SHRUTI CHANDRASHEKHAR ANGOLKAR,DADAR EAST,MUMBAI vs. ADDL-JCIT(A),BENGALURU, INCOME TAX DEPARTMENT,OFFICE OF THE CIT,APPEAL, ADDL/JCIT(A),BENGALURU

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ITA 4409/MUM/2024Status: DisposedITAT Mumbai30 October 2024AY 2021-22Bench: SHRI NARENDER KUMAR CHOUDHRY (Judicial Member), SHRI GAGAN GOYAL (Accountant Member)1 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal noted that as per the first proviso to section 143 of the Act, no adjustments under section 143(1)(a) can be made without providing intimation to the assessee. Since the CPC did not follow this mandatory condition, the addition made by the CPC was deleted.

What were the facts?

The assessee claimed an exemption of Rs. 8,73,423/- on account of leave encashment. The CPC processed the return under section 143(1) and disallowed Rs. 5,73,420/- of this exemption. The assessee challenged this addition, not on merit, but on the legal ground that no prior intimation or notice was issued.

What were the issues?

Whether the addition made by the CPC under section 143(1) is valid without issuing prior intimation or notice to the assessee.

Which sections of the Income-tax Act were involved?

Section 139(1),Section 143(1),Section 10(AA),Section 10A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “J (SMC

Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI GAGAN GOYAL

For Appellant: Shri Chandrashekhar Angolkar, A.R
For Respondent: Shri Asif Karmali, Sr. D.R
Hearing: 15.10.2024Pronounced: 30.10.2024

Per : Narender Kumar Choudhry, Judicial Member:

This appeal has been preferred by the Assessee against the order dated 29.06.2024, impugned herein, passed by the Ld. Addl/JCIT(A)-4, Bengaluru (in short “Ld. Addl./Joint Commissioner”) for the A.Y.

20213-22.

2.

In this case, the Assessee by filing return of income for the assessment year under consideration u/s 139(1) of the Act on 30.12.2021 within the extended due date had claimed the exemption of Rs.8,73,423/- on account of leave encashment. The return filed by the Assessee was processed by the CPC vide intimation/order dated 22.03.2022 u/s. 143(1) of the Act, whereby the addition of Rs.5,73,420/- on account of disallowance of exemption claimed u/s 10(AA) of the Act was levied.

3.

The Assessee, being aggrieved, challenged the said addition before the Ld. Commissioner, who by holding affirmed the said addition by observing and holding as under:

“That earlier the exemption limit on account of leave encashment received by private sector employees was Rs.3,00,000/- which is not increased to Rs.25,00,000/- as per budged 2023-24 and as the Assessee has received Rs.8,73,423/- on account of leave encashment and therefore as per the provisions of section 10(AA) of sub section 10A of the Act, Rs.3,00,000/- can be allowed as exempted. The AO, CPC while processing the return of income of the Assessee, the CPC has rightly disallowed the excess claimed by the Assessee”.

4.

The Assessee, being aggrieved, is in appeal before us.

5.

We have heard the parties and perused the material available on record. The Assessee has not challenged the addition on merit but in fact processing the return filed by the Assessee or issuing the intimation/order 143(1) of the Act or before making the adjustment u/s 10(AA) of the Act, has not issued any notice/intimation to the Assessee and therefore the addition made on adjustment, is liable to be deleted.

6.

The Ld. D.R. refuted the claim of the Assessee, but not the factual aspect qua not issuing any intimation/notice before making the adjustment.

7.

Having heard the parties and given thoughtful consideration to the rival submission of the parties and material available on record, we observe that admittedly first proviso to section 143 of the Act, mandates that no adjustments as prescribed in sub clause (a) of section 143(1) of the Act shall be made, unless an intimation is given to the Assessee of such adjustments either in writing or in electronic mode. It appears from record and submission of the parties that in the instant case, the CPC has not followed such mandatory condition. Hence, we are constrained to allow the claim of the Assessee by deleting the adjustment/addition of Rs.5,73,420/-, however subject to verification by the jurisdictional AO whether any intimation/notice has ever been issued before processing the return or making the adjustment or issuing the intimation/order u/s 143(1) of the Act or not.

8.

In the result, the appeal filed by the Assessee stands allowed in the direction made above.

Order pronounced in the open court on 30.10.2024.

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