Adjustment under Section 143(1) cannot be made on debatable issues without giving an intimation to assessee
Deepak Gupta | May 17, 2022 |
Adjustment under Section 143(1) cannot be made on debatable issues without giving an intimation to assessee
The Income Tax Appellate Tribunal (ITAT) in the matter of Arham Pumps Vs. DCIT ruled out that Adjustment under Section 143(1) cannot be made on debatable issues without giving an intimation to assessee.
The assessee is a partnership firm. For the Asst.Year 2018-19, the assessee filed its return of income on 19.10.2018 declaring total income at Rs.26,03,941/-. The return of income was processed under section 143(1) of the Income Tax Act, 1961 (“the Act” for short) and on 19.10.2019 by the Centralized Processing Centre and determined total income at Rs.28,16,680/- thereby making an addition of Rs.2,10,743/- on the returned income.
Further, “the assessee filed its return of income on 19.9.2018 and admitting total income of Rs.26,03,940/-. The same was processed under section 143(1) on 19.10.2019. The said intimation is in the form of calculation in tabulated columns running into seven pages. There are two main columns; one column description showed “as provided by Taxpayer in Return of Income” and another column showed “As computed under section 143(1)”. There is no description in this intimation or explanation/note why such disallowance or addition made by the CPC in the 143(1) proceedings.”
In this case addition was made by NFAC on debatable issue viz. disallowance made under section 36(1)(va) of the Act in 143(1)(a).
As per Taxpayer, there are divergent views are being expressed by various High Courts on late payment of PF & ESI. NFAC is totally incorrect in upholding the additions made in the assessment framed under section 143(1) of the Act, wherein a debatable issue cannot be considered.
The Tribunal commented that the ld. NAFC has not looked into this fundamental principle of “audi alterm partem”, which has not been provided to the assessee as per the 1st proviso of section 143(1) of the Act, but proceeded with the case on merits and also confirmed the addition made by the CPC. The ld.NAFC is thus erred in conducting the faceless appeal proceedings in a more mechanical manner without application of mind. We therefore hereby quash the intimation issued by the CPC and allow the appeal filed by the assessee.
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