GEBBS Healthcare Solutions Private Limited Vs DCIT (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT) Mumbai recently allowed an appeal filed by GEBBS Healthcare Solutions Private Limited against an order of the Additional/Joint Commissioner of Income Tax (Appeals) [CIT(A)]. The case centered on an adjustment made under Section 143(1) of the Income Tax Act, 1961, for the assessment year 2018-19. The CIT(A) had confirmed the adjustment made by the Assessing Officer (AO) related to the reversal of deferred tax to book profit computed under Section 115JB.
GEBBS Healthcare Solutions argued that the CIT(A) erred in confirming the AO’s action, especially since their case was selected for scrutiny assessment, and the subsequent assessment order under Section 143(3) accepted the returned book profit under Section 115JB. The company contended that the AO’s computation in the Section 143(3) assessment was based on the returned income, without incorporating the Section 143(1) adjustment.
The ITAT’s examination of the case revealed that the deferred tax adjustment was not part of the initial proposed adjustments communicated to GEBBS Healthcare Solutions. This adjustment was introduced in the final intimation under Section 143(1) without providing the company an opportunity to be heard. More importantly, the ITAT noted that the subsequent assessment order under Section 143(3) accepted the returned income as the assessed income. The returned income amount was assessed without any changes or adjustments.
The ITAT concluded that when a case is selected for full scrutiny, and the assessment order under Section 143(3) is based on the returned income without incorporating the Section 143(1) adjustment, the initial adjustment becomes infructuous. The ITAT reasoned that the Section 143(1) intimation effectively merges with the regular assessment order under Section 143(3) when no such addition, disallowance, or adjustment is carried forward into the final assessment. Therefore, the ITAT held that the adjustment made under Section 143(1) could not be sustained. Consequently, the ITAT allowed the assessee’s appeal and deleted the adjustments made under Section 143(1).
FULL TEXT OF THE ORDER OF ITAT MUMBAI
