Bengaluru ITAT: Additions Made in Intimation U/s 143(1) Cannot Be Challenged in Appeal Against Scrutiny Assessment U/s 143(3)

TTP Technologies Private Limited Vs DCIT (ITAT Bangalore)

Bengaluru ITAT: Additions Made in Intimation U/s 143(1) Cannot Be Challenged in Appeal Against Scrutiny Assessment U/s 143(3)

The Bengaluru Bench of the ITAT has held that additions made in an intimation issued under section 143(1) do not automatically merge with a subsequent scrutiny assessment under section 143(3). Consequently, an assessee cannot challenge such additions in an appeal arising from the assessment order under section 143(3) when those issues were never examined or adjudicated during the scrutiny proceedings.

In the present case, the CPC, while processing the return under section 143(1), had made disallowances under section 14A and in respect of MSME interest. Subsequently, the case was selected for scrutiny, but the Assessing Officer examined only the issue of alleged bogus purchases. After verifying the suppliers through notices under section 133(6) and finding the purchases genuine, the AO made no addition in the assessment under section 143(3).

The assessee nevertheless sought to challenge the earlier section 14A and MSME interest disallowances in the appeal against the scrutiny assessment. The Tribunal upheld the CIT(A)’s order rejecting the appeal, observing that these additions arose solely from the intimation under section 143(1) and did not emanate from the assessment order passed under section 143(3). Since the scrutiny assessment had dealt only with the issue of bogus purchases, there was no merger of the 143(1) intimation with the scrutiny assessment on the unrelated issues.

Accordingly, the Tribunal dismissed the appeal and reaffirmed that where an issue is not the subject matter of scrutiny assessment, the intimation under section 143(1) continues to operate independently on that issue, and any challenge must be directed against the 143(1) intimation itself, not the subsequent assessment order.

FULL TEXT OF THE ORDER OF ITAT BANGALORE

1. The assessee has filed the present appeal against the impugned order dated 09/12/2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], which in turn arose from the assessment order passed under section 143(3) of the Act, for the assessment year 2021-22.

2. In this appeal, the assessee has raised the following grounds: –

1. Disallowance under section 14A of Rs. 21,34,217/-

1.1. On the facts and circumstances of the case, the learned Commissioner of Income Tax(Appeals) erred in disallowing a sum of Rs. 21,34,217/-under section 14A of the Income Tax Act, 1961.

1.2. On the facts and circumstances of the case, the learned Commissioner of Income Tax(Appeals) erred in not appreciating the fact that the amount of Rs. 21,34,217/- had already been disallowed in the computation of total income under the head Any other item or items of addition under section 28 to 44DA and further disallowance in this regard has resulted in a double disallowance.

2. Disallowance of provision for MSME interest of Rs. 44,71,802/-

2.1. On the facts and circumstances pf the case, the learned Commissioner of Income Tax(Appeals) erred in disallowing a sum of Rs. 44,71,802/- as interest disallowable under section 23 of the Micro, Small and Medium Enterprises Development Act,2006.

2.2. On the facts and circumstances of the case, the learned Commissioner of Income Tax(Appeals) erred in not appreciating the fact that the amount of Rs. 44,71,802/- had already been disallowed in the computation of total income under the head Any other item or items of addition under section 28 to 44D and further disallowance in this regard has resulted in a double disallowance.

3. On the fact and circumstances of the case, the learned Commissioner of Income Tax(Appeals) erred in rejecting the appeal raised on the ground that above disallowances were not made under the respective heads of disallowances mentioned in the ITR.

3. We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee company is engaged in the business of manufacturing and exporting radiators for Power Transformers. During the year under consideration, the assessee filed its return of income on 23/03/2022, declaring a total income of INR 43,74,92,280. The return filed by the assessee was processed vide intimation issued under section 143(1) of the Act, determining the total income of the assessee at INR 44,19,64,080. Subsequently, the return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. During the scrutiny proceedings, it was observed that the assessee has made substantial purchases from suppliers who are either non-filers or have filed non-business ITRs or have reported lower turnover in their ITRs. Accordingly, in order to verify the identity and genuineness of the transaction, notice was issued to the suppliers calling information under section 133(6) of the Act on various dates. On perusal of the information received from suppliers, it is observed that they have supplied the goods to the assessee and in support of the same, a copy of the Ledger account, a copy of the acknowledgement of ITR and computation of Income, a copy of the invoices and a copy of the Bank statement were provided by the suppliers as called for. Since on verification of information received from each such supplier(s), no discrepancies were noticed, the Assessing Officer (“AO”), vide assessment order dated 13/12/2022 passed under section 143(3) of the Act, did not make any adverse inference on this issue and made no addition to the income of the assessee computed vide intimation issued under section 143(1) of the Act.

4. The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee on the basis that the issues raised by the assessee do not arise from the assessment order passed under section 143(3) of the Act. The learned CIT(A) held that the assessee’s grievance lies with the intimation issued under section 143(1) instead of the assessment order passed under section 143(3) of the Act. Being aggrieved, the assessee is in appeal before us.

5. Having considered the submissions of both sides and perused the material available on record, we find that only the issue of bogus purchases was examined by the AO during the scrutiny assessment proceedings, and after considering various documents placed on record, the AO, vide assessment order passed under section 143(3) of the Act, did not draw any adverse inference against the assessee. In the appeal before us, the assessee has raised the grounds challenging the disallowance made under section 14A of the Act and the disallowance of the provision for MSME interest. It is pertinent to note that none of these additions arises from the assessment order passed under section 143(3) of the Act. On the other hand, it is undisputed that both these additions/disallowances arose from the intimation issued under section 143(1) of the Act. Therefore, we do not find any infirmity in the order passed by the learned CIT(A) in rejecting the assessee’s appeal, as these issues do not emanate from the assessment order which resulted in the present appellate proceedings. As on these issues, there was no merger of the intimation issued under section 143(1) of the Act and scrutiny assessment order passed under section 143(3) of the Act, the impugned order passed by the learned CIT(A) is upheld. Accordingly, the grounds raised by the assessee are dismissed.

6. In the result, the appeal by the assessee is dismissed.

Order pronounced in the open court on 6^th July, 2026