SUNIL BANKATLAL DESADLA,PUNE vs. ITO, WARD-5(1), PUNE, PUNE

PER SATBEER SINGH GODARA, J.M. :

This assessee’s appeal, for assessment year 2021-22,

arises against the National Faceless Appeal Centre [in short

the “NFAC”] Delhi’s Din and Order No. ITBA/NFAC/S/250/

2023-24/1058732700(1), dated 13.12.2023, in proceedings

u/s.154 of the Income Tax Act, 1961 (in short “the Act”).

Heard both the parties. Case file perused.

grounds raised in the instant appeal that both the lower

authorities have erred in law and on facts by rectifying section

143(1) “processing” under section 154 of the Act thereby

2 ITA.No.1451/PUN./2023

enhancing section-80IA(4) deduction disallowance to the tune

of Rs.24,23,653/- than that already allowed of Rs.98,24,640/.

He takes us to the CIT(A)-NFAC's detailed discussion to the

effect reading as under :

“4.3. Ground No. 3 & 4 relates to adjustment of

Rs.98,24,640/- claimed under chapter VIA in the order

passed u/s 154 of the Act thereby enhancing the total

income :

4.3.1. In this case, the return of income for AY 2021-22

was processed u/s 143(1) of the Act on 11.08.2022

wherein adjustment of Rs.87,46,388/- was made u/s

143(1)(a)(ii) of the Act on account of incorrect claim. The

appellant filed rectification request on 22.12.2022 against

the adjustments in the intimation. The CPC passed the

rectification order on 11.01.2023 and enhanced the

amount of demand to Rs.54,83,210/- and also the amount

of total income to Rs.3,58,92,792/-. Out of the adjustment

of Rs.87,46,388/- made in the intimation dated

11.08.2022, an amount of Rs.10,22,912/- was reduced

and the balance of Rs.77,23,476/- was retained.

Secondly, claim of deduction of Rs.98,24,640/- under

Chapter VIA, which was fully allowed in the intimation

order u/s 143(1), was denied in the rectification order. The

3 ITA.No.1451/PUN./2023

appellant has preferred this appeal against the

rectification order.

4.3.2. The appellant has submitted that an

adjustment of Rs.98,24,640/- was made by the CPC while

passing the order u/s 154 of the Act. This amount was

claimed as deduction u/s 801A under chapter VIA of the

Act which has resulted into enhancing of the total income.

The appellant has submitted that this deduction was fully

allowed in the intimation u/s 143(1) of the Act.

4.3.3. The appellant has submitted that adjustment

has resulted into enhancement of total income and the

CPC has passed this order without providing reasonable

opportunity of being heard. In this regard, on perusal of

data available on ITBA, it is seen that the CPC has issued

notice to the appellant on 11.04.2022 for proposed

adjustments u/s 143(1)(a) of the Act. The intimation for

proposed adjustments is sent for incorrect claim u/s

143(1)(a)(ii) of the Act and this includes the adjustment

against the claim made by the appellant in schedule VI-A

of the Act, which the appellant has raised the same issue

in this ground. Further, it is seen that this adjustment was

not made in the intimation dated 11.08.2022 passed u/s

143(1) of the Act. In this regard, it is observed that the CPC

has already sent the intimation of adjustment on the issue

4 ITA.No.1451/PUN./2023

of schedule VI-A claim which was ultimately made in the

order passed u/s 154 of the Act. Therefore, the contention

of the appellant that the CPC has not given the opportunity

of being heard is not correct and hence this contention is

dismissed.

4.3.4. On examination of the facts of the case, with

regard to the merit of this ground of appeal, it is seen that

adjustment of Rs.98,24,640/- was made u/s. 143(1)(a)(ii)

of the Act on account of incorrect claim. Further, on perusal

of rectification order passed u/s 154 as well as 143(1) of

the Act, it is observed that CPC has made remarks

"Assessee cannot claim deductions under part C (Sl. No.2)

of schedule VI-A more than Net Profit or loss from business

or profession other than speculative business and

specified business Hence amount at Sl. No. 2 of schedule

VI-A is recomputed accordingly after applying rule 7A, 7B

or 8, if applicable and after adjusting the current &

brought forward losses and reducing income on

presumptive basis" while making adjustments. This

adjustment was made in full in the order u/s 154 of the

Act however the CPC has computed deduction claimed u/s

801A in schedule VI-A at Rs.74,00,987/- as against

Rs.98,24,640/- thereby arising variance of Rs.24,23,653/-

. On perusal of audit report for FY 2020-21, it is observed

that deduction under chapter VIA of Rs.1,00,09,640/- is

5 ITA.No.1451/PUN./2023

reported at schedule 33 pertaining to sl. No.33 of Form

3CD report. This amount includes amount of

Rs.98,24,640/- claimed u/s 801A of the Act. Further, on

perusal of ITR for AY 2021-22, it is seen that appellant has

filled amount of Rs.98,24,640/- at sl. no. 2 of schedule

VIA. In schedule BP at sl. no. 38, the appellant has filled

an amount of Rs.74,00,987/-. Further on perusal of

schedule CYLA and BFLA, it is seen that current year's

non-speculative business income remaining after set off is

at Rs.74,00,987/-, In this circumstances, claim deductions

under part C (SI. No.2) of schedule VI-A cannot be more

than Net Profit or loss from business or profession other

than speculative business and specified business and

after adjusting the current & brought forward lossess and

reducing income on presumptive basis. Therefore, the

deduction claimed u/s 801A in schedule VIA cannot

exceed Net Profit or loss from business or profession other

than speculative business, hence this claim is restricted to

Rs.74,00,987/- and the remaining amount of

Rs.24,23,653/- is disallowable in this case. It is noted that

the appellant has not submitted any argument or written

submission on merit for claiming the amount of

Rs.98,24,640/- in full.

4.3.5. Considering the above facts and circumstances

of the case, it is observed that the appellant is eligible for

6 ITA.No.1451/PUN./2023

claim of deduction of Rs.74,00,987/- u/s 801A in

schedule-VIA against the claim of Rs.98,24,640/- in the

ITR and the remaining amount of Rs.24,23,653/- needs to

be disallowed in this case. The AO is directed to grant

relief accordingly. Hence, the sole issue in ground no. 3

and 4 is partially allowed.”

first and foremost legal argument that both the lower

authorities have made the impugned disallowance

Rs.24,23,653/- without issuing any statutory notice

u/sec.154(3) of the Act and therefore, the same deserves to be

deleted for the precise reason of being violative of the said

provision. He further quotes [2024] 162 taxmann.com 2

(Telangana) Apollo Speciality Hospital (P.) Ltd. vs. DCIT

deleting such an enhancement without prior notice in very

terms. The Revenue has drawn strong support from the

CIT(A)-NFAC’s above extracted detailed discussion for the

reason that the assessee had been duly heard vide notice

dated 11.04.2022 and therefore, it's instant sole substantive

grievance deserves to be rejected.

foregoing vehement rival stands and see no merit in Revenue’s

arguments. We make it clear first of all that the CPC had

processed the assessee’s return under section 143(1) of the Act

7 ITA.No.1451/PUN./2023

on 11.08.2022 accepting sec.80IA claim of Rs.98,24,640/-.

That being the case, it is evident that the Revenue’s reliance

on the so-called notice dated 11.04.2022 carries no substance

since the same had been issued well before sec.143(1)

“processing” dated 11.08.2022 than finalising the rectification

herein on 11.01.2023. Faced with this situation, we are of the

considered view that the impugned admitted enhancement of

Rs.24,23,653/- deserves to be deleted being not sustainable in

law in very terms. Ordered accordingly.

Order pronounced in the open Court on 27.09.2024.

Sd/- Sd/- [DR. DIPAK P. RIPOTE] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER

Pune, Dated 27th September, 2024

VBP/-

Copy to

//By Order//

//True Copy //

Sr. Private Secretary, ITAT, Pune Benches, Pune.