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Facts
The assessee filed appeals against the orders of the CIT(A) for AY 2021-22 and 2022-23. The assessee sought an adjournment, which was rejected. The core issue involved the denial of exempt income claimed by the assessee, representing partners' share of profit from a firm, in an intimation under Section 143(1).
Held
The Tribunal held that a firm not filing its return cannot claim exemption in the hands of its partners. However, the adjustment made in the intimation under Section 143(1) was found to be outside the scope of prima facie adjustments permitted by the section.
Key Issues
Whether the denial of exempt income claimed from a firm's profit by partners can be done through a Section 143(1) intimation when the firm itself has not filed its return, and if the adjustment falls within the permissible limits of Section 143(1).
Sections Cited
143(1), 154
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Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI
Before: SHRI GEORGE MATHAN & SHRI RATNESH NANDAN SAHAY
Assessee represented by Adjournment Application Department represented by Shri Rajib Jain, CIT-DR Date of hearing 06/01/2026 Date of pronouncement 06/01/2026 O R D E R PER: BENCH 1. These are the appeals filed by the assessee against the orders of the ld. CIT(A), NFAC, Delhi both dated 27/01/2025 for the A.Y. 2021-22 and 2022- 23 respectively.
The assessee has sought adjournment. As it is noticed that the issue in these appeals are very small. The adjournment application filed by the assessee is rejected and the appeals disposed off.
It was put to the ld. CIT-DR that the adjustment as done in Section 143(1) and denied under Section 154 is in respect of the exempt income claimed by the assessee representing the partners' share of profit from the firm. It was put to the ld. CIT-DR that as to how the said denial of the said exempt income can be done in an intimation under Section 143(1) in so far as it does not fall within prima facie adjustment as specified in the provisions of Section 143(1). It was submitted by the ld. CIT-DR that non-filing of the form shows & 74/Ran/2025 Subhadra Construction Vs DCIT that the firm has not filed the return and therefore, the income cannot be granted as exempt. It was a submission that the adjustment is permissible.
We have considered the submissions. The firm having not filed its return cannot make the claim of exemption in the hands of the partners, prima facie adjustment which can be done in an intimation under Section 143(1) as the adjustment as done in the intimation is found to be not falling within the parameters of prima facie adjustment as required under the provisions of Section 143(1), the intimation issued under Section 143(1) and the consequential rectification denied, stands quashed.
In the result, both the appeals of the assessee are allowed. Order announced in open court on 06/01/2026