Sudha Gopalakrishnan Vs DCIT (ITAT Bangalore)
Bangalore ITAT Quashes Tax Demand Raised Through Computation Sheet; Holds Demand Cannot Exceed Findings in Assessment Order
The Bangalore ITAT allowed the appeal of Sudha Gopalakrishnan, holding that the Assessing Officer could not raise a tax demand of ₹24.90 lakh through the computation sheet and notice of demand when the assessment order under Section 143(3) had accepted the returned income without making any addition or variation. Although the assessment order accepted the revised return in full, the accompanying computation sheet recalculated tax, surcharge and interest under Sections 234A, 234B and 234C, resulting in an additional demand. The assessee challenged the demand, contending that the assessment order itself contained no findings justifying any additional tax liability.
The Tribunal observed that a computation sheet and a notice of demand under Section 156 are merely consequential documents and cannot create a fresh tax liability independent of the assessment order. It held that the computation sheet is only a working document and cannot introduce new additions, disallowances or enhanced tax demands where the assessment order expressly accepts the returned income. The Tribunal further held that a notice of demand must be strictly “in consequence of” the assessment order, and therefore cannot travel beyond the findings recorded therein.
The Tribunal also held that interest under Sections 234A, 234B and 234C cannot be levied through a demand notice unless the assessment order itself specifically directs such levy. A general or mechanical computation of interest is insufficient where the assessment order contains no corresponding determination. Since the assessment order had accepted the returned income without any modification, the Tribunal held that the consequential computation sheet and notice of demand were without legal foundation. Accordingly, it directed the Assessing Officer to delete the entire demand raised through the computation sheet and notice of demand, and allowed the appeal.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal at the instance of the assessee is directed against the order of the ld.CIT(A)/NFAC dated 17.02.2026 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1086102838(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2018-19.
