Evergreen Traders (P)Ltd, Kolkata vs Department Of Income Tax

IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH: KOLKATA [Before Shri P. K. Bansal, AM & Shri Mahavir Singh, JM]

I.T.A No.1221/Kol/2012 Assessment Year: 2010-11 Income-tax Officer, Wd-5(3), Kolkata Vs. M/s. Evergreen Pvt. Ltd. (PAN: AAACE 5794N) (Appellant) (Respondent) Date of hearing: 29.06.2015 Date of pronouncement: 27.07.2015

For the Revenue: Shri Debashis Roy, JCIT, Sr. DR For the Assessee: Shri S.L.Kochar, Advocate & Shri Anil Kochar, Advocate

ORDER

Per Shri Mahavir Singh, JM:

This appeal by revenue is arising out of order of CIT(A)-VI, Kolkata in Appeal No. 77cita-VI/Wd-5(3)/1/12/Kol dated 18.06.12. Assessment was framed by ACT(CPC), u/s. 154 of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Year 2010-11 vide order dated 01.09.2011.

2. The only issue in this appeal of Revenue is against the order of CIT(A) deleting the addition made by Assessing Officer u/s 143(1) of the Act. For this, Revenue has raised following effective ground:-

"1. That on the facts and circumstances of the case, Ld. CIT(A) erred in law in deleting the addition made by the AO on account of income under the head 'business income' of Rs.29,27,384/- in the order u/s. 143(1) of the I.T. Act, 1961 without appreciating the fact that the order u/s.154 is based on processing u/s. 143(1) of the I.T. Act, which has been done electronically. Since there is no scope of any manual consideration and the logical analysis of the date provided by the assessee also does not support the claim of the assessee but confirms the action of the CPC, the order u/s. 154 should be restored."

3. Briefly stated facts are that assessee filed its return of income for AY 2010- 11 on 28.09.2010. The CPC Bengaluru processed the return of income filed by assessee-company through e-filing at an amount of Rs.52,33,210/- against the income declared by assessee at Rs.23,05,830/-. Aggrieved against the processing done by CPC Bengaluru u/s 143(1) of the Act filed an application u/s./ 154 of the Act before CPC Bengaluru. But assessee did not get the rectification done as requested by it. Aggrieved, assessee filed appeal before CIT(A) who deleted the 2 ITA No.1221/K/2012 M/s Evergreen Traders (P) Ltd. AY 2010-11

disallowance. Aggrieved, now Revenue is in appeal before the Tribunal.

4. We have heard rival submissions and gone through the facts and circumstances of the case. We find that the assessee has shown in the computation of income in Col. No. 15 Part-B of TTI at Sl. No.2 as "NIL" income from profit and gains. The assessee has declared total income u/s. 115JB of the Act at an amount of Rs.23,05,830/-. However, the CPC, Bengaluru while processing the return taken the figure of Rs.52,33,210/- as income from business or profession. We find from the accounts of the assessee that the balance sheet and profit and loss account are duly audited. A copy of return of income for AY 20010-11, which was filed electronically by assessee in Form No ITR-6, and copy of computation of income where an amount of Rs.23,05,830/- has been shown as total income u/s 115JB of the Act and thus taking same as income from business or profession in the order u/s. 143(1) is a mistake apparent from record. We are of the view that this adjustment cannot be done by AO while processing return of income u/s. 143(1) of the Act. The CIT(A) allowed the appeal of the assessee by observing in para 9 & 10 as under:-

"9. The Assessing Officer cannot take the advantage of innocence or mistake of the assessee to penalise him with taxing an amount which has not been shown as income by the assessee and charging more income tax than what is due from him. The Central Board of Direct Taxes and the appellate authorities have repeatedly held that the department should not charge more income tax than due in case the assessee commits some mistake in filing of the form or unknowingly offer some income for taxation which is otherwise exempted or to charge higher rate of taxation than the rate provided in the Act. In case of such situation the appellate authorities have a duty to correct the same. The appellant also submitted that apparently there is no mistake committed by him in filing of the various columns provided in the proforma of the Income Tax Return to be filed electronically (e- filled). But, even if there is any communication gap because of un-amendable proforma, he should not be penalised with higher taxes.

10. Therefore, in view of the facts and circumstances, the addition of Rs.29,27,384/- in the order u/s. 143(1) of the I. T. Act, 1961 is deleted. The appellant gets a relief of Rs.29,27,384/-. These grounds of appeals are accordingly allowed."

5. We find from the above facts that the AO of CPC Bengaluru has made adjustment to the returned income by the amount of Rs.29,27,384/- by making adjustment u/s. 115JB of the Act. Whether this can be adjusted while acting u/s. 143(1) of the Act because adjustment under the provisions of section 115JB of the 3 ITA No.1221/K/2012 M/s Evergreen Traders (P) Ltd. AY 2010-11

Act in respect to gross receipts of business is a debatable issue and this cannot be done while making prima facie adjustment. We have gone through the provisions of the Act i.e. section 143(1)(a) of the Act and it is perused that the extent and ambit of the prima facie adjustments to be made under the first proviso to section 143(1)(a) are as -What were permissible, under the first proviso to section 143(1)(a), to be adjusted were (i) only apparent arithmetical errors in the return, accounts or documents accompanying the return, (ii) loss carried forward, deduction, allowance or relief, which was prima facie admissible on the basis of information available in the return but not claimed in the return, and, similarly, (iii) those claims which were on the basis of the information available in the return, prima facie inadmissible, were to be rectified/allowed/disallowed. This only meant that, at that stage, only errors apparent on the face of the record alone might be corrected. It is further noticed that even this was permissible on the basis of the information accompanying the return.

The Assessing Officer was not permitted under this guise of making adjustment to adjudicate upon any debatable issue. The Assessing Officer had no power to go beyond or behind the return, accounts or documents, either in allowing or in disallowing any such deduction, allowance or relief. This view is expressed by Hon'ble Bombay High Court in the case of Khatau Junkar Ltd. v. K.S. Pathania, (1992) 196 ITR 55(Bom). Under the guise of effecting an adjustment under the first proviso to section 143(1)(a), the Assessing Officer could not decide debatable issues. Unless the inadmissibility of a deduction was evident and obvious (as in the case of section 154) from the return and its annexures, the Assessing Officer who wanted to disallow a deduction or a claim, was bound to follow the procedure under section 143(2) of giving a notice to the assessee; and that no substantial adjustments, which required examination of evidence or which would require a hearing, were contemplated under section 143(1)(a). The assessee was entitled to a notice under section 143(2) even though the result of the hearing and consequential disposal might lead to the same result.

In other words, the fact that on ultimate analysis, the assessee might not be entitled for the deduction claimed from the total income did not mean that recourse could be had to disallowance under section 143(1)(a), dispensing with, hearing and denying opportunity to the assessee to challenge the disallowance. Accordingly, 4 ITA No.1221/K/2012 M/s Evergreen Traders (P) Ltd. AY 2010-11

the disallowances as made by AO u/s. 143(1) of the Act are deleted and the appeal of the revenue is dismissed.

6. In the result, the appeal of revenue is dismissed.

7. Order is pronounced in the open court on __27th July, 2015.

Sd/- Sd/- (P. K. Bansal) (Mahavir Singh) Accountant Member Judicial Member

Dated : 27th July, 2015

*Dkp-P.S.

Copy of the order forwarded to:

1. APPELLANT - ITO Ward-5(3), P-7, Chowringhee Square, 8th floor, Kolkata-700 069 2 Respondent -M/s Evergreen Traders Pvt. Ltd. 36, Strand Road, 1st Floor, Room No. 8, Kolkata - 700 001

3. The CIT(A), Kolkata

4. CIT Kolkata

5. DR, Kolkata Benches, Kolkata

/True Copy, By order,

Asstt. Registrar.