Income classification: amounts declared under appropriate heads and supported by a tax audit report must not be re-added in assessment processing.

Whether amounts already declared in the return and supported by the tax audit report could be re-added in assessment processing: ITAT held that receipts classified as rent (income from house property) and other receipts, certified in Form 3CA/3CD as not credited to the profit and loss account and offered to tax under appropriate heads, cannot be added again to business income in an intimation under assessment processing; the addition was deleted and the assessing officer directed to accept the returned income.

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Issues: Whether the addition of Rs. 6,85,286 made in the intimation under section 143(1)(a) and confirmed by the Commissioner (Appeals) is sustainable where the same amounts were already declared in the return of income and supported by the tax audit report (Form 3CA/3CD) as income from house property and income from other sources.

Analysis: The returned income and accompanying tax audit report (Form 3CA/3CD) show itemised receipts classified as rent (income from house property) and other receipts (income from other sources) and recorded in column 16(d) as amounts not credited to the profit and loss account. The intimation under assessment processing added the same receipts to business income despite their prior declaration under the appropriate heads. The assessee also sought rectification under the applicable provision for reprocessing the return and filed grievance, and produced the return acknowledgment, detailed computation and the tax audit report before the appellate forum. The factual record establishes that the amounts added in the intimation were already offered to tax in the return and supported by the auditor's certification.

Conclusion: The addition of Rs. 6,85,286 is deleted and the order of the Commissioner (Appeals) confirming the addition is set aside; the Assessing Officer is directed to accept the returned income of the assessee.

Ratio Decidendi: Where amounts have been offered to tax in the return and are supported by the tax audit report as amounts not credited to the profit and loss account and classified under appropriate heads, an addition of the same amounts in the intimation under assessment processing cannot be sustained and must be deleted.

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