Aashirvad Villa Limited Vs ITO (ITAT Kolkata)
Introduction: The case of Aashirvad Villa Limited Vs ITO, adjudicated by the Income Tax Appellate Tribunal (ITAT) Kolkata, revolves around the legality of proceeding upon intimation passed under section 143(1) of the Income Tax Act without granting the assessee a reasonable opportunity of hearing. The analysis of this case sheds light on the intricacies of pre-litigation mediation and its impact on taxpayers’ rights.
Detailed Analysis: The appeal filed by Aashirvad Villa Limited contested the order of the Commissioner of Income Tax (Appeals) dated 08.11.2023, which upheld the action of the Assessing Officer (AO) in assessing the total income of the assessee without allowing certain deductions claimed by the assessee. The crux of the matter lies in the AO’s rejection of the loss claimed by the assessee from house property, amounting to Rs. 87,143, without affording the assessee a reasonable opportunity of hearing.
Section 143(1) of the Income Tax Act mandates that no adjustments shall be made to the returned income of the assessee without providing intimation to the assessee and considering any response received within thirty days. The failure to adhere to this provision renders the intimation invalid, as established by precedents such as the case of Income Tax Officer (Exemption) vs. Camellia Educare Trust.
The Income Tax Appellate Tribunal, Kolkata, echoed the ruling of the Camellia Educare Trust case, emphasizing the importance of affording the assessee a fair opportunity of hearing before making any adjustments to the returned income. In light of this, the intimation passed by the AO under section 143(1) was deemed invalid, and the loss claimed by the assessee was allowed.
Conclusion: The Aashirvad Villa Limited Vs ITO case underscores the significance of procedural fairness in income tax assessments. The decision highlights the importance of providing taxpayers with a reasonable opportunity of hearing before making any adjustments to their returned income, as mandated by section 143(1) of the Income Tax Act. By upholding the rights of the assessee, the Kolkata ITAT reaffirmed the principles of natural justice and procedural integrity in tax proceedings.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
The instant appeal of the assessee was filed against the order of Ld. Commissioner of Income Tax (appeals), ADDL/JCIT(A)-5 Chennai [in brevity ld.‘CIT(A)’] dated 08.11.2023 passed u/s 250 of the Income Tax Act, 1961 (in brevity the ‘Act’) for assessment year 2020-21. The impugned order was emanated from the order of the ld. Income Tax Officer, CPC, Bengalure(in brevity the ‘AO’)passed u/s. 143(1)of the Act dated23.12.2021.
2. The assessee has taken the following grounds of appeal as well as additional ground of appeal:
(1) That on the facts and in the circumstances of the case, the CIT(A) has erred in upholding the action of the Ld. A.O., CPC in computing the total income of Rs.2, 77,370/- as against income declared by the assessee of Rs. 1,90,230/-.
(2) That, the learned CIT(A) erred in upholding the action of the Ld. A. O., CPC on facts and in law in not allowing Loss from House Property of Rs.87, 143/- declared in the ROI to be set off against Long Term Capital Gains of Rs.2,83,950/- u/s 71 of the Act.
(3) That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in upholding the action of the Ld. A.O., CPC in not considering that the loss from House Property of Rs.87,413/- was automatically set off with Long Term Capital Gains by the income tax portal itself at the time of filing the Income Tax Return – Schedule CYLA.
Additional Ground
“That on the facts and in law, the learned CPC in the intimation issued u/s 143(1) of the Act dated 23-12-2021 erred in not following the mandate as required by first proviso to section 143(1) of the Act which says that no such adjustment shall be made unless an intimation is given to the assessee of such adjustment either in writing or in electronic mode”.
3. Brief facts of the case are that the assessee filed its return of income electronically under section 139(1) of the Income Tax Act on 15.02.202 1. The assessee adjusted the loss during the year in house property amounting to Rs.87, 143/-, which was set off with the long-term capital gain and the business loss of Rs.6,578/- which was also adjusted with the long-term capital gain. During the processing of the return under section 143(1), the ld. Assessing Officer assessed the total income of the assessee at Rs.2,77,370/- by not allowing loss from house property to be set off against capital gains without giving any intimation to the assessee and rejected the loss from house property amounting to Rs.87, 143/-. Being aggrieved, the assessee filed appeal before the ld. CIT(Appeals) but ld. CIT(Appeals) upheld the intimation of the ld. Assessing Officer. Aggrieved, the assessee filed appeal before us.
4. The ld. A.R. vehemently argued at the time of hearing before us and filed written submissions, which are kept in the record. The ld. A.R. first invited our attention in the computation of total income, which is inserted as below: –
The assessee filed the return of income for A. Y. 2020-21 on 1 5.02.2021, declaring total income of Rs. 1,90,230/-. The computation of total income as provided by the assessee in its ROI was as under:-
