TaxTMI 
TaxTMI 
2024 (6) TMI 641
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....djustment. 3. The learned CIT(A) failed to appreciate that payment of cost imposed by the Hon. Court was in the course of the business and are in nature to protect the business interest and not in nature of penalty. 2. Briefly stated, facts of the case are that the return of income filed by the assessee was processed by the Computer Processing Centre (CPC), Bangalore on 02.10.2023 u/s 143(1) of the Income-tax Act, 1961 (in short 'the Act'). In the said processing/intimation order, the Assessing Officer made adjustment for the amount of Rs.1,00,00,000/- which was appearing in the relevant column/row of the tax audit report as expenditure by way of penalty or fine for violation of any law for the time being in force. The Ld. Assessing Officer issued show cause notice to the assessee and after taking into consideration reply of the assessee, the Ld. Assessing Officer made adjustment for the item of expenditure of Rs.1,00,00,000/- for payment to Tata Memorial Hospital vide his order u/s 143(1) dated 02.10.2023. The assessee filed appeal against the said intimation before the Ld. 'FAA' and challenged the legality of making addition u/s 143(1) and also the addition on merit. The Ld.....
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....nce. Therefore, these decisions rendered in an altogether different context are not found applicable to the facts of the case under consideration and hence not taken cognizance. 4.5 As stated earlier, the ground of appeal is confined, as to whether the adjustment made by CPC u/s. 143(1) is in order or otherwise. On verification of the Audit Report in form no.3CD, more particularly Column no.21(a), the CPC cannot be erred for having undertaken this adjustment as there is a stark difference between the values reported by the CA and the values incorporated in the return of income. Under such circumstances, the adjustment made by the CPC is upheld." 3. Before us, the Ld. counsel for the assessee addressing ground Nos. 1 to 3 of the appeal, referred to the various pages of the Paper Book filed on behalf of the assessee. The Ld. counsel referred to Paper Book page 9 which is part of the tax audit report filed in Form No. 3CD. The relevant clause No. 21(a) of the said report contains details of the amount debited to the profit and loss account which are mainly of the disallowable nature including capital expenditure, personal expenditure, advertisement expenditure etc. Under this cla....
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....llowing the provisions of section 143(1) of the Act communicated the assessee for the proposed adjustment not once but twice. Finally, he did not accept the response filed by the assessee and adjusted the amount to the returned income as proposed in the communication to the assessee. 5. We have heard rival submission of the parties and perused the relevant material on record. The issue in dispute in Ground No. 1 to 3 of the appeal raised is whether the Assessing Officer, in proceedings u/s 143(1) of the Act, was required to pass a speaking and reasoned order after considering the response of the assessee. For ready reference the relevant section is reproduced as under: "143(1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:- (a) the total income or loss shall be computed after making the following adjustments, namely:- (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set....
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....essee is adjusted but no tax, interest or fee is payable by, or no refund is due to, him: Provided further that no intimation under this sub-section shall be sent after the expiry of [nine months] from the end of the financial year in which the return is made. Explanation.-For the purposes of this sub-section,- (a) "an incorrect claim apparent from any information in the return" shall mean a claim, on the basis of an entry, in the return,- (i) of an item, which is inconsistent with another entry of the same or some other item in such return; (ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction; (b) the acknowledgement of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a)." 5.1 In view of clear language of the section, the Assessing Officer has taken into consideration, t....
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....hat intimation under section 143(1)(a) is given without prejudice to the provisions of section 143(2). Though technically the intimation issued was deemed to be a demand notice issued under section 156, that did not per se preclude the right of the Assessing Officer to proceed under section 143(2). That right is preserved and is not taken away. Between the period from April 1, 1989 to March 31, 1998, the second proviso to section 143(1)(a), required that where adjustments were made under the first proviso to section 143(1)(a), an intimation had to be sent to the assessee notwithstanding that no tax or refund was due from him after making such adjustments. With effect from April 1, 1998, the second proviso to section 143(1)(a) was substituted by the Finance Act, 1997, which was operative till June 1, 1999. The requirement was that an intimation was to be sent to the assessee whether or not any adjustment had been made under the first proviso to section 143(1) and notwithstanding that no tax or interest was found due from the assessee concerned. Between April 1, 1998 and May 31, 1999, sending of an intimation under section 143(1)(a) was mandatory. Thus, the legislative intent is very....
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....ll out the intent of the Legislature, i.e., to minimize the departmental work to scrutinize each and every return and to concentrate on selective scrutiny of returns. These aspects were highlighted by one of us (D. K. Jain J) in Apogee International Limited v. Union of India [(1996) 220 ITR 248]. It may be noted above that under the first proviso to the newly substituted section 143(1), with effect from June 1, 1999, except as provided in the provision itself, the acknowledgment of the return shall be deemed to be an intimation under section 143(1) where (a) either no sum is payable by the assessee, or (b) no refund is due to him. It is significant that the acknowledgment is not done by any Assessing Officer, but mostly by ministerial staff. Can it be said that any assessment is done by them? The reply is an emphatic no. The intimation under section 143(1)(a) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provision. Therefore, there bei....