2024 (10) TMI 588 - AT - Income Tax

Intimation order passed u/s 143(1) - Adjustment of capital gains income - CIT(A) not deleting the adjustment which was made by erroneously considering the Sale consideration of Short Term Capital Gain as Total Capital Gain earned under the head Capital Gain' HELD THAT - While processing the return of income instead of reducing aggregate capital gains from the business income, amount of sale consideration received by the Appellant in respect of short term capital gains was reduced. As a result, the Business Income got increased and the loss was converted into profit - The aforesaid facts are apparent on perusal of the return of income. Therefore, the addition made in the intimation order passed u/s 143(1) of the Act cannot be sustained. We are of the view that the delay in filing the appeal before the CIT(A) should have been condoned. In our view, restoring the issue back to the file of CIT(A) for adjudication on merits would be an empty formality. Accordingly, the order passed by the CIT(A) is set aside and the addition is deleted. Grounds No.1 to 4 raised by the Appellant are allowed.

Summary

Issues:
Challenge to order under Section 143(1) of the Income Tax Act for Assessment Year 2018-19, Delay in filing appeal, Adjustment of capital gains income, Condonation of delay, Double taxation issue.

Analysis:
1. The appellant challenged the order dated 21/02/2024 passed by the CIT(A) against the intimation order under Section 143(1) of the Income Tax Act for the Assessment Year 2018-19. The appellant raised grounds related to the delay in filing the appeal and the erroneous adjustment of capital gains income, leading to double taxation concerns.

2. The appellant filed the return of income declaring a loss for the Assessment Year 2018-19, which was processed, and an intimation under Section 143(1) was issued increasing the business income by INR 70,34,565. The appeal before the CIT(A) was dismissed due to being time-barred, resulting in the appeal before the Tribunal.

3. The Tribunal considered the circumstances, including the delay in filing the appeal, which the appellant attributed to the Covid-19 pandemic and technical difficulties with the income tax portal. The appellant argued that the addition to income resulted in double taxation of the same capital gains. The CIT(A) declined to condone the delay, leading to the appeal before the Tribunal.

4. The Tribunal analyzed the situation and emphasized the need for substantial justice over technicalities. It noted that the appellant had disclosed the capital gains income correctly in the return, and the adjustment made in the intimation order was erroneous, leading to an unjust increase in business income. The Tribunal set aside the CIT(A) order and deleted the addition of INR 70,34,565, allowing the grounds raised by the appellant.

5. In conclusion, the Tribunal allowed the appeal by the Assessee, emphasizing the importance of substantial justice in the decision-making process. The order dated 21/02/2024 by the CIT(A) was set aside, and the erroneous adjustment of capital gains income was deleted, addressing the concerns raised by the appellant regarding double taxation and procedural delays.