ITAT Quashes Rs. 1.62 Crore Adjustment Made Without Giving Proper Reason or Issuance of Notice:

ITAT Quashes Rs. 1.62 Crore Adjustment Made Without Giving Proper Reason or Issuance of Notice ITAT Kolkata ruled that the tax authorities had wrongly made a Rs. 1.62 crore adjustment under Section 143(1) without giving reasons and without issuing a notice. The tribunal set aside the order in question and deleted the addition. Fully allowed the appeal of the company. A company named Bilatibari Tea Company Private Limited has filed the current appeal before the ITAT Kolkata, challenging an order dated March 05, 2025, passed by the NFAC/CIT(A) under section 250 of the Income-tax Act, 1961. The impugned order had disallowed the assessee's amount of Rs. 1.62 crore from the reported income through making an adjustment under Section 143(1)(a)(ii).

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The company filed its income tax return (ITR) for the assessment year 2013-14, declaring total income at Rs. 38,74,130. During return processing, the Assessing Officer (AO) assessed the total income of the company at Rs. 2.01 crore by making an adjustment of Rs. 1.62 crore in the return. The dissatisfied company filed an appeal before the CIT(A). The CIT(A) partially allowed the appeal by restoring the appeal and sending the case back to the Assessing Officer (AO) for fresh consideration. Directed the AO to re-verify the claims made by the assessee company in its ITR. Dissatisfied with the action of the CIT(A), the assessee company filed an appeal before the ITAT Kolkata. After hearing both sides and checking the records, the Tribunal found that the Assessing Officer/CPC wrongly increased the assessee’s income while processing the return under Section 143(1). There was no calculation mistake and no wrong claim in the return filed by the assessee.

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The AO/CPC made adjustments without giving reasons and without issuing a notice under Section 143(2), which is beyond their authority. Since the income was correctly calculated and expenses and depreciation were properly claimed, the adjustment made under Section 143(1)(a) is not valid in law. Therefore, in conclusion, the tribunal set aside the impugned order of the CIT(A) and deleted the addition made by the AO. Allowed the appeal of the assessee in full.