2020 (1) TMI 1130 - AT - Income Tax

Intimation u/s 143(1) as appealable order u/s 246A - CPC making addition on account of disallowance of expenditure indicated in the audit report in intimation u/s 143(1) - disallowance of expenditures u/s 143(1) by CPC is a debatable issue and is not a mistake apparent from record, which cannot be rectified u /s 154 - HELD THAT - Appeal lies to the CIT(A) from an order passed / initiation given by the CPC u/s.143(1) 143(1A) of the Act if the assessee denies his liability pursuance to order passed under section 143(1) of the Act. CIT(A) had wrongly mentioned in the order reproduced herein above that no appeal lies against the intimation issued by the CPC under section 143( 1) of the Act unless the assessee approaches the CPC for rectification. From the perusal of the provision is reproduced hereinabove it is abundantly clear that there is no requirement in law to approach to the CPC for rectification of the order, if the assessee is aggrieved by the order and denies his liability as per the intimation received by him under section 143 (1) of the Act. We are of the opinion that the matter is required to remand back to the file of CIT(A) for fresh adjudication on merits as we hold that the appeal lies before the CIT(A) against the order passed u/s.143(1) of the Act by the CPC. Admittedly the assessee is affected by the order/intimation of the CPC as is clear from the facts of present case. In the light of the above, the Grounds raised by assessee are treated as allowed for statistical purposes.

Issues:
1. Appeal against order of Commissioner of Income Tax (Appeals)
2. Disallowance of expenditures under section 143(1)
3. Jurisdiction of CPC in making adjustments under section 143(1)
4. Natural justice principles in disallowance
5. Consideration of additional grounds of appeal
6. Disallowance of specific expenses

Analysis:
1. The appeal was filed against the order of Commissioner of Income Tax (Appeals) for the assessment year 2016-17. The appellant challenged the dismissal of the appeal by CIT (A) on the grounds that the intimation under section 143(1) was appealable under section 246A, and the issue should have been adjudicated on merits.

2. The appellant contested the disallowance of expenditures under section 143(1) by CPC, arguing that it was a debatable issue and not a mistake apparent from record. The CIT (A) directed the appellant to file an online rectification application before the CPC, which was challenged.

3. The appellant raised concerns regarding the jurisdiction of CPC in making adjustments under section 143(1), stating that the CPC acted beyond its authority. It was argued that the disallowance made without providing an opportunity to the assessee violated natural justice principles.

4. The appellant highlighted that no opportunity was given by the CPC before making the disallowance, which was deemed against the principles of natural justice. The appellant insisted that the disallowance should be deleted due to this procedural flaw.

5. The appellant contended that the additional grounds of appeal were not considered by the CIT (A), which was a violation of procedural fairness. The failure to address these grounds raised concerns about the completeness of the decision-making process.

6. Specific expenses, such as payments made to entities for electricity and rent, were disputed by the appellant. The appellant argued that these expenses were genuine and made for business exigencies, emphasizing the need for their allowance and deletion of the additions made.

In conclusion, the ITAT Agra remanded the matter back to the CIT (A) for fresh adjudication on merits, acknowledging that the appeal lies before the CIT (A) against the order passed under section 143(1) by the CPC. The grounds raised by the appellant were treated as allowed for statistical purposes, and the appeal was considered allowed on those grounds.

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