2023 (1) TMI 35 - AT - Income Tax

Tribunal grants appeal on tax deduction dispute, directs assessing officer to vacate demand.

Srijani Farmers Society For Rural Livelihood Development Versus I.T. Deptt., NFAC, Delhi

The Tribunal allowed the appeal of the assessee regarding the disallowance of deduction under Chapter VI of the Income-tax Act. The Tribunal held that the ... Demand raised in the computation sheet - deduction claimed u/s 80P(2) has not been taken into account - HELD THAT:- We find that the submission made by the ld. Counsel are worth considering and the demand raised in the computation sheet is not in agreement with assessment order passed by the ld. AO. We refer to the provisions of section 156 of the Act relating to notice of demand according to which the assessee shall be served with a notice of demand in the prescribed form when any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act. It is important to note that the sum payable has to be in consequence of an order passed under the Act. In the present case before us, the computation sheet and demand payable is not in consequence with the assessment order passed by the ld. A.O wherein the return has been accepted without any modification and assessed as such. Accordingly we direct to the ld. AO to vacate the demand so raised. Ground No.3 taken by the assessee is allowed. Issues:1. Disallowance of deduction under Chapter VI of the Income-tax Act2. Exemption of total income under section 10(1) of the Act3. Discrepancy between the computation sheet and assessment order under section 143(3)4. Applicability of interest charged under sections 234A, 234B, 234C, and 234FAnalysis:1. The appeal pertains to the disallowance of a claim of deduction under Chapter VI of the Income-tax Act. The assessee, a registered society engaged in agricultural activities, filed its return of income claiming a deduction under section 80P(2) of Chapter VI-A. The assessment order accepted the returned income as assessed income under section 143(3). However, a demand was raised in the computation sheet, not accounting for the deduction claimed under section 80P(2), leading to a disagreement between the computation sheet and the assessment order.2. The Tribunal considered the arguments presented by the assessee's counsel, emphasizing that the returned income was accepted without modification, and any tax demand payable should align with the return filed. The counsel contended that the demand raised was void ab initio as the tax payable in the return was already settled as self-assessment tax. The Tribunal found merit in the counsel's submissions, noting that the demand in the computation sheet did not correspond to the assessment order. Citing section 156 of the Act, which requires the sum payable to be in consequence of an order passed, the Tribunal directed the assessing officer to vacate the demand as it was not in line with the accepted assessment.3. As a result of the above analysis, the Tribunal allowed the appeal of the assessee, specifically granting relief on the issue of the discrepancy between the computation sheet and the assessment order. The Tribunal highlighted that the other grounds raised by the assessee were not addressed as they would be considered a mere academic exercise in light of the allowed ground. The judgment was pronounced in open court on a specified date.This detailed analysis of the legal judgment addresses the issues raised in the appeal comprehensively, providing insights into the Tribunal's decision-making process and the application of relevant provisions of the Income-tax Act.