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Income Tax Appellate Tribunal - Delhi

Vinod Malik , Faridabad vs Adit, Cpc , Faridabad on 25 November, 2022

       IN THE INCOME TAX APPELLATE TRIBUNAL
             DELHI BENCH 'H', NEW DELHI
          Before Sh. C. N. Prasad, Judicial Member
           Dr. B. R. R. Kumar, Accountant Member

     ITA No. 1635/Del/2021 : Asstt. Year : 2019-20
Vinod Malik,                          Vs   ADIT,
Opp. Jain Mandir Main Bazaar Ballab        CPC,
Garh, Faridabad, Haryana-121004            Faridabad
(APPELLANT)                                (RESPONDENT)
PAN No. AJFPM5466Q

                 Assessee by : Sh. Ajay Kumar Gupta, Adv.
                 Revenue by : Ms. Rajeshwari R., Sr. DR

Date of Hearing: 12.09.2022      Date of Pronouncement: 25.11.2022


                                 ORDER

Per Dr. B. R. R. Kumar, Accountant Member:

The present appeal has been filed by the assessee against the order of National Faceless Appeal Centre (NFAC) , Delhi dated 04.08.2021.

2. Following grounds have been raised by the assessee:

"1. That in the present case, employees contribution Rs.5,70,838/- towards ESIC and EPF having been paid by the appellant employer before the date of filing return of income u/s 139(1) for the present period, such amount could not be added back in the income of the appellant declared in the return of income filed. This addition is against the well settled law on the subject.

2. That the disallowance of deduction as has been made in the present case could not be made by way of intimation u/s 143(1)(a) of the I.T. Act, 1961.

Vinod Malik Such a disallowance could be made only after providing an opportunity to the assessee to establish its claim."

3. The issue of payment of employees contribution towards the PF has been ruled against the assessee by the Hon'ble Supreme Court in the case of Checkmate Services P. Ltd. vs. Commissioner Of Income Tax-I in CA No. 2833/2016 vide order dated 12.10.2022. Hence, the ground no. 1 of the appeal of the assessee is liable to be dismissed.

4. In the ground No. 2 the assessee raised the issue of disallowing the payment without providing an opportunity to establish the claim and the intimation u/s 143(1)(a) of the Income Tax Act, 1961.

5. The provisions of Section 143(1)(a) are as under:

Assessment.

"143. (1) Whe re a return has bee n made unde r section 139, or in response to a no tice under sub-se ction ( 1) of section 142, such return shall be pro cessed in the fo llo wing manner, nam ely:--

(a) the to tal income or loss shall be computed after making the following adj ustme nts, namely:--

(i) any arithmetical erro r in the return; [***]

(ii) an incorrect claim , if such inco rrect claim is apparent from any info rmation in the return;

[(iii) disallo wance of loss claimed, if return of the previous year for which set o ff of loss is claimed was furnished beyond the due date specifie d unde r sub-sectio n ( 1) o f se ction 139;

(iv) disallowance of expe nditure indicate d in the audit report but not taken into acco unt in computing the total income in the return;

Vinod Malik

(v) disallowance of de duction claimed unde r sections 10AA, 80- IA, 80-IAB, 80-IB, 80-IC, 80-I D o r section 80-IE, if the return is furnished beyo nd the due date specified under sub-section ( 1) of sectio n 139; o r

(vi) addition o f income appearing in Form 26AS or Form 16A or Form 16 which has no t been included in computing the total income in the return:

Pro vide d that no such adjustme nts shall be m ade unless an intimation is give n to the assesse e of such adjustments eithe r in writing o r in electronic mode:

Pro vide d further that the response receive d from the assessee , if any, shall be considere d befo re making any adjustment, and in a case where no response is rece ive d within thirty days of the issue o f such intimation, such adjustments shall be made:] [Provided also that no adjustment shall be made under sub-clause

(vi) in re lation to a return furnished for the assessment ye ar commencing o n o r after the 1st day of April, 2018;]"

6. From the above, we find that the disallowance made by the CPC was in accordance with provisions of Section 143(1)(iv). The act mandates, before making an adjustment, an intimation has to be given to the assessee of such adjustment in writing or in electronic mode. The revenue could not produce evidence of sending the intimation to the assessee with regard to the proposed adjustment.

7. Failure to adhere to the mandatory procedure prescribed in statute has domino effect on the order passed u/s 143(1)(a) culminating in treating the order legally unsustainable.

Vinod Malik

8. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 25/11/2022.

           Sd/-                                   Sd/-
  (C. N. Prasad)                            (Dr. B. R. R. Kumar)
 Judicial Member                            Accountant Member
Dated: 25/11/2022
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
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