Kavita Paras Shah Vs ITO (ITAT Rajkot)
The appeal was filed by the assessee against the order dated 16.03.2026 passed by the Commissioner of Income Tax (Appeals), which arose from an order under Section 143(1) of the Income-tax Act, 1961 dated 22.01.2026. The dispute concerned the assessee’s claim of rebate under Section 87A for Assessment Year 2025-26.
The assessee had filed her return declaring total income of ₹5,70,000, comprising income from business or profession and short-term capital gains (STCG) from transfer of listed securities taxable under Section 111A. She had opted for the new tax regime under Section 115BAC(1A). Her total tax liability was ₹16,835, comprising ₹9,070 on normal income and ₹7,765 on STCG under Section 111A. Since her total income did not exceed ₹7,00,000, she claimed rebate of the entire tax under the first proviso to Section 87A.
While processing the return under Section 143(1), the Central Processing Centre restricted the Section 87A rebate to the ₹9,070 tax payable on normal income and denied the ₹7,765 rebate relating to STCG under Section 111A. This resulted in a demand of ₹8,076. The adjustment was made without prior intimation or an opportunity of hearing. The CIT(A) upheld the CPC’s action, leading the assessee to approach the Tribunal.
