DCIT Vs DBS Bank India Limited (ITAT Mumbai)
U/s 143(1)(a) Adjustment Invalid Without Prior Intimation – Bad Debt Recovery Already Offered to Tax – CPC Addition Deleted – ITAT Mumbai
CPC made adjustment of ₹2.88 Cr u/s 143(1)(a) alleging mismatch between ROI & audit report by adding bad debt recovery to income. CIT(A) deleted adjustment holding that no prior intimation/show cause was issued as mandated by proviso to Sec 143(1)(a). Revenue challenged deletion.
ITAT held that adjustment u/s 143(1)(a) cannot be made without giving prior intimation and opportunity to respond; failure to comply with statutory proviso violates principles of natural justice. Tribunal further noted that bad debt recovery was already credited to P&L and offered to tax, as evident from Schedule 14 & 17 reconciliation in financials (refer reconciliation table on page 4), hence addition resulted in double taxation. Order of CIT(A) upheld and Revenue appeal dismissed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
Captioned appeal by the department, arises out of order dated 08.07.2025 of Additional Commissioner of Income Tax (Addl. CIT for short), Kolkata, pertaining to assessment year (A.Y. for short) 2021-22.
2. Substantive grounds raised by the Department are as under:
1. “Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) is correct in holding the power in quashing the adjustment made u/s 143(1)(a) of the Act merely on the ground that prior intimation for adjustment was not given to the assessee. In doing the Ld.CIT(A) failed to appreciate that the intimation could not have been quashed merely on a procedural irregularity?”
2. “Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) is correct in quashing the adjustment made u/s 143(1)(a) of the Act, disregarding the fact that the consequential grounds no. 2 to 6 were adjudicated on merits, thus, adjudication in ground no 1 becomes contradictory to the adjudication in ground no. 2 to 6 and resulting in deletion of adjustment of Rs. 2,88,06,410/-?”
3. As could be seen from the grounds raised, the grievance of the department is with regard to deletion of adjustment made of Rs.2,88,06,410/- by the Centralized Processing Centre (‘CPC’ for short) while processing assessee’s return of income u/s. 143(1) of the Act.
