2020 (1) TMI 1303 - HC - Income Tax

Demand raised in Intimation issued under Section 143(1) - As per CIT-A amount set apart for specified purpose was treated as income of the appellant and No reason was given for this adjustment made u/s.143(1) - This adjustment is beyond the scope of section 143(1) and AO is directed to allow the claim if the appellant has filed Form 10B - HELD THAT - Since the direction given by the Commissioner in order dated 26.07.2018 is said to be in the process of being challenged before the Tribunal, I refrain from making any observations in regard to the same and leave it to the Tribunal to go into the appeal, if and when filed and decide the same in accordance with law. The order of the Commissioner (Appeals) stating that the 143(1) intimation lacks jurisdiction has become final as admittedly no appeal has been filed against this order by the Department before the Tribunal. Thus the impugned Intimation in so far as it relates to the demand raised in Intimation issued under Section 143(1) is clearly bad in law and is quashed.

Summary

Issues:
Challenge to adjustment of outstanding demands under Section 245 of the Income Tax Act, 1961 for assessment years 2012-2013 and 2015-2016.

Analysis:
The petitioner contested an intimation dated 15.09.2018 adjusting outstanding demands for assessment years 2012-2013 and 2015-2016 under Section 245 of the Income Tax Act, 1961. The respondents acknowledged that the demand for 2012-2013 no longer existed. However, for the demand of &8377; 1,65,97,390 for 2015-2016, it was noted that the intimation leading to this demand was under appeal before the Commissioner of Income Tax (Appeals).

The Commissioner of Income Tax (Appeals) in ITA No.16/18-19 found that the adjustment made under Section 143(1) of the IT Act was beyond its scope. Consequently, the intimation was set aside. Although the Commissioner directed the Assessing Officer to allow the claim subject to certain conditions, the petitioner challenged this direction belatedly before the Income Tax Appellate Tribunal.

Despite the Assessing Authority implementing the Commissioner's order, reaffirming the order under Section 143(1) and stating no modification was needed, the impugned intimation was issued. The Court refrained from commenting on the Commissioner's direction pending the Tribunal's review. However, as no appeal was filed against the Commissioner's order questioning the jurisdiction of the 143(1) intimation, it was deemed final. Consequently, the Court quashed the impugned Intimation related to the demand raised under Section 143(1) as it was deemed unlawful.

In conclusion, the writ petition was allowed with no costs, and connected miscellaneous petitions were closed.