Goodrich Carbohydrates Ltd.’s Appeal Against CPC Bengaluru Order for FY 2020-21

Goodrich Carbohydrates Ltd.’s Challenge to Income Tax Assessment for FY 2020-21

The case of Goodrich Carbohydrates Ltd., a Delhi-based entity, against the Assistant Director of Income Tax (ADIT), Centralized Processing Center (CPC), Bengaluru, Karnataka, marks a significant point of contention within the realm of tax litigation. ITA No. 1762/DEL/2022, decided by the Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘B’, resonates as a beacon of precedent for cases involving the assessment year 2020-21. This article delves deep into the essence of the litigation, the legal contentions raised by the appellant, the arguments put forth by the respondent, and the final judgment rendered, allowing the appeal in favor of Goodrich Carbohydrates Ltd.

The saga commences with the filing of the return of income by Goodrich Carbohydrates Ltd. for the fiscal year 2019-20, on 15th February 2021. Subsequently, an intimation under section 143(1) of the Income-tax Act, 1961, dated 30th December 2021, outlined two pivotal disallowances challenging the fiscal integrity of the appellant. Notably, the bone of contention centered around the addition of exempt income concerning the sale of fixed assets, meticulously computed under the Companies Act, 2013, vis-à-vis the sale consideration reduced while calculating depreciation in accordance with the Income-tax Act, 1961.

As the case unfolds, the initial assessment u/s 143(1), executed by the CPC, Bengaluru, drew criticism for its superficial handling of the exempt income from the sale of fixed assets. The appellant contested this assessment, leading to the involvement of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. In an attack against the initial adjudication, Goodrich Carbohydrates Ltd. highlighted the technical glitch and inconsistencies that marred the assessment process, necessitating a nuanced scrutiny at the appellate level.

The appellate authority, embodied by the learned CIT (Appeals), however, chose to dismiss the appellant’s grounds for appeal. This decision was predicated on the verification of the return of income, the accompanying documents, and the appellant’s submission. The crux of the dismissal rested on deemed inconsistencies and the purported failure to furnish critical information pertaining to the capital gain accrued on the sale of depreciable assets.

The tribunal’s journey towards the final verdict encapsulates a thorough examination of the intricate details surrounding the case. Upon painstakingly perusing the records and hearing the representations, the bench critically evaluated the purported inconsistencies and the correctness of the addition made by the CPC, Bengaluru. The adjudicating members, Shri Narendra Kumar Billaiya and Shri Anubhav Sharma, in their erudite judgment, underscored the necessity to transcend beyond superficial inconsistencies, thereby spotlighting the technical glitch that unjustly victimized the appellant.

In a remarkable turn of events, the ITAT bench opined that the matter necessitated a remittance back to the file of the Assessing Officer (AO) to ascertain the veracity of the appellant’s submissions and the legitimacy of the addition stemming from a technical glitch. This pivotal directive ensured a fresh reassessment, paving the path towards justice and equity.

The tribunal’s decision, pronounced on 25th July 2023, not only allowed the appeal for statistical purposes but also mandated a meticulous re-evaluation by the AO, guided by the observations articulated by the ITAT bench. This case not only sets a pivotal precedent for interpreting technical glitches within the ambit of tax assessments but also augments the corpus of jurisprudence concerning the sale of fixed assets and the computation of exempt income.

In conclusion, the case of Goodrich Carbohydrates Ltd. vs. ADIT, CPC Bengaluru, for the assessment year 2020-21, transcends its immediate fiscal implications to underscore the paramount importance of accuracy, fairness, and justice in the realm of tax administration and litigation. It stands as a testament to the vigilant scrutiny exercised by the judicial mechanisms in place, ensuring that the tenets of justice and equity are upheld within the intricate tapestry of tax law.

Goodrich Carbohydrates Ltd.’s Appeal Against CPC Bengaluru Order for FY 2020-21