Case Law Details
Asokkumar Vignesh Vs ACIT (ITAT Chennai)
143(1) Has Limits: CPC Can’t Rewrite Dividend Income-Schedule BP Entry Not an Incorrect Claim: ITAT Grants Relief
In Asokkumar Vignesh Vs. ACIT- ITA No.3001/Chny/2025, AY 2020-21, order dated 31.12.2025, Chennai ITAT allowed Assessee’s appeal & set aside CPC’s prima facie adjustment u/s 143(1) relating to dividend income. Assessee had correctly offered taxable dividend of ₹17.61 lakh after claiming exemption of ₹10 lakh u/s 115BBDA from total dividend of ₹27.61 lakh. However, CPC while processing return u/s 143(1) wrongly adopted entire ₹27.61 lakh as taxable dividend, merely because same amount was reduced while computing business income in Schedule BP, and rejected rectification petition u/s 154.
Tribunal held that mere reporting or adjustment in Schedule BP cannot alter correct quantum of dividend income, particularly when Assessee had otherwise correctly disclosed taxable dividend in return. Such adjustment did not fall within scope of “incorrect claim apparent from return” as contemplated under Explanation to section 143(1). CPC was held to have travelled beyond its limited jurisdiction under summary processing provisions. Tribunal directed CPC/AO to restrict dividend income to ₹17.61 lakh & grant exemption of ₹10 lakh u/s 115BBDA accordingly. Appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee directed against the order of the Addl/JCIT(A) (herein after called CIT(A)’ in short], Thane, dated 03.09.2025 for AY-2020-21.
2.0 Briefly the facts of the case are the appellant is an individual. The return of income for the Assessment Year 2020-21 was filed on 15.02.2021 disclosing a total income of Rs.31,96,070/-. The said return of income was processed u/s 143(1) by CPC vide intimation dated 30.11.2021 by adopting dividend income of Rs.27,61,768/- as against Rs.17,61,768/- disclosed by the appellant after allowing the exemption limit of Rs. 10 lakhs in respect of dividend income under the provision of 115BBDA of the Income Tax Act, 1961. On receipt of said intimation, the appellant filed a petition u/s 154 before CPC seeking the rectification of intimation. However, the CPC has rejected the petition on 13.12.2024.
3.0 Being aggrieved, an appeal was filed before the CIT(A), who vide impugned order upheld the rectification order passed by the CPC by holding that the prima-facie adjustment made by the CPS is in accordance with the information contained in the return of income and accompanying documents. The mistake, if any, had arisen only due to appellant’s own mistakes committed while filing the return of income. Being aggrieved, the appeal is in appeal before us.
4.0 The learned A.R submits that the CIT(A) had failed to appreciate that the appellant had reported correct taxable dividend income in excess of Rs. 10 lakhs, in terms of provision of section 115BBDA of the Act. He further submits that the mere fact that the appellant had reduced dividend of income of Rs.27,61,768/- from business profits in Sl.No.A.3.d in Schedule No: BP is irrelevant consideration. Thus, he prayed that the order of CIT(A) be reversed.
5.0 On the other hand, the learned Sr.DR had opposed the above submissions.
6.0 We heard the rival submissions and perused the material available on record. On bare perusal of intimation issued u/s 143(1) of the Act, it would be evident that the CPC had adopted the dividend income of Rs.27,61,768/- as against Rs.17,61,768/- shown by the appellant, merely because of the fact that the appellant had reduced a sum of Rs.27,61,768/- while computing the business income. In our considered opinion, this information, would not change the quantum of dividend income, in as much as, it may include the other income. In any event, this would not amount to “incorrect claim”, as defined under the explanation to section 143(1) of Act. Therefore, we hold that the CPC had travelled beyond the scope of provisions of 143(1) of Act, therefore, we direct the CPC / AO to adopt the dividend of Rs. 17,61,768/- only and tax the balance dividend income after allowing the exemption limit of Rs. 10 lakhs u/s 115BBDA of the Act and accordingly amend the intimation.
Accordingly, the appeal filed by the assessee stands allowed.
7.0 In this result, the appeal of the assessee is allowed.
Order pronounced on 31st , December-2025 at Chennai.
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