Kriteshwar Prasad Singh Vs ACIT/DCIT (ITAT Ahmedabad)
Adjustment u/s 143(1) Without Prior Intimation Quashed – ITAT Ahmedabad Rules in Favour of ONGC Employee
Assessee, an ONGC employee, filed return declaring income of ₹89.76 lakh & claimed exemption of ₹6.34 lakh u/s 10(10AA) for leave encashment on retirement. CPC, Bengaluru, while processing u/s 143(1), restricted exemption to ₹3 lakh, treating ONGC employees as non-Govt employees, resulting in an addition of ₹3.34 lakh.
Assessee argued that:
- No prior intimation was issued before making adjustment, violating the first proviso to Section 143(1)(a);
- CPC had no jurisdiction to decide such a debatable issue;
- ONGC being a Central Govt PSU, its employees are entitled to full exemption akin to Govt
CIT(A)/NFAC dismissed the appeal, holding ONGC not equivalent to Central Govt for this purpose & that CBDT Notification 31/2023 (₹25 lakh limit) was prospective.
Before ITAT, it was shown that CPC made the adjustment without serving any intimation or opportunity as required by law. Tribunal noted that no record of prior notice existed, & that the mandatory procedural safeguard under the first proviso to Section 143(1)(a) was ignored. Relying on Devendra Singh Bhaskar v. DCIT (ITA 431/Ahd/2022), Arham Pumps v. DCIT (ITA 206/Ahd/2021), & Kailash Narayan Shridhar v. DCIT (177 taxmann.com 755), ITAT held that any adjustment without prior intimation violates audi alteram partem & is invalid in law. Accordingly, the intimation u/s 143(1) was quashed & the appeal allowed in full.
