Suman Sehrawat Vs ITO (ITAT Delhi)
Facts: The assessee, Suman Sehrawat, declared a total income of ₹17,23,160 for AY 2017-18, including ₹30,00,000 received from M/s MSG AII Trading International Pvt. Ltd., offered under “Income from Other Sources.” A tax deduction of ₹9,00,000 was made on this amount under Section 194B, as reflected in Form 26AS. The assessee claimed expenses of ₹16,04,850 related to the said income, classifying it as income from an organized adventure in the nature of trade/game.
Issues:
1.Whether the adjustment under Section 143(1)(a)(vi) was beyond the scope of permissible adjustments.
2. Whether the income of ₹30,00,000 was already included in the return filed by the assessee.
3. Whether the expenses claimed were allowable under law.
4. Whether the adjustment led to double taxation.
Courts finding:
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, held that the adjustment made by the CPC under Section 143(1)(a)(vi) of the Income Tax Act was beyond the permissible scope of the provision, as the assessee had already disclosed the income of ₹30,00,000 under the head “Income from Other Sources” in her return. The Tribunal observed that there was no inconsistency between the return and Form 26AS, and the claim of ₹16,04,850 as expenses related to an organized adventure game was properly accounted for. It further emphasized that the deduction of tax at source under Section 194B could not automatically lead to the conclusion that the income was in the nature of lottery winnings taxable under Section 115BB, as the nature of the income must be determined independently. The Tribunal found that the adjustment resulted in double taxation and involved debatable issues which could not be adjudicated in summary proceedings under Section 143(1). Consequently, it held that the addition of ₹16,04,850 sustained by the CIT(A) was unsustainable in law and deleted the same, thereby allowing the appeal in full.
Impact on Tax Practice:
This judgment reinforces taxpayer rights against mechanical adjustments and emphasizes that proper disclosure in returns provides strong protection against wrongful additions during processing stage.
