KP Advisory Services LLP Vs ACIT (ITAT Hyderabad)
Exempt Dividend Taxed Due to ITR Error Deleted; CPC Order Merges with 143(3): ITAT Hyderabad Grants Major Relief
The Hyderabad Bench of the ITAT partly allowed the appeal of the assessee LLP for AY 2018-19, granting substantial relief on multiple issues arising from processing of return by CPC and subsequent scrutiny assessment.
The Tribunal deleted the addition of ₹69.48 lakh representing dividend income, holding that it was exempt under section 10(34). The addition arose solely due to a bonafide reporting error in the ITR, where dividend income was mistakenly shown in Schedule-BP instead of Schedule-OS, despite being correctly disclosed as exempt income in Schedule-EI. The ITAT held that once a scrutiny assessment under section 143(3) is completed, the CPC order under section 143(1) merges with it, and no separate appeal against the CPC order is required.
On section 14A disallowance, the assessee did not press the ground, and it was dismissed accordingly.
On the issue of double taxation of capital gains, the ITAT noted that the same income had already been assessed in AY 2017-18, and since the assessee could not have anticipated this at the time of filing the return for AY 2018-19, the matter was remanded to the AO to grant relief if double taxation is established and the earlier year’s assessment has attained finality.
The Tribunal also directed the AO to verify and rectify an apparent arithmetical/typographical error in the computation of capital gains and held that interest under sections 234A/234B/234C is consequential.
Accordingly, the appeal was partly allowed for statistical purposes
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
