Loading judgment…
Facts
The assessee company filed a return of income declaring a total loss. The CPC, Bengaluru, sought clarification on certain data, proposing an adjustment of ₹26,19,670 to the total income. The assessee failed to respond to the clarification, and the CPC processed the return with the adjustment. A subsequent rectification request was rejected by the CPC, and the appeal to the CIT(A) was also dismissed.
Held
The Tribunal noted that the assessee failed to respond to the clarification sought by the CPC and to the show cause notice before the intimation, and later failed to adequately clarify the proposed adjustment in their rectification petition. However, considering the interest of justice, the Tribunal decided to provide the assessee another opportunity to explain the discrepancy.
Key Issues
Whether the assessee should be given another opportunity to explain the discrepancy in their return of income, despite failing to respond to the CPC's clarifications and the subsequent dismissal of their rectification request and appeal.
Sections Cited
250, 139(1), 143(1), 115JB, 154, 234B, 234C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CUTTACK ‘SMC’ BENCH AT KOLKATA
Before: SHRI PRADIP KUMAR CHOUBEY & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the Assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2024-25 dated 12.08.2025. 2. The Assessee is in appeal before the Tribunal raising the following grounds of appeal: “1 For that in view and circumstances of the case the Learned Commissioner of Income-tax (Appeals), NFAC has erred on facts and in law in ignoring the submission of the Appellant Company and confirming the error made by Learned DDIT, CPC in assessing the total income of the Appellant company in the sum of RS. 26,19,970/ as against NIL amount returned by the appellant company. 2 For that in view and circumstances of the case the Learned Commissioner of Income-tax (Appeals), NFAC has erred on facts and in law in ignoring the submission of the Appellant Company and confirming the error made by ITA No.: 542/CTK/2025 Assessment Year: 2024-25 Anupama Infotech Private Limited. Learned DDIT, CPC, who has erred on facts and in law in rejecting the rectification request on 28/06/2025 with remarks that since the rectification petition was filed under section 154 no claim of loss or relief can be given to the appellant company fully ignoring the fact that return was filed by a layman employee of the company who was not conversant of the complexities of provision of INCOME TAX ACTS AND LAWS and opportunity to rectify was given by the CPC itself and rectification was only option available to the assessee. 3 For that in view and circumstances of the case the Learned Commissioner of Income-tax (Appeals), NFAC has erred on facts and in law in ignoring the submission of the Appellant Company and confirming the error made by Learned DDIT, CPC who has erred on facts and in law in imposing interest under section 234B of RS.86,940/ and 234C of RS.31,362/ which is not chargeable in the instant case. 4 The above grounds of appeal will be argued in details at the time of hearing and the Appellant Company craves to leave, add, alter, amend any of the above grounds before or during the course of hearing.”
Brief facts of the case are that the assessee company filed its return of income u/s 139(1) of the Act on 31.10.2024 declaring total loss of ₹5,15,000/-. The CPC, Bengaluru, vide communication dated 07.04.2025, sought certain information/clarification on the data in the return of income filed by the assessee. In the aforesaid communication, an adjustment of ₹26,19,670/- was proposed to the total income of the assessee. Thereafter, the CPC, Bengaluru processed the return of income u/s 143(1) of the Act on 19.05.2025 determining the total income under normal provisions at ₹26,19,670/- and book profit u/s 115JB of the Act at ₹26,19.670/-. The tax liability of the assessee was computed in accordance with the normal provisions of the Act raising demand of ₹7,39,330/-. Thereafter, the assessee filed a rectification request for return data correction which was rejected by the CPC on 28.06.2025. Aggrieved with the rectification order u/s 154 of the Act, the assessee filed an appeal before the Ld. CIT(A) who, vide order dated 12.08.2025 dismissed the appeal of the assessee. ITA No.: 542/CTK/2025 Assessment Year: 2024-25 Anupama Infotech Private Limited.
Aggrieved with the order of the Ld. CIT(A), the Assessee has filed the appeal before the Tribunal.
Rival contentions were heard and the submissions made have been examined. It was submitted before us that the CPC had rejected the application u/s 154 of the Act which was filed against the adjustment of ₹26,19,970/- made to the returned income. It was stated before us that the same was rejected for being not a mistake apparent from record and our attention was drawn to page 24 of the paper book filed being the profit and loss account for FY 2023-24. The CPC issued a show cause notice before making the adjustment but the assessee failed to respond to the same and therefore, the intimation dated 19.05.2025 was issued. Our attention was drawn to page 3 para 4.1 of the appeal order which is part of the statement of facts submitted before the Ld. CIT(A) and is extracted as under: “In response to the above said notice the Appellant company filed Rectification request, the only option available for return data correction on 28/06/2025 rectifying the errors by providing correct particulars and filing proper details in the rectified ITR. This rectification request was turned down and rejected by CPC on 28/06/2025 with remarks that since the rectification petition was filed under section 154 no fresh /additional/reduction claim of CFL or relief can be given to the appellant company ignoring the fact that return was filed by a layman employee of the company who was not conversant of the complexities of provision of INCOME TAX ACTS AND LAWS and opportunity to rectify was given by the CPC itself. It may be noteworthy that the appellant company was an assessee whose accounts were audited under TAX AUDIT and TAX AUDIT REPORT was also filed wherein all the particulars of income and expenses were duly reported confirming and establishing the lawful claim of the appellant company.”
The assessee stated that because of technical glitch, the response could not be filed and the rectification application was rejected. The revised return which was filed was also rejected and the Ld. AR ITA No.: 542/CTK/2025 Assessment Year: 2024-25 Anupama Infotech Private Limited. requested that the matter may be remanded to the Ld. CIT(A). The written submission filed in this regard are as under: “We respectfully submit before your Honour that in the instant case, hearing was conducted and as per direction of learned and honorable members, we are submitting the following facts before your goodself that our returned income of loss of Rs. 5,15,000/-, which was rejected by CPC and calculated at the sum of Rs. 26,19,970/-, which was due to error as mentioned in notice issued by CPC, wherein: - "Incorrect claim u/s 143(1)(a)(ii): Profit before tax as per profit and loss account is at variance in Schedule BP as Gross profit from trading account is not being carry forwarded to Profit and Loss account. Accordingly, there is an increase in income in Part B TI. This requires adjustment to the income within the meaning of section 143(1)(a) and accordingly this is an opportunity provided to respond within the time allowed." It is also noteworthy to mentioned that learned CIT (Appeal) in his order dated 12/08/2025 has mentioned in para 6.1.3 of page 7 that :- "Subsequently the appellant filed rectification petition which was rejected by the CPC as the appellant did not clarify the proposed adjustment of Rs. 26,19,970/-." In this regard we respectfully submit and clarify before your honour that we filed rectification petition under section 154 and also filed rectified Income Tax Return under acknowledgment number 212843520280625, which is also enclosed herewith for your kind consideration and necessary action as well as for learned CIT (Appeal) NFAC. Since due to technical glitch in the Income site, in the profit and loss account, income was not truly represented as Profit and Loss account was not linked with Trading account, Your Honour is requested to accept and allow our instant appeal.”
We have considered the facts of the case, the submissions made and the documents filed. The Ld. CIT(A) dismissed the appeal as the CPC had sent a communication dated 07/04/2025 and had sought certain information/clarification on the data in the return of income filed under section 139(1) of the Act by the assessee. Before issuing the intimation u/s 143(1) of the Act dated 19.05.2025, the CPC had given an opportunity to the assessee to clarify the data in the return of income ITA No.: 542/CTK/2025 Assessment Year: 2024-25 Anupama Infotech Private Limited. filed by it within 30 days from the date of the intimation being a show cause notice, failing which it was informed that the proposed adjustment of ₹ 26,19,970/- would be made to the total income of the assessee. The assessee failed to respond to the clarification sought by the CPC. Subsequently, the assessee filed a rectification petition which was rejected by the CPC as the assessee did not clarify the proposed addition of ₹ 26,19,070/-. The return of income filed on 31/10/2024 was duly verified and digitally signed by the Managing Director the company, who could not be said to be a layman employee of the company as per the Ld. CIT(A). The Ld. CIT(A) has held that the onus lay on the assessee to clarify the proposed adjustment by the CPC; however, the assessee had failed to do so. In the absence of any clarification on the part of the assessee, the CPC had rightly issued the intimation under section 143(1) of the Act determining the total income of ₹ 26,90,070/- as per the information available in the return of income filed for the assessment year 2024-25 and thereby rejected the request of the assessee vide order under section 154 of the Act dated 28/06/2025. Accordingly, the up to was dismissed. The Bench was of the view that in the interest of justice and fair play, the assessee needs to be given another opportunity to explain the discrepancy and therefore, the order of the Ld. CIT(A) is hereby set aside and the issue is remanded to him for considering the response of the assessee afresh and decide the appeal as per law as the assessee claims that there was no discrepancy in the return of income and it has ample evidence for explaining the same. The assessee shall be given a reasonable opportunity of being heard, and thereafter, the issue shall be decided as per law. Hence, all the grounds of appeal are partly allowed for statistical purposes. ITA No.: 542/CTK/2025 Assessment Year: 2024-25 Anupama Infotech Private Limited.
In the result, the appeal filed by the Assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 24th February, 2026. [Pradip Kumar Choubey] [Rakesh Mishra] Judicial Member Accountant Member Dated: 24.02.2026 Bidhan (Sr. P.S.) ITA No.: 542/CTK/2025 Assessment Year: 2024-25 Anupama Infotech Private Limited. Copy of the order forwarded to:
Anupama Infotech Private Limited, Ranjeet Kumar Dash, At- Lalbazar, 11A, Ward No-04, Baripada, Mayurbhanj, Odisha, 757001. 2. ITO, Ward-1, Baripada.
CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Cuttack Benches, Cuttack.
Guard File. //// By order