failing which the ld. CIT(A) shall be at liberty to pass appropriate order in accordance with law and merits

10 ITA No.159/CTK/2025 based on the materials available on record. Thus, the grounds raised by the assessee are allowed for statistical purposes. 6. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 16/07/2025. Sd/- Sd/- (RAKESH MISHRA) (DUVVURU RL REDDY) लेखा सदस्य/ ACCOUNTANT MEMBER उपाध्यक्ष / VICE PRESIDENT ददनाांक Dated 16/07/2025 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : अपीलार्थी / The Appellant- 1. 2. प्रत्यर्थी / The Respondent- आयकर आयुक्त(अपील) / The CIT(A), 3. 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कटक / DR, ITAT, Cuttack गार्ड फाईल / Guard file. 6. सत्यापपत प्रतत //True Copy// आदेशािुसार/ BY ORDER,

(Assistant Registrar) आयकर अपीलीय अधिकरण, कटक/ITAT, Cuttack