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Facts
The assessee filed its income tax return for AY 2019-20 on 01-11-2019, after experiencing difficulties in uploading it by the due date. The return was processed under Section 143(1)(a) with several disallowances, including those under Sections 36(1)(va) and 80JJAA, leading to a demand. The assessee filed a rectification application under Section 154, which was partly accepted.
Held
The CIT(A) dismissed the assessee's claim, stating that the original cause of action arose at the stage of proceedings under Section 143(1), not Section 154, and therefore the appeal against the Section 154 order was not maintainable. The Tribunal disagreed, opining that the CIT(A) should have considered the assessee's claims on merits.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal against the Section 154 order without considering the merits of the disallowances made under Section 143(1)(a).
Sections Cited
143(1)(a), 36(1)(va), 43B, 80JJAA, 154
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Income Tax Appellate Tribunal, ‘A’ BENCH : BANGALORE
Before: SMT. BEENA PILLAI & SHRI WASEEM AHMED
ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal arises out of order dated 06/02/2024 passed by NFAC, Delhi for A.Y. 2019-20.
Page 2 of 5 ITA No. 448/Bang/2024
Brief facts of the case are as under: 2.1. It is submitted that the assessee filed its return of income for Asst Year 2019-20 on 01-11-2019 at 00.08 AM after experiencing difficulties in uploading the ITR — 6 on the due date viz. 31-10- 2019.
2.2. It is submitted that subsequently, a communication u/s. 143(1)(a) dated 26-2-2020 was received proposing following adjustments:
Under Section 143(1)(a)(iv) / 143(1)(a)(ii) Amount disallowable u/s 36(1)(va) Rs. 46,520 Amount disallowable u/s 43B Rs. 56,00,000 Under Section 143(1)(a)(ii) Disallowance of deduction claimed u/s 80JJAA as return filed after due date Rs. 16,72,686 ___________________ 73,19,206 ___________________ 2.3. In response to the same a revised tax audit report was submitted by the assessee on 10-03-2020 and appropriate response was furnished regarding each item of the proposed adjustment.
2.4. The return was then processed u/s. 143(1) and intimation dated 08-05-2020, without considering the response and Rs. 73,19,206 was added to the returned income raising a demand of Rs. 18,87,326.
Page 3 of 5 2.5. The assessee then immediately filed a rectification application on 24/02/2021 and same was processed on 03/04/2021 by restricting disallowances as under:
Disallowable u/s 36(1)(va) Rs. 46,520 Disallowance of deduction claimed u/s 80JJAA Rs. 16,72,683 _________________ 17,19,203 _________________ Aggrieved by the rectification order dated 03/04/2021, assessee preferred appeal before the Ld.CIT(A).
2.6. The Ld.CIT(A) dismissed the claim of the assessee by observing as under: “4.2 In this case, the CPC had made disallowance u/s 36(1)(va) of the I.T Act to a sum of Rs. 46,520/- and disallowance of deduction claimed u/s 80JJAA to a sum of Rs. 16,72,683/-during the year under consideration while processing the return u/s 143(1). The appellant could have filed an appeal against the intimation u/s 143(1) as per the provisions of the Act. However, it appears that the appellant has not filed an appeal against the intimation u/s 143(1). Thereafter, the appellant has filed an application u/s 154 before the CPC which has been rejected and hence the appellant has filed the present appeal against the order u/s 154. In this regard, it is stated that the original cause of action in the present case had arisen at the stage of the proceedings u/s 143(1) and not u/s 154. The appellant is trying to make a back door entry by filing an appeal against the order u/s 154, the original cause of action for which had arisen at an earlier point of time during the proceedings u/s 143(1). Therefore, as the original cause of action has arisen at the stage of 143(1), the issue cannot be adjudicated upon in the present appeal and further there is no mistake apparent from record at the stage of 154. Therefore, the grounds of appeal are dismissed.”
Page 4 of 5 We have perused the submissions advanced by both sides in the light of records placed before us.
It is noted that the original return was processed u/s. 143(1)(a) on 08/05/2020, making various disallowance along with disallowance u/s. 36(1)(va), disallowance of deduction claimed u/s. 80JJAA of the act. The assessee filed rectification application u/s. 154 on 24/02/2021 which was partly accepted. In our view the Ld.CIT(A) should have considered the claims of assessee on merits of the additions that were retained in the order u/s. 154 of the act. In our view, the assessee has not committed any error by filing a rectification petition against the original intimation issued u/s. 143(1) dated 08/05/2020.
3.1. We therefore in the interest of justice, remand the issue back to the Ld.AO to consider the claims of the assessee on the above two issues in accordance with law having regard to the evidences filed by the assessee. Needless to say that proper opportunity of being heard must be granted to the assessee in accordance with law. Accordingly, ground nos. 4 – 6 (a) to (b) stands allowed for statistical purposes.
In respect of ground nos. 1-3, we are not inclined to express any opinion at this stage considering the smallness of the addition. It is kept open for the assessee to be raised in an Page 5 of 5 appropriate circumstances if required before an appropriate forum. In the result, the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open court on 28th August, 2024.