2023 (3) TMI 1514 - AT - Income Tax

Intimation u/s 143(1) - non granting sufficient opportunity of being heard to the Appellant leading to violation of the principles of natural justice - HELD THAT - Without giving proper opportunity of being heard to the assessee/ proper notice for adjustment through applying section 143(1)(a), no alteration in the returned figures can be done by CPC, Bangalore. In this appeal we observed that this basic provision of law has not been followed, hence action of CPC, Bangalore in adjusting returned income is null and void and without jurisdiction. This fact is emanating from record produced before us and there is no challenge to this fact by the department also. In view of this Ground Nos. 1 2 raised by the assessee is allowed. Short grant of T.D.S. - If assessee is able to prove that amount under consideration has been deducted and corresponding income has been considered while filing the return of income, claim of the assessee should be allowed despite the fact whether the same has been reflected in Form No. 26AS or not. With this observation this ground of appeal of the assessee is partly allowed for statistical purposes. Charging of interest u/s. 234B - This ground is consequential in nature and based on the outcome of other substantial grounds adjudicated above, hence no separate adjudication is required. But Jurisdictional AO is directed to recalculate the same keeping in view the finding of this bench on issues decided above. This ground of appeal by assessee is allowed for statistical purposes. Charging of interest u/s. 234C - This ground is not consequential in nature as hold by Ld. CIT (A) in his order. Charging of interest u/s. 234C is limited up to return income declared by the assessee and can t be disturbed for later developments in the matter.

Summary

Issues:
1. Confirmation of total income computation by the AO
2. Non-issuance of show cause notice before issuing Intimation under Section 143(1)
3. Addition of Employee's Contribution to Provident Fund under Section 36(1) (va) of the Act
4. Short grant of TDS Credit
5. Levy of Interest under Section 234B of the Act
6. Levy of Interest under Section 234C of the Act

Analysis:

1. The appeal challenged the order of the National Faceless Appeal Centre confirming the total income computation for the assessment year 2020-21. The Appellate Tribunal observed that the AO erred in not following the procedure laid down in Section 143(1) by adjusting the returned income without proper opportunity for the assessee to be heard. Consequently, the Tribunal allowed the grounds raised by the assessee regarding the confirmation of total income computation.

2. The issue of non-issuance of a show cause notice before issuing the Intimation under Section 143(1) was also raised. The Tribunal found that the basic provision of law regarding providing an opportunity to be heard was not followed by the CPC, Bangalore. The action of adjusting the returned income without proper notice was deemed null and void, leading to the allowance of the grounds related to this issue.

3. The addition of Employee's Contribution to Provident Fund under Section 36(1) (va) of the Act was contested. Although these grounds were not pressed by the assessee, the Tribunal allowed them due to the violation of the procedure under Section 143(1) by the CPC, Bangalore. The disallowance made by the CPC was deleted based on this procedural violation.

4. The issue of the short grant of TDS Credit was addressed by the Tribunal. The assessee's claim for TDS Credit was partially allowed, with directions given to the jurisdictional AO to provide an opportunity for the assessee to substantiate the claim further. The Tribunal emphasized that the amount reflected in Form No. 26AS should be granted without requiring additional reconciliation by the assessee.

5. Regarding the levy of interest under Section 234B of the Act, the Tribunal directed the jurisdictional AO to recalculate the interest based on the outcomes of the other substantial grounds decided. The appeal on this ground was allowed for statistical purposes.

6. The issue of charging interest under Section 234C of the Act was also addressed. The Tribunal held that interest under Section 234C is limited to the return income declared by the assessee and cannot be disturbed for later developments. The AO was directed to charge interest only on the returned income as declared by the assessee.

In conclusion, the appeal of the assessee was allowed for statistical purposes by the Appellate Tribunal, with specific directions given on various issues raised in the appeal.