Madhu Sudan Misra Vs DCIT (ITAT Delhi)
143(1) Adjustments Merge into 143(3): ITAT Delhi Deletes CPC Additions & Overrules NFAC Dismissal
The Delhi ITAT “E” Bench, comprising Shri S. Rifaur Rahman (AM) & Shri Sudhir Kumar (JM), allowed the appeal of Madhu Sudan Misra for AY 2018-19 and held that adjustments made by CPC u/s 143(1) cannot survive once a regular assessment u/s 143(3) is completed, applying the settled doctrine of merger
The Assessee had filed return declaring income of ₹1.39 crore. CPC issued an intimation proposing adjustments relating to (i) capital gains reported in an incorrect schedule and (ii) denial of set-off of losses of AYs 2010-11 & 2011-12 on the alleged ground of belated return. Despite the Assessee filing objections and explaining that he was a partner in a tax-audit firm u/s 44AB, CPC passed intimation u/s 143(1) making additions.
Subsequently, the case was selected for limited scrutiny, notices u/s 143(2) and 142(1) were issued, and the AO completed assessment u/s 143(3) without making any independent additions, merely adopting the income as determined by CPC. The NFAC-CIT(A) dismissed the appeal holding that the Assessee should have separately appealed against the 143(1) intimation.
Reversing the NFAC order, the Tribunal held that:
