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Income Tax Appellate Tribunal, PUNE “B” BENCH : PUNE
Before: SHRI SATBEER SINGH GODARA & DR. DIPAK P. RIPOTE
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.
Learned counsel refers to the assessee’s substantive 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.”
It is at this stage that the learned counsel raises his 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.
We have given our thoughtful consideration to the 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.
This assessee’s appeal is allowed in above terms.
Order pronounced in the open Court on 27.09.2024.