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Facts
The assessee filed an appeal for Assessment Year 2019-20 against a rectification order passed under section 154 of the Income-tax Act. The order disallowed employees' contribution amounting to Rs. 8,37,613/- under section 36(1)(va) of the Act. This disallowance was made through section 154 rectification proceedings, not during regular assessment under section 143(3).
Held
The Tribunal held that the rectification order under section 154 was unsustainable because the Assessing Officer failed to provide the assessee with a reasonable opportunity, which is a mandatory requirement under section 154(3) of the Act. Consequently, the impugned disallowance made without observing this procedural safeguard was deemed not sustainable in law.
Key Issues
Whether a disallowance of employees' contribution made through a rectification order under section 154, without affording the assessee a reasonable opportunity as mandated by section 154(3), is legally sustainable.
Sections Cited
Section 154, Section 36(1)(va), Section 143(3), Section 154(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘A’ NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI M. BALAGANESH
O R D E R
PER SATBEER SINGH GODARA, JM:
This assessee’s appeal for assessment year 2019-20 arises against National Faceless Appeal Centre (NFAC), Delhi’s DIN and order no. ITBA/NFAC/S/250/2022-23/1047593174(1), dated 23.11.2022, in case no. CIT(A), Delhi-21/10026/2020-21, in proceedings u/s 154of the Income-tax Act, 1961, hereinafter referred to as the ‘Act’.
Heard both the parties at length. Case file perused.
It emerges at the outset that both the learned lower authorities and more particularly the assessing officer herein had taken recourse to section 154
Faced with this situation the department vehemently argues that in light of Checkmate Services Pvt. Ltd. vs. CIT (2022) 143 taxmann.com 278 (SC) that the instant issue is no more res-integra as settled by the hon’ble apex court. We, however, notice that the learned Assessing Officer had invoked the impugned disallowance not in section 143(3) proceedings but in section 154 rectification, wherein he had failed to ensure compliance of sub-section (3) thereof, as no ‘opportunity’ much less a reasonable one was afforded to the taxpayer. We, thus, conclude in this background that the impugned rectification is not sustainable in law once it violates section 154(3) of the Act. Ordered accordingly.
This assessee’s appeal is allowed in above terms.
Order pronounced in open court on 27.11.2024.