2024 (10) TMI 1149 - AT - Income Tax

Denial of deduction u/s 80IA - adjustment made u/s 143(1)(a) - assessee has contended that no prior intimation was given to the assessee before making the alleged adjustment or denying deduction u/s 80IE - HELD THAT - As decided in case of Smt. Neelam Pachisia, Bangalore 2020 (3) TMI 1480 - ITAT BANGALORE the proviso mandating giving of intimation to the assessee to the proposed adjustment should have also been followed by the revenue. It is so because, the said proviso was also inserted in sec.143(1) along with clauses (iii) to (vi) by Finance Act, 2016. Since no such intimation was given to the assessee, the impugned adjustment is liable to be deleted. Thus we allow the ground raised by the assessee because no such intimation was given to the assessee prior to make the impugned adjustment.

Summary

Issues:
Appeal against order passed by CIT(A) - Disallowance of deduction under section 80IE without prior intimation to assessee.

Analysis:
The appeal pertains to the assessment year 2016-17 and challenges the order passed by the CIT(A) confirming the disallowance of a deduction under section 80IE of the Income Tax Act, 1961. The Tribunal recalled the appeal for adjudicating ground no.3 raised by the assessee, which questioned the lack of opportunity provided to the assessee before disallowing the deduction. The assessee argued that no prior intimation was given before making the adjustment, citing a similar case precedent. The Tribunal noted that the proviso to Section 143(1)(a) mandates providing intimation to the assessee before making any adjustment. The lack of evidence of prior intimation led the Tribunal to allow the ground raised by the assessee.

Analysis:
In a similar case precedent, the Tribunal addressed a comparable issue where the deduction claimed by the assessee under section 80IC was disallowed without providing prior intimation. The Tribunal observed that the provisions of sec.143(1)(v) disallowing the deduction if the return is filed beyond the due date were inserted with effect from a later assessment year. The Tribunal highlighted that the proviso mandating intimation to the assessee of any adjustment was also inserted in sec.143(1) simultaneously. As no intimation was given to the assessee in this case, the Tribunal directed the AO to delete the disallowance of the deduction claimed under section 80IC. The decision was based on the absence of intimation and the timing of the processing of the return post the insertion of relevant provisions.

Conclusion:
The Tribunal allowed the appeal of the assessee partly, based on the lack of prior intimation to the assessee before disallowing the deduction under section 80IE. The decision was influenced by a similar case precedent where the lack of intimation led to the deletion of the disallowance. The Tribunal emphasized the importance of providing intimation to the assessee before making any adjustments to the income declared. The appeal was partly allowed, highlighting the significance of procedural fairness in tax assessments.