2022 (6) TMI 1097 - AT - Income Tax

ITAT Allows Appeal, Overturns Disallowances under Income Tax Act

The ITAT allowed the appeal, deleting the disallowances made under section 143(1)(a) of the Income Tax Act, 1961, regarding adjustments and reductions in ... Exemption u/s 11 - intimation u/s 143(1) from CPC Bengaluru making certain adjustment as regards deduction claimed under section 11(2) which according to the assessee have been incorrectly disallowed since assessee’s case - HELD THAT:- As relying in own case [2022 (6) TMI 1079 - ITAT AHMEDABAD] disallowances were being made under section 143(1) of the Act, and similar disallowance is also made for the present year viz. Asst.Year 2016-17, we hold that debatable issue should not be done in an intimation under section 143(1)(a) of the Act. Therefore, we allow the appeal of the assessee and delete both the disallowances. Assessee appeal allowed. Issues:1. Adjustment made under section 143(1)(a) of the Income Tax Act, 1961.2. Reduction of claim for deduction under section 11(1)(A) of the Income Tax Act, 1961.3. Reduction in claim for deduction under section 11 of the Income Tax Act, 1961.4. Determination of assessed income under section 11(3)(c) of the Income Tax Act, 1961.Issue 1: Adjustment under Section 143(1)(a) of the Income Tax Act, 1961:The appellant challenged the adjustments made under section 143(1)(a) of the Income Tax Act, contending that they were beyond the scope of the provisions of the Act. The Commissioner of Income Tax (Appeals) upheld the adjustments, stating that the law authorized the Assessing Officer to make such adjustments. The appellant argued that the adjustments disallowing deductions were incorrect and not in line with the Calcutta High Court's decision supporting their case. The ITAT noted that the appeal was time-barred but allowed it due to exceptional circumstances related to the COVID-19 pandemic. On merits, the ITAT referred to a previous order in the assessee's case for the preceding assessment year, where similar disallowances were deleted, emphasizing that debatable issues should not be decided in section 143(1)(a) intimation. Consequently, the ITAT allowed the appeal, deleting the disallowances.Issue 2: Reduction of Claim for Deduction under Section 11(1)(A) of the Income Tax Act, 1961:The appellant contested the reduction of the claim for deduction under section 11(1)(A) of the Income Tax Act, stating that the allowed deduction was less than the claimed amount. The ITAT, following a Co-ordinate Bench decision in the appellant's own case for the previous year, allowed the appeal and deleted the disallowance, emphasizing that debatable issues should not be decided in an intimation under section 143(1)(a) of the Act.Issue 3: Reduction in Claim for Deduction under Section 11 of the Income Tax Act, 1961:The appellant also challenged the reduction in the claim for deduction under section 11 of the Income Tax Act, arguing that the allowed deduction was lower than the claimed amount. The ITAT, relying on the Co-ordinate Bench decision in the appellant's previous year's case, allowed the appeal and deleted the disallowance, reiterating that debatable issues should not be addressed in a section 143(1)(a) intimation.Issue 4: Determination of Assessed Income under Section 11(3)(c) of the Income Tax Act, 1961:The appellant disputed the determination of the assessed income at a specific amount under section 11(3)(c) of the Income Tax Act, contending that the income shown under this section should not be assessable separately from other income. The ITAT allowed the appeal, referencing a previous order in the appellant's case for the preceding assessment year, where similar disallowances were deleted, emphasizing that debatable issues should not be decided in section 143(1)(a) intimation. Consequently, the ITAT allowed the appeal, deleting the disallowances and ruling in favor of the appellant.This comprehensive analysis of the judgment highlights the key issues raised by the appellant, the arguments presented, the decisions made by the ITAT, and the legal principles applied in reaching those decisions.