CIT(A) directed to consider rectification application u/s 154 against CPC adjustment made u/s 143(1)(a)
In a recent judgment, ITAT has directed CIT(A), NFAC to consider rectification application filed by assessee u/s 154 against CPC adjustment made u/s 143(1)(a).
ABCAUS Case Law Citation:
ABCAUS 3889 (2024) (03) ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) of National Faceless Appeal Centre (NFAC) in confirming rejection of rectification petition u/s 154 of the Income Tax Act, 1961 (the Act) of the applicant by the CPC Bengaluru.
the appellant assessee was a partnership firm. The Return of Income was filed declaring income under presumptive tax u/s 44AD of the Act by applying Net Profit Rate of 8% on gross receipts. The Return of Income was processed by CPC after making adjustment u/s 143(1)(a) of the Act and addition was made to the deemed profit as returned on account of partners salary.
Thereafter, the assessee moved an application u/s 154 of the Act with the CPC which came to be rejected by holding that the assessee had failed to respond to the communication to the proposed adjustment u/s. 143(1)(a) of the Act and, therefore, the transaction was closed and no further rectification was possible.
Aggrieved with the rejection of application u/s154 of the Act, the assessee filed an appeal before the NFAC challenging the said rejection. However, the assessee’s appeal came to be dismissed by the NFAC on the ground that there was no compliance on the part of the assessee on as many as eleven opportunities provided by the NFAC.
Before the Tribunal the assessee contended that undisputed fact was that assessee had declared deemed profit applying the provisions of section 44AD of the act without making any deduction for the salary paid to the partner from deemed net profit, additions for the partners salary was illegal and is liable to be quashed.
The Tribunal observed that it was evident that there was complete non compliance on the part of the assessee during the course of first appellate proceedings. However, looking into the facts of the case, the Tribunal opined that in the interest of justice, the assessee deserved one more opportunity to present his case and, therefore, it restored the case to the Office of the NFAC with the direction to provide one more opportunity to the assessee to present his case.
Accordingly, the appeal of the assessee was allowed.
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