ITA No.240/C/2016 IN INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH KOCHI BEFORE S/SHRI B P JAIN, AM & GEORGE GEORGE K, JM ITA No 240/Coch/2016 (Asst Year 2008-09) M/s. Central Financiers, Vs Income Tax Officer, Ward 1, Room No.11/544, Pattanikarottu Kottayam. Building, Kuravilangad, Kottayam- 686633 ( Appellant) (Respondent) PAN No. AACFC 5739N Assessee By Shri C.B.M.Warrier,C.A Revenue By Sh Dhanaraj, Sr DR Date of Hearing 27th Sept 2016 Date of pronouncement 28th Sept 2016 ORDER PER GEORGE GEORGE K, JM: This appeal, at instance of assessee, is directed against CIT(A)s order dated 18.3.2016. relevant assessment year is 2008-09. 2 solitary issue that arises for our consideration is whether Assessing Officer while passing intimation under section 143(1) of Income Tax Act, 1961(in short Act ) is justified in changing status of assessee from AOP to that of firm . 3. Briefly stated, facts of care are as follows:- 1 ITA No.240/C/2016 assessee was assessed in past years in status of AOP. For relevant assessment year namely, assessment year 2008-09, return of income was filed in status of AOP. return was processed u/s. 143(1) of Act on 30/3/2010 under status of firm. assessee filed rectification application requesting that status is to be changed to AOP. rectification application was rejected by Assessing Officer vide his letter dated 01/09/2010. 3. Aggrieved by letter of Assessing Officer rejecting rectification application, assessee preferred appeal before first appellate authority. CIT(A) dismissed appeal of assessee. CIT(A) was primarily of view that assessee had PAN in status of firm and hence, not possible to change status to that of AOP. relevant finding of CIT(A) read as under:- 9. assessee is partnership firm, but has been assessed as AOP for many years. PAN has been obtained in status of firm. This change in status worked smoothly as long as income tax returns were processed manually. Now, after introduction of full-fledged computerized processing change in status is not possible. But, assessee wants this old practice to be continued for some reason, which is not logically correct. I do not find any merit in argument of assessee. If assessee wants to change status to AOP, he should apply to authority issuing PAN numbers. Asking Assessing Officer to change every time is not correct. For above said reasons he appeal is dismissed. 4. Aggrieved by order of CIT(A) assessee is in appeal before us. Ld. Counsel for assessee reiterated submissions made before Income Tax Authorities. On other hand, Ld. Departmental Representative supported orders of Assessing Officer and CIT(A). 2 ITA No.240/C/2016 5. We have heard rival submissions and perused material on record. Primarily, in this case, assessee for past many years have been assessed in status of AOP. For current assessment year also return of income was filed in status of AOP. Copy of return filed for relevant assessment year is placed on record at page-40 of paper book filed by assessee. Therefore, CIT(A) s reasoning that assessee had filed return for assessment year 2008-09 in status of firm is wrong and incorrect. 5.1. While passing Intimation U/s 143 (1) of Act , adjustment shall be limited to following items. Where return has been made under section 139, or in response to notice under sub-section (1) of section 142, such return shall be processed in following manner, namely :- a) total income or loss shall be computed after making following adjustments, namely :- I. any arithmetical error in return; [or] II. incorrect claim, if such incorrect claim is apparent from any information in return; III. disallowance of loss claimed, if return of previous year for which setoff of loss is claimed was furnished beyond due date specified under sub - section (1) of section 139; IV. disallowance of expenditure indicated in audit report but not taken in to account in computing total income in return; V. disallowance of deduction claimed under sections10AA, 80-IA, 80-lAB, 80-IB, 80-IC, 80-lDor section 80-IE, if return is furnished beyond due date specified under sub-section (1) of section 139; or VI. addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing total income in return: Provided that no such adjustments shall be made unless intimation is given to assessee of such adjustments either in writing or in electronic mode: Provided further that response received from assesse, if any, shall be considered before making any adjustment, and in case where no response is received within thirty days of issue of such intimation, such adjustments shall be made; 3 ITA No.240/C/2016 b) tax and interest, if any, shall be computed on basis of total income computed under clause (a); c) sum payable by, or amount of refund due to, assesse shall be determined after adjustment of tax and interest, if any, computed under clause (b) by any tax deducted at source, any tax collected at source, any advance tax paid, any relief allowable under agreement under section 90 or section 90A, or any relief allowable under section 91, any rebate allowable under Part of Chapter VIII, any tax paid on self-assessment and any amount paid otherwise by way of tax or interest; d) intimation shall be prepared or generated and sent to assessee specifying sum determined to be payable by, or amount of refund due to, assesse under clause (c); and e) amount of refund due to assesse in pursuance of determination under clause (c) shall be granted to assesse: Provided that intimation shall also be sent to assessee in case where loss declared in return by assesse is adjusted but no tax or interest is payable by, or no refund is due to, him: Provided further that no intimation under this sub-section shall be sent after expiry of one year from end of financial year in which return is made. 5.2 assessing officer has not given any notice or proposal to change status of assesse as per return of income filed. Assessing Officer is not authorized to make any changes other than what is provided in provisions of Act and hence change in status of assessee without giving opportunity to assessee to explain case is without jurisdiction. 5.3 CIT (Appeal) is fundamentally wrong since he proceeded with wrong understanding that assessee filed return of income, with status of firm. assessee also submitted that income from business is computed without claiming remuneration or interest to partners, because status is adopted as AOP. This is evident from Statement of Total Income for A. Y. 2008 - 09 filed along with return of income.(Page- 83 of paper book filed by assessee) 4 ITA No.240/C/2016 5.4 In view of above reasoning, change of status of assessee from that of AOP to FIRM is not justified on facts and circumstances of case. It is ordered accordingly. 6. In result, appeal filed by assessee is allowed. Order pronounced in open Court on this 28th day of Sept 2016. Sd/- Sd/- ( B P JAIN ) ( GEORGE GEORGE K) Accountant Member Judicial Member Cochin: Dated 28th Sept 2016 VM, Sr. PS Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT, 5. DR 6. Guard File By order Assistant Registrar ITAT, COCHIN 5 ITA No.240/C/2016 6 M/s. Central Financiers v. Income-tax Officer, Ward 1, Kottayam