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Income Tax Appellate Tribunal, KOLKATA BENCH (SMC
Before: Shri P.M. Jagtap, Hon’ble Vice -]
order : October 31, 2018 ORDER This appeal filed by the assessee is directed against the order of Ld. CIT (Appeals) – 25, Kolkata dated 27.04.2018 and the grounds raised
therein by the assessee read as under: “1. For that the Ld. CIT(A) erred in law and facts allowing the appeal statistically ‘since he gave the direction to the AO to verify the claim of the appellant as per provisions of section 11 of the Act’ without paying attention to the fact that the order appealed has been passed under section 143(1) of the Act and the provisions of section 250(6) of the Act.
2. For that the Ld. CIT(A) erred in law and facts allowing the appeal statistically ‘since he gave the direction to the AO to verify the claim of the appellant as per provisions of section 11 of the Act’ not appreciating the provisions of section 143(1) of the Act though adjustments mentioned in the said section do not cover the adjustment made, further before proceeding to the said adjustment proviso to section 143(1) requiring intimation to be given to appellant was not complied.”
The assessee in the present case is a trust which filed its return of income for the year under consideration on 24.01.2017 declaring total income at nil after claiming its entire income as exempt u/s 11 as under:
1. 1. Voluntary contribution forming part of the corpus: Rs. 5,60,000/-.
2. Amount applied to charitable or religious purposes in India: Rs. 6,83,638/-.
3. Amount accumulated or set apart for application to charitable or religious purposes not exceeding 15% of income: Rs. 1,04,815/-.
While processing the return of income filed by the assessee u/s 143(1) of the Act, the Assessing Officer i.e. DCIT, CPC, Bangalore disallowed the claim of the assessee for exemption u/s 11 and raised demand of Rs. 1,99,170/- against the assessee vide an intimation dated 09.09.2017 issued u/s 143(1) of the Act.
Against the intimation issued by the AO u/s 143(1), an appeal was preferred by the assessee before the Ld. CIT(A) and while disposing of the said appeal vide appellate order dated 27.04.2018, the Ld. CIT(A) directed the AO to verify the claim of the assessee for exemption u/s 11 of the Act by examining thoroughly the activities of the assessee so as to ascertain that the same were covered within the meaning of section 2(15) of the Act. Aggrieved by the order of the Ld. CIT(A), the assessee has preferred this appeal before the Tribunal.
I have heard the arguments of both the sides and also perused the relevant material available on record. As rightly contended by the learned counsel for the assessee, the scope of adjustments permissible u/s 143(1) is limited and while computing the total income of the assessee, the AO can make only the following adjustments: “1. any arithmetical error in the return or; 2. an incorrect claim, if such incorrect claim is apparent from any information in the return; 3. disallowance of loss claimed, if return of the previous year for such set off of loss is claimed was furnished beyond the due date specified under section 139(1); 4. disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return; 5. disallowance of deduction claimed under sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or section 80-IE if the return is furnished beyond the due date specified under section 139(1) and 6. addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return.
The learned counsel for the assessee is contended that the disallowance of assessee’s claim for exemption u/s 11 is beyond the scope of adjustments permissible u/s 143(1) and this position clearly evident from the record as well as the relevant provisions of law is not disputed even by the learned DR. As rightly contended by the learned counsel for the assessee, the Ld. CIT(A) therefore ought to have deleted the disallowance made by the AO on account of assessee’s claim for exemption u/s 11 as the same was beyond the scope of adjustments permissible u/s 143(1) and he was not justified in directing the AO to verify the claim of the assessee for exemption u/s 11 as such verification was beyond the limited scope of section 143(1). I therefore set aside the impugned order of the Ld. CIT(A) and delete the disallowance made by the AO on account assessee’s claim for exemption u/s 11.