The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) deleted the deferred tax adjustment, stating that the Assessing officer (AO) accepted the assessee’s Income Tax Return without any adjustments.
The GEBBS Healthcare Solutions Pvt Ltd (assessee) filed an income tax return for the Assessment Year (AY) 2018-19, declaring an income of Rs. 18.60 crore. The Central Processing Centre (CPC), Bengaluru, issued a proposed adjustment under Section 143(1)(a) related to various claims, including exempt income, deductions, and employee contributions.
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The AO selected the case for complete scrutiny and an assessment order was passed under Section 143(3). The AO accepted the assessee’s returned income without incorporating the deferred tax adjustment made in Section 143(1) intimation.
Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeal)[CIT(A)]. However, the CIT(A) upheld the order of the AO and confirmed the adjustments made by the CPC.
Therefore, the assessee further filed an appeal before the ITAT. The assessee contended that since the assessment under Section 143(3) had been concluded without making any additions, the prior adjustments under Section 143(1) could not be sustained.
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The assessee also submitted that the AO accepted the returned income as assessed income and passed an assessment order. The assessee further contended that the AO computed income without taking adjustment into account.
The two-member bench comprising Amit Shukla (Judicial Member) and S. Padmavathy (Accountant Member) observed that the deferred tax adjustment was never part of the proposed adjustments in the intimation order.
The tribunal observed that the adjustment was made in the final intimation order without giving any opportunity for a hearing or notice to the assessee. The tribunal observed that the AO computed the income as per returned income not as per the adjustment made by the CPC.
The tribunal further observed that the returned income of Rs. 18.60 crores and the same has been computed by the AO. Therefore, the tribunal observed that adjustments made under section 143(1) cannot be sustained. Consequently, the tribunal ruled that any adjustment made under section 143(1) did not survive and it became infructuous. Therefore, the tribunal deleted the deferred tax adjustment made under section 143(1) of the Income Tax Act. The appeal of the assessee was allowed.
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