Final Assessment Passed Within Two Days Of Issuing Intimation, Violation Of 143(1) IT Act : Mumbai ITAT
The Mumbai ITAT held that the AO has no jurisdiction to make any adjustment in final assessment order passed u/s 143(3) before thirty days of receiving any response from the assessee on basis of intimation issued u/s 143(1). As per Section 143 of the Income tax Act, the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where...
The Mumbai ITAT held that the AO has no jurisdiction to make any adjustment in final assessment order passed u/s 143(3) before thirty days of receiving any response from the assessee on basis of intimation issued u/s 143(1).
As per Section 143 of the Income tax Act, the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made.
The Division Bench of Anikesh Banerjee (Judicial Member) and Prashant Maharishi (Accountant Member) observed that “the intimation was issued and within two days, the final order u/s 143(1) was passed which entirely violated the 2nd Proviso of section 143(1)”. (Para 6)
Facts of the case:
The assessee claimed deduction u/s 10(2A) as profit from partnership firm amounting to Rs.1,83,17,026/- while filing its return u/s 139(1). The intimation order u/s 143(1) was however issued by disallowing the deduction claimed u/s 10(2A).
Observations of the Tribunal:
The Bench found that the intimation for adjustment of demand was duly informed to assessee, but when the assessee proceeded to reply the intimation, there was no impression in the window in the website of the Incometax Portal.
Hence, the Bench noted that the assessee was unable to comply to the notice and resultant thereon, an intimation was issued within two days u/s 143(1) raising the demand.
Thus, the Bench found that there was a violation of 2nd Proviso of section 143(1) where the adjustment of income was done without allowing thirty days-time period.
The Bench observed that the addition was made simply on the basis of the profit received by the assessee from the different partnership firms which is liable for exemption u/s 10(2A).
However, the Bench emphasized that only after two days of issuing the intimation, the final order u/s 143(1) was passed which entirely violated the 2nd Proviso of section 143(1) of the Act.
Therefore, the ITAT quashed the order passed by AO in excess of jurisdiction and allowed the Assessee's appeal.
Counsel for Appellant/ Assessee: Aarti Vissanji & Prabhudesai
Counsel for Respondent/ Revenue: Manoj Kumar Sinha
Case Title: Add More Real Estate Developers LLP verses The Asst. Director of Income-tax
Case Number: ITA 2285/Mum/2024