Iqbal and Nina Chaney Foundation, Pune vs Income-tax Officer, (Exemption), Ward-2, Pune

आयकर अपील य अ धकरण “एक-सदय” यायपीठ पुणे म । IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM आयकर अपील सं. / ITA No.

194/PUN/2019 नधा रण वष / Assessment Year : 2014-15 Iqbal and Nina Chaney Foundation, 312/314/315, 3rd Floor, Metro House, Mangaldas Road, Pune-411 001 PAN : AAATI4663H .......अपीलाथ / Appellant बनाम / V/s.

The Income Tax Officer (Exemption), Ward-2, Pune. …… यथ / Respondent Assessee by : Ms.

Neha Paranjpe Revenue by : Shri M.K.

Verma सुनवाई क तारख / Date of Hearing : 09.04.2019 घोषणा क तारख / Date of Pronouncement : 16.04.2019 आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM : This appeal preferred by the assessee emanates from the order of the Ld.

CIT(Appeals), Pune-10 dated 01.11.2018 for the assessment year 2014-15 as per the grounds of appeal on record.

2 ITA No.

194/PUN/2019 A.Y.2014-15 2.

At the time of hearing, the assessee has preferred additional grounds which are herein admitted since it goes to the root of the matter and is, therefore, in accordance with the directions laid down by the Hon'ble Apex Court in the case of National Thermal Power Co.

Ltd.

Vs.

CIT reported as 229 ITR 383(SC).

The additional grounds raised by the assessee are as under: “1.

Whether on the facts and in circumstances of the case and in law, the, intimation dated 31.01.2016 issued by CPC, Bangalore under section 143(1) of the Act taxing the Appellant at maximum marginal rate is not a permissible adjustment as per the provisions of the section 143(1) of the Act.

Thus, the said intimation may be declared as a bad in law and subsequently be quashed.

2.

The authorities below failed to appreciate that the issue of taxability under Maximum marginal rate as against the normal tax rate is the debatable issue and no adjustment can be done on the said ground in the intimation issued by CPC under section 143(1) of the Act.

Thus, the said intimation may be quashed.

3. uashed.

3.

The Appellant craves leave to add, alter or amend any of the above grounds of appeal.” 3.

First we would adjudicate the additional grounds raised in appeal by the assessee.

The crux of the grievance of the assessee is that when assessment is completed and information was provided to the assessee u/s.143(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), then within the said provisions, the Assessing Officer whether is permitted to enhance the tax as that in comparison to the tax shown by the assessee in the return of income.

4.

The brief facts in this case are that the assessee is a public charitable trust duly registered with Maharashtra Public Trust Act, 1950 on 17.07.2004 vide registration No.

E-4768 (Pune).

The assessee trust has obtained registration u/s.

12AA of the Act w.e.f.

30.04.2014.

The assessee trust had filed return of income at Rs.3,14,142/-.

The income as declared by the assessee was accepted by the CPC Bangalore.

However, there is difference in 3 ITA No.

194/PUN/2019 A.Y.2014-15 calculation of tax.

The assessee has calculated tax as per normal rate at Rs.11,756/- by treating itself as AOP.

However, the CPC has calculated the tax at Rs.94,242/- being maximum marginal rate chargeable to tax i.e.30%.

Therefore, the tax as per assessee was Rs.11,756/- whereas, CPC has calculated tax excluding interest u/s.234B and 234C of the Act at Rs.94,242/-.

5.

At the time of hearing, the Ld.

AR of the assessee vehemently argued that the said action taken by the Assessing Officer is not warranted within the provision of section 143(1) of the Act.

That when the Department has processed the return of income and issued intimation u/s.143(1) of the Act, then, it is only some arithmetical error or some mistakes which are absolutely apparent from record may be considered while completing such assessment. ssessment.

However, this sort of exercise when the tax has been enhanced by the Assessing Officer is not permitted within the ambit of assessment completed u/s.143(1) of the Act.

6.

Per contra, the Ld.

DR has placed reliance on the orders of the Sub- ordinate Authorities.

7.

We have perused the case records and heard the rival contentions.

We have also analysed the facts and circumstances in this case.

That on perusal of the provisions of section 143(1) of the Act, it is absolutely clear that in the assessment completed u/s.143(1) of the Act, the return filed has to be processed after taking into consideration certain arithmetical error or certain error which are absolutely apparent from the return itself, these basic mistakes in the return of income may be considered and the assessment has to be completed.

That for all practical purposes whenever the return is 4 ITA No.

194/PUN/2019 A.Y.2014-15 processed u/s.143(1) of the Act the returned income declared by the assessee is accepted by the Department and intimation u/s.143(1) of the Act is issued to the assessee.

Thereafter, if the return is selected for scrutiny then the assessment u/s.143(3) of the Act is completed after issuing and serving statutory notices to the assessee u/s.143(2) r.w.s.

142(1) of the Act along with questionnaire.

In the assessment made u/s.143(1) of the Act, the Assessing Officer is only doing a preliminary assessment after which intimation is sent to the assessee.

If the return of income is accepted as it is by the Department then intimation u/s.143(1) sent with demand Nil and if after considering certain basic parameters as imbibed with Section 143(1) of the Act vis-à-vis the return filed some demand arises there the intimation u/s.143(1) is sent along with a demand notice in a specific form in accordance with section 156 of the Act.

The scope of scrutiny of return is permitted as per the Act when assessment completed u/s.143(3) of the Act and not in assessment u/s.143(1) of the Act. f the Act.

The only objective of preliminary assessment u/s.143(1) of the Act is to process return so as to collect taxes if any or issue refund to assessee as the case may be.

In this aspect of the matter it would not be out of place to observe that with millions of tax returns filed every year, there was a need to automate the process of assessment of these tax returns and hence the Finance Act, 2008 empowered Central Board of Direct Taxes (CBDT) to introduce scheme of Centralized Processing of those return and Department adopted Centralized Processing Centre (CPC).

This is instated in Bangalore where the return are processed without any interface with tax payers and in authority free manner with help of computer.

Though it is good on one hand on the other it is not free from technical errors.

Reverting to the facts of the present case, the ITO/CPC had enhanced tax to Rs.94,242/- without assigning any reason or without pointing out any 5 ITA No.

194/PUN/2019 A.Y.2014-15 defects in the return filed and has provided intimation to the assessee after completion of assessment u/s.143(1) of the Act.

Nowhere in the said provision, such kind of action is permitted for the Assessing Officer.

In view of the matter, we set aside the order of the Ld.

CIT(Appeals) and direct the Assessing Officer to take the tax as declared by the assessee in the return of income therefore allowing the appeal of the assessee.

8.

Since additional grounds have been answered in favour of the assessee, all other grounds in this appeal become infructuous.

9.

In the result, appeal of the assessee is allowed.

Order pronounced on 16th day of April, 2019.

Sd/- Sd/- ANIL CHATURVEDI PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; दनांक / Dated : 16th April, 2019.

SB आदेश क# $ त&ल'प अ(े'षत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant.

2. यथ / The Respondent.

The CIT(Appeals)-10, Pune.

The CIT(Exemptions), Pune.

5. , Pune.

5. "वभागीय %त%न&ध, आयकर अपीलय अ&धकरण, “एक-सदय” ब*च, पुणे / DR, ITAT, “SMC” Bench, Pune.

6. गाड- फ़ाइल / Guard File. // True Copy // आदेशानुसार / BY ORDER, %नजी स&चव / Private Secretary आयकर अपीलय अ&धकरण, पुणे / ITAT, Pune.

6 ITA No.

194/PUN/2019 A.Y.2014-15 Date 1 Draft dictated on 09.04.2019 Sr.PS/PS 2 Draft placed before author 09.04.2019 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr.

PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order