MSTC Ltd. Vs Jurisdictional Assessing Officer (ITAT Kolkata)
Conclusion: Doctrine of merger did not apply because AO had accepted the returned income, thereby implying that no addition was made on account of the reasons for which the case was selected under scrutiny but the adjustment made to the income vide intimation issued by the CPC had been retained.
Held: Assessee had been mainly providing e-platform for conducting e-auction, e-procurement services for disposal of scrap arisings, surplus stores, etc. from PSUs and Government Departments including Defence. It also looked after the procurement of industrial raw materials in bulk for its customers. The items that were procured include Coke, Coal, etc., which were mainly consumed by the Power and Steel industry in the country. Assessee company filed its return of Income for the A.Y. 2021-22 declaring total income at ‘Nil’. However, assessee contended as per the statement of fact filed before CIT(A) that “the Assessee company filed its return for the Assessment Year 2021-22 vide Acknowledgement Number 938675410170122 on 17.01.2022, well within the extended due date for filing of return which stood extended till 15.03.2022, declaring Loss of Rs.36282050 and carry forward of such loss and claiming refund of Rs. 144150124 arising out of TDS and TCS effected for Rs.110856751 and Rs. 793373, respectively along with Advance Tax paid for Rs. 32500000. Hence refund of Rs. 144150124 with interest stood payable to Assessee.” The return of the assessee had been processed and income computed u/s 143(1)(a) at the total income of Rs. 223,14,77,950/- raising a demand of Rs. 81,85,97,786/-. Against this intimation, assessee filed an appeal before CIT(A) on 18.10.2022 and rectification petition u/s 154 of the Act through online grievance before CPC-ITR 27.10.2022 and rectification petition u/s 154 through online grievance before AO NaFAC on 04.11.2012, which were still pending. Subsequently, the case had been selected under scrutiny for the reason “Very Low PBDIT ratio in specific business code and turnover range where deficiency was reported in audit report. Therefore, the reason for low PBDIT to turnover ratio may be verified”. AO concluded that no adverse inference was warranted, finalizing the assessment at ₹2,231,477,950. CIT(A) reviewed and dismissed assessee’s appeal, prompting the current appeal before the tribunal. It was held that the addition made in the intimation u/s 143(1)(a) by the CPC had not been reversed by AO in the order u/s 143(3) passed subsequently and the income as per the intimation had only been retained, therefore, the doctrine of merger did not apply. AO had accepted the returned income, thereby implying that no addition was made on ac-count of the reasons for which the case was selected under scrutiny but the adjustment made to the income vide intimation issued by the CPC had been retained. Hence, all the grounds of appeal in this regard were dismissed and the appeal of the assessee was liable to be dismissed. Assessee might pursue the other modes of relief in respect of the addition made in the intimation under section 143(1)(a).
