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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI INTURI RAMA RAO & SHRI VINAY BHAMORE
This is an appeal filed by the assessee directed against the order of National Faceless Appeal Centre, Delhi dated 24.01.2024 for the assessment year 2017-18.
Briefly, the facts of the case are that the appellant is an individual engaged in the business of execution of contracts. The appellant filed the return of income for the A.Y. 2017-18 on presumptive basis u/s.44AD declaring income of Rs.14,66,570/-. The said return of income was processed by the DCIT, CPC, Bengaluru vide intimation u/s.143(1) assessing the income at 50% of the gross receipts shown in Form No.26AS treating the gross receipts as per the specified profession.
Being aggrieved by the said intimation, the appellant filed rectification petition and the same was rejected vide order passed u/s.154 on 29.01.2019.
Being aggrieved by the order of rectification, the appellant filed an appeal before the CIT(A)/NFAC who vide impugned order dismissed the appeal for non-prosecution without dealing with the merits of the addition.
When the appeal was called on, none appeared on behalf of 5. the appellant despite due service of notice of hearing. After hearing the ld. DR and perusing the material on record, we proceed to dispose of the appeal ex parte qua the appellant.
Heard ld. Sr.DR and perused the relevant material on record. The issue in the present appeal is with regard to applicability of presumptive provisions of tax u/s.44ADA of the Act. Undisputedly, it is the contention of the appellant that Form No.26AS was wrongly uploaded by the deductor showing the contract receipts as professional receipts.
No doubt, the appellant could not adduce any evidence in support of the contention that he was deriving the income from the business of execution of contracts. However, it is undisputed fact that the appellant had not disclosed the income on presumptive basis u/s.44ADA but under the provisions of section 44AD of the Act. Then, the question that arises for our determination is whether the CPC was justified in invoking the provisions of section 44ADA of the Act. The scope of adjustments u/s.143(1) is defined as under :
“143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:—
(a) the total income or loss shall be computed after making the following adjustments, namely:— (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure 97[or increase in income] indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under 98[section 10AA or under any of the provisions of Chapter VI-A under the heading "C.—Deductions in respect of certain incomes", if] the return is furnished beyond the due date specified under sub-section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return:
Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode:
Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made:
Provided also that no adjustment shall be made under sub-clause (vi) in relation to a return furnished for the assessment year commencing on or after the 1st day of April, 2018; (b) the tax, interest and fee, if any, shall be computed on the basis of the total income computed under clause (a); (c) the sum payable by, or the amount of refund due to, the assessee shall be determined after adjustment of the tax, interest and fee, if any, computed under clause (b) by any tax deducted at source, any tax collected at source, any advance tax paid, any relief allowable under section 89, any relief allowable under an agreement under section 90 or section 90A, or any relief allowable under section 91, any rebate allowable under Part A of Chapter VIII, any tax paid on self-assessment and any amount paid otherwise by way of tax , interest or fee; (d) an intimation shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to, the assessee under clause (c); and (e) the amount of refund due to the assessee in pursuance of the determination under clause (c) shall be granted to the assessee:
Provided that an intimation shall also be sent to the assessee in a case where the loss declared in the return by the assessee is adjusted but no tax, interest or fee is payable by, or no refund is due to, him:
Provided further that no intimation under this sub-section shall be sent after the expiry of 99[nine months] from the end of the financial year in which the return is made.
Explanation.—For the purposes of this sub-section,— (a) "an incorrect claim apparent from any information in the return" shall mean a claim, on the basis of an entry, in the return,— (i) of an item, which is inconsistent with another entry of the same or some other item in such return; (ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction; (b) the acknowledgement of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a).”
In our considered opinion, the CPC had travelled beyond the scope of power of adjustment prescribed u/s.143(1) of the Act. Therefore, the prima-facie adjustment made by the CPC vide intimation u/s.143(1) is hereby set-aside.
In the result, the appeal filed by the assessee stands allowed. Order pronounced on this 06th day of May, 2024.