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TMI Blog2023 (3) TMI 1193X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act, 1961 under the respective heads of income to which they are taxable/assessable. 2. BECAUSE addition of Rs. 15,21,060/- had been made and confirmed by the authorities below merely on the basis of disclosure made by the Tax Auditor in Clause No.16(d) to his tax audit report furnished in Form 3CB read alongwith annexure marked as Form 3CD to the audit report and the authorities below have failed to bring on record any evidence which could lead to a conclusion that income aggregating to Rs.15,21,060/- has not been considered by the appellant in his return of income originally filed under section 139(1) of the Income-tax Act, 1961. 4. BECAUSE addition of Rs.15,21,060/- confirmed by the CIT(A) merely on technical reasoning reading as under: "It is pertinent to note that in the automated processing of returns u/s 143(1), any variance between Tax Audit Report and the ITR shall result in necessary adjustments in accordance with the provisions of the Act. This process does not involve any detailed investigation of facts or documents other than ITR, Form 3CD etc. Detailed instructions are issued every year by CBDT/DGIT(Systems) as to how the various schedules and entrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on PPF, interest on saving bank account, interest on FDR, dividend income and interest on REC bonds total amounting to Rs. 15,21,057/-. Since, the income from house property was already declared by the assessee in the return of income and also part of the processing under section 143(1) of the Act therefore, there is a double taxation of the said income on account of the rental income. Similarly, the interest on saving bank account, interest on FDR, dividend income were also separately declared in the return of income but the same were also part of the adjustment / addition made by the CPC which resulted the double taxation of the said income. He has further pointed out that the interest on PPF and interest on REC Bonds are exempt income specifically reported in the return of income under the head exempt income but the CPC has made the adjustment and addition on account of these exempt incomes also. Hence, the learned AR has pointed out that the adjustment made by the CPC is nothing but the items which are reported in the tax audit report under Clause No. 16(d) representing any other income apart from the items of income within the scope of section 28 required to be reported in Cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 80C, 80TTA, 80D and exempt income under section 10 of the Income Tax Act. In the return of income, the assessee has declared business loss of Rs. 7,63,940/- and income from house property of Rs. 7,88,200/-. The assessee has also declared income from other sources at Rs. 3,37,670/- comprising of interest from saving bank account, interest on FDR, other items and dividend income. The assessee also claim exempt income and given the details in the return of income regarding interest on PPF of Rs. 3,41,127/- and interest on REC bonds of Rs. 16,260/- total amounting to Rs. 3,57,387/-. It is apparent from the return of income and computation of the income that for the year under consideration, the assessee has reported business loss of Rs. 4,37,494/- and then claimed set off of brought forward depreciation of Rs. 3,26,446/- which has resulted net income from business and profession as loss of Rs. 7,63,940/-. The said return of income was processed by the CPC, vide order dated 11.08.2022 whereby an adjustment of Rs. 15,21,057/- was made as per Sr. No. 23 of annexure to computation of income from business or profession. The CPC has then allowed the current year's business loss of Rs. 4,37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted during the previous year: SI. NO. Description Amount No records added (d). any other item of income: SI. Description Amount 1 Rental Income Rs.11,26,000 2 Interest on PPF Rs.3,41,127 3 Interest on SB A/C Rs.30,185 4 Interest on FDR Rs.2,771 5 Dividend Rs.4,714 6 Interest of Bonds Rs.16,260 (e) Capital Receipt, if any: SI. NO. Description Amount 1 LIC Survival Benefit Rs. 11,21,500 XXXXXXX XXXXXXX XXXXXXX XXXXXXX XXXXXXX 5. It is clear that Sub-Clause (d) of Clause 16 of the audit report describes any other item of income which is entirely different from the item of income falling within the scope of section 28 as per Sub Clause (a) of Clause 16 of Form 3CB. Thought, the Tax Auditor reported this income under Clause 16(d) of Form 3CB however, the nature of income as evident from the description is clearly non business income. Therefore, a mere mistake on the part of the Tax Auditor in reporting the income not forming part of business income of the assessee in Cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A), has raised this specific issue in the grounds of appeal which are reproduced by the CIT(A) in para 2 of the impugned order. The assessee has also filed the written submissions before the CIT(A) and specifically explained that the incomes which are reported in the tax audit report in Form 3CB under Clause 16(d) has already been declared by the assessee in the return of income under the head income from house property and income from other sources and therefore to that extent, it is double taxation of the said income by the CPC. Further, the assessee has explained that the two items of income being interest on PPF and interest on REC tax free bonds are exempt income duly reported in the return of income and addition made by the CPC in respect of these items is unjustified as tax free income has been taxed. The CIT(A) without considering the main grievance of the assessee regarding double taxation of the income already declared by the assessee in the return of income as well as taxation of the exempt income has confirmed the adjustment / additions made by the CPC by ignoring the bare facts available on record in the return of income, submissions of the assessee as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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