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Facts
The assessee, engaged in power generation, filed its return of income. The return was processed, and additions were made, leading to a demand. The assessee contended that the proposed adjustments were already offered to tax and should be considered void ab initio.
Held
The Tribunal noted that the CIT(A) had deleted the disallowance after examining the financial statements and finding that the amount was already offered to tax, thus avoiding a double addition. The Tribunal found the CIT(A)'s deletion to be justified.
Key Issues
Whether the addition made by the revenue constituted a double disallowance and if the CIT(A) was justified in deleting the addition.
Sections Cited
139(1), 143(1), 41(1)
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Income Tax Appellate Tribunal, DELHI ‘A’ BENCH,
Before: SHRI SATBEER SINGH GODARA, & SHRI NAVEEN CHANDRA
This appeal by the Revenue is directed against the order of the ld.
CIT(A, Thane dated 24.07.2024 pertaining to A.Y 2021-22.
The solitary grievance raised by the Revenue reads as under:
“Whether on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs.25,18,25,750/- holding the same as double disallowance without reconciling the figures reflecting in financials vis a vis ITR in respect of gain on settlement of financial liabilities-." (II) "The appellant craves to be allowed to add any fresh ground(s) of appeal and or deleted or amend any of the ground(s) of appeal."
Briefly stated, the facts of the case are that the assessee is a company engaged in business activities relating to generation of power through non-conventional and renewable energy resources. For the captioned assessment year, the assessee filed its return of income on 12.03.2022 within the stipulated time limit prescribed u/s 139(1) of the Income Tax Act, 1961 ('the Act') declaring total income of Rs. 14,85,56,220/- and claiming a refund of Rs. 50,000/-.
Thereafter, return of income was processed and the assessee was in receipt of intimation u/s 143(1) of the Act dated 13 November 2022 wherein the net total income was determined at Rs. 40,03,82,970/- by making additions to the total income of the assessee and demand of Rs. 7,80,81,730/- was raised.
At the very outset, the ld. counsel for the assessee submitted vide Ground No 1 being intimation u/s 143(1) of the Act as Void-ab-initio and bad in law. It is the say of the ld. counsel for the assessee that the Page 2 of 5 proposed in communication for proposed adjustment under section 143(1)(a)(iv) of the Act have already been included in the Profit & Loss account of the assessee and the amount under the tax audit report has only been indicated from disclosure point of view. To this extent, the amount of proposed adjustment has already been offered to tax.
Accordingly, the adjustments proposed are not in line with the said section and hence, bad in law. Therefore, the ld. counsel for the assessee prayed that the intimation issued in contravention of the provisions of the Act be held as void-ab-initio and accordingly, be quashed.
When the aggrieved assessee went in appeal before the ld. CIT(A), the ld. CIT(A) deleted the addition.
Aggrieved, the Revenue is in appeal before us.
The ld. DR relied on the orders of the AO.
We have heard the rival submissions and perused the relevant material on record. We find that the CIT(A), after examining the financial statement of the assessee, has given a finding of fact that the amount of Rs 25,18,26,746/-, as disclosed under Form 3CD as taxable under section 41(1) of the Act, has already been offered to tax in the ITR. The CIT(A) found for a fact that:
“the amount of Rs. 25,18,25,750/- (mentioned in clause 25 of Tax Audit Report) has already been offered to tax as can be seen from the Part A-P&L Ind-AS of the return of income, Sr. No. 14 (xi). ……. On perusal of the same, it is seen that amount of Rs. 297 million has been shown under the head “Other Income”. Considering the facts that this income has already been offered, the addition made by the CPC resulted in double addition. Hence, addition of Rs. 25,18,25,750/- is directed to be deleted and the appeal on this ground is hereby allowed.
We find that there is a double addition which is evident from page 36 of the Paper Book which describes an amount of Rs 24,99,83,296/- offered as profit chargeable to tax under section 41(1) of the Act and its computation. We are therefore, of the considered view that the ld. CIT(A) has justifiably deleted the addition. In that view of the matter, we have no hesitation in confirming the order of the ld. CIT(A). Ground of appeal of the Revenue is dismissed. dismissed.
Order pronounced in open court on 03.09.2025.