India Thermit Corporation Ltd Vs DCIT (ITAT Delhi)
ITAT Delhi ruling on Two proceedings initiated simultaneously -Notice u/s 143(2) for scrutiny assessment and AO subsequently processed the return u/s 143(1) making adjustment of income
Income Tax Appellate Tribunal (ITAT) Delhi has ruled in favor of India Thermit Corporation Ltd in its appeal against the Deputy Commissioner of Income Tax (DCIT). The case pertained to the validity of an income tax adjustment made under Section 143(1)(a) of the Income-tax Act, 1961, despite a scrutiny assessment already being initiated under Section 143(2). The assessee argued that once a notice under Section 143(2) had been issued, the Assessing Officer (AO) could not process the return under Section 143(1)(a). ITAT found merit in this contention and ruled in favor of the assessee.
The appellant had also sought condonation of delay in filing the appeal, citing disruptions caused by the COVID-19 pandemic. The tribunal accepted the affidavit submitted by the company’s Managing Director and found a reasonable cause for the delay, allowing the appeal to be heard on merits. The core dispute revolved around the AO making additions to the taxable income through adjustments under Section 143(1)(a), even though a scrutiny assessment was pending under Section 143(2). The tribunal relied on the Supreme Court ruling in Commissioner of Income-Tax vs Gujarat Electricity Board (260 ITR 84 SC), which held that once scrutiny proceedings are initiated, summary adjustments under Section 143(1)(a) are not permissible.
