ITC Infotech India Limited Vs DCIT (ITAT Kolkata)
The ITAT Kolkata allowed the assessee’s appeal against the order of the Joint Commissioner of Income Tax (Appeals) concerning disallowances under Section 43B of the Income-tax Act.
The assessee’s return for AY 2021-22 was processed under Section 143(1), wherein deductions aggregating to ₹11,25,44,273 under Section 43B were disallowed despite the tax audit report stating that the amounts, comprising bonus of ₹8,25,74,086, miscellaneous items of ₹71,09,943, and leave encashment of ₹2,08,60,243, had been paid during the financial year and were allowable. The assessee’s rectification application under Section 154 was rejected, and the CIT(A) dismissed the appeal, holding that the rectification order had merged with the subsequent assessment order passed under Section 143(3) read with Section 144B.
The Tribunal observed that the disputed amounts had been disallowed in earlier years for non-payment under Section 43B and became allowable in the relevant year upon payment, as also certified by the tax auditor. It further found that the subsequent scrutiny assessment merely adopted the income determined under Section 143(1) and did not examine or adjudicate the Section 43B disallowances. Accordingly, it held that the Section 143(1) intimation had not merged with the scrutiny assessment in respect of those unadjudicated issues.
