TaxTMI 
TaxTMI 
2023 (5) TMI 1372
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....mstances of the case and in law, the CIT(A) erred in applying the decision of Hon'ble ITAT Panji Bench in the case of Prathamik Krishi Pattinsahkari Bank Ltd vs Income Tax Officer, ward 1(3), Belgaum 55 taxmann.com 412, even though the facts of the case are distinguishable. 3. That on the facts and circumstances of the case and in law, the CIT(A) erred in not following the decision of Hon'ble Kolkata Tribunal in the case of M/s Bolkunda Packwai & (S) C vs ITO, Ward 1(1), Asansol (ITA No. 462-463/Kol/2016), where the facts of the case are similar to the case of the appellant. 4. The appellant craves to add, alter or delete any of the grounds of appeal during course of appellate proceedings." 2. Succinctly stated, the assessee is an individual holding FL-2 license on behalf of his partnership firm viz. Juneja Ventures, which is engaged in the business of running a restaurant under the name and style of "Mocha Restaurant" at VIP Road, Raipur. The assessee had filed his return of income for A.Y.2018-19 on 13.10.2018, declaring an income of Rs.7,22,540/-. 3. Income of the assessee was processed by the CPC, Bengaluru u/s.143(1) of the Act dated 26.08.2019,....
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.... CPC, Bengaluru while processing the returned income of the assessee in the backdrop of the aforesaid qualification by the auditor, i.e. payment made by the assessee in a manner other than that prescribed u/s. 40A(3) of the Act, therein, vide its letter dated 21.01.2019 communicated to the assessee a proposed disallowance of the aforesaid amount of Rs.57,62,920/- (supra), and called upon it to show cause within a period of 30 days as to why said adjustment may not be carried out. For the sake of clarity, the relevant extract of the aforesaid communication dated 21.01.2019 issued by the CPC, Bengaluru a/w. "annexure" is culled out as under: On a perusal of the aforesaid communication of the CPC, Bengaluru, it transpires that the assessee was specifically allowed a time period of 30 days to respond to the aforesaid proposed adjustment u/s. 143(1)(a) of the Act. In fact, it was specifically stated at Note-4 that the response of the assessee if received within stipulated time period would be considered before making any adjustment. 8. In response to the aforesaid communication received from CPC, Bengaluru dated 21.01.2019, the assessee vide its rely uploaded on 24.01.2019 (....
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....itted by him that as the assessee's auditor had clearly qualified in his audit report that the assessee had incurred an expenditure of Rs.57,62,920/- in violation of the provisions of Section 40A(3) of the Act, therefore, the CPC, Bengaluru had rightly disallowed the amount and made a consequential adjustment in the hands of the assessee u/s.143(1)(a) of the Act. However, the Ld. DR on being confronted with the fact that the response filed by the assessee, wherein he had categorically objected a/w. reasons to the proposed adjustment had been summarily brushed aside by the CPC, Bengaluru, which had proceeded with and disallowed the aforesaid amount vide its intimation u/s.143(1) dated 26.08.2019, could not rebut the same. 11. We have given a thoughtful consideration to the issue involved in the present appeal, and find substance in the claim of the Ld. AR that the adjustment made by the CPC, Bengaluru vide its intimation u/s.143(1) of the Act dated 26.08.2019 is not strictly as per the mandate of law. Before proceeding any further, we deem it fit to cull out the provisions of Section 143(1)(a) of the Act, which reads as under: "143. (1) Where a return has been made under....
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....- may not be made in his hands u/s.40A(3) of the Act. On a perusal of the aforesaid letter, we find that the same as per the mandate of the "2nd Proviso" to Section 143(1)(a) of the Act had allowed a time period of 30 days to the assessee to file his objection to the proposed adjustment. As observed by us hereinabove, the assessee on being intimated about the aforesaid proposed adjustment that was sought to be made in his hands, i.e. disallowance u/s.40A(3) of the Act of Rs.57,62,920/-, had therein responded to the same and objected to the said disallowance. It was claim of the assessee that as the aforesaid payments were made towards purchase of liquor from the State Government undertaking which did not receive payment in any mode other than cash, therefore, no disallowance u/s.40A(3) of the Act with respect to the payment in question was called for in his hands. We find on a careful perusal of the reply filed by the assessee that he had impliedly tried to bring his case within the realm of Rule 6DD(b) of the Income Tax Rules, 1962, i.e. an exception carved out to the applicability of the provisions of Section 40A(3) of the Act. For the sake of clarity, Rule 6DD(b) is culled out a....
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....ng any adjustment. We are unable to persuade ourselves to subscribe to the manner in which the objections/response filed by the assessee to the proposed adjustment had been brushed aside; or in fact dispensed with by the CPC, Bengaluru, which as observed by us hereinabove, had rendered the entire mechanism provided u/s.143(1)(a) of the Act as redundant and otiose. As we cannot remain a mere spectator of the aforesaid whimsical exercise carried out by the CPC, Bengaluru which violates the clear mandate of Section 143(1)(a) of the Act, therefore, in all fairness in order to safeguard an assessee from being saddled with a tax liability which is not as per the mandate of law; and at the same time prevent leakage of any revenue to which the Government exchequer would be duly entitled for, restore the issue to the file of the A.O for afresh adjudication. The A.O shall in the course of set-aside proceedings, as per the mandate of "2nd Proviso" to Section 143(1)(a) of the Act consider the claim that was raised by the assessee vide its objection/response that was uploaded by him on 24.01.2019 (18:57:41) to the proposed adjustment that was intimated by the CPC, Bengaluru vide communication d....
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.... partaning to the errorsincorrect claimar inconestens drow 2. You are advised to use the software uty avalebie on the website www.incometaxinaalne.auv. to avo 3. The response to this communication wil be presumed to be duly verified, correct and complete in accor provisions of the Act. 4. The response se received shall be considered before making any adjustment. In ease, no responsi within 30 days (thirty days) of issue of this intimation, the return of income will be prosessed after masing necessary adjustment(s) re 143(1)(a) of Income Tax Act, 1961 without providing any further opportunits in this the income Tax Department: CPG, which is obesied from a AMRIT RAJ SINGH Deputy Commissioner of Income T CPC, Bengaluru und the information Techniyet 2000 váran 13202401344 Document 2 (11) SLNO Schedule Error Description Schedule P Part-A Adjustments u/s 143(1)(a) Incorrect Claim ule 143(1)(a) In Schedule BP, S.No.17. Amount debited to the profit and loss account, to the extent disallowable under section 40A of Part-Ol) is not consistent with amount shown in SL.No. 9. Total amount disallowable ....