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Facts
The Revenue's appeal is against the CIT(A)'s order concerning AY 2022-23. The primary issue revolves around an intimation issued under Section 143(1) without a show cause notice. The assessee claimed expenditure, but it was disallowed due to a delay in filing Form 10B, despite the CIT(A) acknowledging the assessee's entitlement to exemption.
Held
The Tribunal held that the intimation issued under Section 143(1) is bad in law as it was passed without issuing a show cause notice to the assessee, as required by the proviso to the said section. Consequently, the intimation is liable to be quashed.
Key Issues
Whether the intimation issued under Section 143(1) of the Income Tax Act, 1961, is liable to be quashed for want of a show cause notice.
Sections Cited
143(1), 250, 11, 12
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Income Tax Appellate Tribunal, “CUTTACK” BENCH, CUTTACK
Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR
The captioned appeal by the revenue is against the order of the Ld. Commissioner of Income Tax (Appeal), Addl/JCIT(A)-7, Mumbai [hereinafter referred to as “the Ld. CIT(A)”] vide order no. ITBA/NFAC/S/250/2024-25/1070089764(1) dated 04.11.2024 passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2022-23.
Shri S. K. Sarangi, CA represented on behalf of the assessee and Shri Sanjay Kumar, CIT, DR appeared on behalf of the revenue.
It was submitted by the Ld. AR that he desires to invoke the principle laid down under Rule 27 of the ITAT, Rules, 1962. It was the submission that the intimation u/s. 143(1) has been issued on 04.04.2023 without issuing a show cause notice to the assessee. It was a submission that as there was no show cause notice the intimation is liable to be quashed. It was the further submission that in the intimation the Assessing Officer has disallowed the assessee’s claim of expenditure holding that there was delay in filing form 10B. It was the submission that the Ld. CIT(A) held that admittedly on account of the delay the assessee was entitled to exemption. However, he directed the Assessing Officer to recompute the income of the assessee by allowing the expenditure that the same is revenue in nature. It was the submission that the Ld. CIT(A) directed the Assessing Officer to compute the income of the assessee as a business income. It was the submission that the Ld. CIT(A) erred in giving direction in so far as the appeal was against an issue u/s. 143(1).
The Ld. CIT, DR submitted that the Ld. CIT(A) ought not to have directed the Assessing Officer to allow the expenditure. It was the submission that the Ld. CIT(A) having upheld the denial of exemption u/s. 11 and 12 ought not to have proceeded further.
5 We have heard rival submissions. The Ld. AR of the assessee has placed reliance on the decision of the Coordinate Bench of this Tribunal Cuttack Bench in the case of Navodaya Trust in AY 2022-23 dated 03.06.29024 to support the order of the Ld. CIT(A) without prejudice to his earlier argument. A perusal of the order of intimation u/s. 143(1) clearly shows that no show cause notice has been issued to the assessee under the proviso to sec. 143(1). This being so, the intimation issued u/s. 143(1) is primarily bad in law and consequently, the same is liable to be quashed and we do accordingly. As we have quashed the intimation issued u/s. 143(1) the order of the Ld. CIT(A) also become infructuous and consequently, the appeal of the revenue stands dismissed.