2022 (7) TMI 1399 - AT - Income Tax

Maintainability of appeal against the intimation u/s 143(1) - Addition of interest income while processing the return u/s 143(1) - assessee preferred an appeal before the National Faceless Appeal Center Delhi which was dismissed as right course of action for the assessee to file rectification application u/s 154 instead of filing appeal u/s 246A - HELD THAT - The provisions of section 246A of the Act gives right to the assessee to preferred an appeal to the learned CIT-A, if aggrieved, against the intimation issued by CPC Bangalore under the provisions of section 143(1) of the Act. Thus we hold that the learned CIT-A/NFAC erred in not adjudicating the appeal preferred by the assessee on merit. Accordingly we set aside the issue to the learned CIT-A/NFAC to decide the grievance raised by the assessee on merit as per the provisions of law. Appeal of the assessee is allowed for the statistical purposes.

Summary

Issues:
1. Appeal against addition of interest income under section 143(1) of the Income Tax Act.

Analysis:
The appeal was filed by the Assessee against the order of the Commissioner of Income Tax(Appeal), National Faceless Appeal Centre(NFAC), Delhi, regarding the addition of Rs. 15,85,364/- as interest income by the CPC while processing the return under section 143(1) of the Income Tax Act for the Assessment Year 2017-2018. The Assessee contended that the NFAC erred in confirming the addition. The Assessee, an individual and partner in a firm, declared income of Rs. 39,85,850/-, but the CPC made the addition based on a difference in interest income as per form 26AS and the income declared by the Assessee.

The Assessee's appeal before the NFAC was dismissed, stating that the right course of action was to file a rectification application under section 154 of the Act instead of an appeal under section 246A. The Assessee then appealed to the Appellate Tribunal ITAT Ahmedabad. The Assessee argued that there was no denial under the Act to file an appeal against the intimation generated under section 143(1), and the appeal should have been admitted and decided on merit by the NFAC. The Assessee requested the issue to be restored for fresh adjudication as per the law.

After hearing both parties, the Tribunal held that the Assessee had the right to appeal under section 246A against the intimation issued by the CPC under section 143(1) of the Act. The Tribunal referred to the relevant extract of section 246A, which allows an assessee to appeal against certain orders, including those related to adjustments in income or tax determined. The Tribunal found that the NFAC erred in not adjudicating the appeal on merit and set aside the issue for the NFAC to decide the grievance raised by the Assessee in accordance with the law. Consequently, the appeal of the Assessee was allowed for statistical purposes.

In conclusion, the Appellate Tribunal ITAT Ahmedabad allowed the appeal filed by the Assessee against the addition of interest income under section 143(1) of the Income Tax Act for the Assessment Year 2017-2018. The Tribunal directed the NFAC to decide the grievance raised by the Assessee on merit in accordance with the provisions of the law.