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Facts
The assessee contested the additions made by the Assessing Officer during assessment under Section 143(3) of the Income Tax Act, which consequently enhanced the book profit. While the CIT(A) granted partial relief on other additions, the specific ground concerning the book profit additions was dismissed due to a lack of AO's findings and the assessee's inability to justify its claim.
Held
The Income Tax Appellate Tribunal observed that the adjustments to book profit had not been properly examined as per the provisions of Section 115JB of the Act. Consequently, the Tribunal remitted the issue back to the Assessing Officer to recompute the book profit in accordance with Section 115JB, ensuring the assessee is given a fair opportunity to be heard.
Key Issues
Whether additions made to total income under regular assessment automatically lead to additions to book profit without specific examination under Section 115JB of the Income Tax Act.
Sections Cited
143(3), 115JB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘B’: NEW DELHI
Before: SHRI SHAMIM YAHYA & MS. ASTHA CHANDRA
ASSESSEE BY : Ms. Manju Goel, CA REVENUE BY : Shri Vivek Kumar Upadhyay, Sr. DR Date of Hearing : 25.01.2024 Date of Order : 06.02.2024
ORDER
PER SHAMIM YAHYA, ACCOUNTANT MEMBER :
This appeal by the assessee is directed against the order of the ld. CIT (Appeals)-25, New Delhi dated 13.09.2017 for the assessment year 2014-15.
Although assessee has raised various grounds, ld. Counsel of the assessee pressed only ground no.4 which read as under :-
“The addition made by the learned AO is bad in law in so far as the adding the amount of addition made while framing of assessment u/s 143(3) of the Income Tax Act to the book profit of the company.”
In this case, AO in the assessment order made several additions as under :-
Gross total income/loss as per computation of income Rs.(59,03,678/-) Add : As per para 4 Rs. 1,51,243/- As per para 5 Rs. 26,33,890/- As per para 6 Rs. 1,20,780/- Total income : Rs.(29,97,765/-)
Upon assessee’s appeal, ld. CIT (A) granted part relief. However, the assessee has also urged ld. CIT (A) that AO has made adjustment of the additions under income-tax computation of the book profit also and has enhanced the book profit accordingly. The ld. CIT (A)’s order in this regard is as under :-
In Ground No. 4 of the appeal the Appellant has stated that the Assessing Officer has added the amount of additions made while framing of Assessment u/s 143(3) of the Income Tax Act, 1961, to the Book Profit of the Appellant Company. It is seen that the addition of Rs.26,33,890/- has been deleted and the other additions of Rs.l,51,243/- and Rs.1,20,780/-(with Enhancement of Rs.12,42,627/-) have been confirmed. It is seen that Assessing Officer has not giving any finding regarding Book Profits in the Assessment Order. The Appellant Company could not explain and justify its claim regarding Ground No.4. Hence, Ground No.4 of the appeal is also dismissed.
Against the above order, assessee is in appeal before us. We have heard both the parties and perused the records.
Ld. Counsel of the assessee submitted that adjustment to book profit has to be done as per the mandate of section 115JB of Income-tax Act, 1961
(for short ‘the Act’). She prayed that these adjustments are not in accordance with law. Hence, she prayed that the issue may be remanded to the AO. Ld. DR for the Revenue did not have any opposition to this proposition.
Upon careful consideration, we find that the adjustment to book profit in this case has not been examined on the touchstone of provisions of section 115JB of the Act. Hence, in the interest of justice, we remit the issue to the file of AO. The AO shall compute the book profit as per provisions of section 115JB of the Act. Needless to add, assessee should be granted adequate opportunity of being heard.
In the result, this appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on this0 6th day of February, 2024.