Case Law Details
SRBC & Co. LLP Vs DCIT (ITAT Kolkata)
The appeal before the Income Tax Appellate Tribunal (ITAT), Kolkata, arose from an order of the CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 1 December 2021, which originated from an intimation issued by the Deputy Commissioner of Income Tax, CPC Bengaluru, under Section 143(1) of the Income-tax Act for Assessment Year 2017-18. The assessee challenged various adjustments made while processing the return, including taxation of dividend income under Section 115BBDA, alleged double taxation of income, short grant of TDS credit, and levy of interest under Sections 234B and 234C.
At the outset, the Tribunal considered a delay of 99 days in filing the appeal. The delay fell during the period affected by the COVID-19 pandemic. Referring to the Supreme Court’s directions in Suo Motu Writ Petition (C) No. 3 of 2020 excluding the period from 15 March 2020 to 28 February 2022 for limitation purposes and granting an additional period of 90 days from 1 March 2022, the Tribunal condoned the delay and proceeded to hear the matter.
The assessee had originally filed its return on 30 October 2017 declaring total income of ₹41,15,79,882. While processing the return under Section 143(1), the CPC computed the taxable income at ₹41,55,30,701. The assessee filed an appeal against the adjustments made in the intimation. During the pendency of that appeal, however, the case was selected for scrutiny and an assessment order under Section 143(3) was passed on 24 December 2019. In that assessment, the Assessing Officer made a disallowance relating to a claim of exemption for provision for leave encashment under Section 43B(f). The assessee separately challenged that assessment order before the CIT(A), where the matter remained pending.
The Tribunal observed that the issues raised in the present appeal related to adjustments made in the intimation under Section 143(1), particularly taxation of dividend income from mutual fund units under Section 115BBDA and short grant of TDS credit. However, the assessment order passed under Section 143(3) had not made any addition relating to the dividend income issue raised in the present appeal. The Tribunal further noted that the Assessing Officer, while completing the scrutiny assessment, computed income based on the returned income and not on the income processed under Section 143(1).
The Tribunal held that once an assessment order under Section 143(3) had been passed, the earlier intimation issued under Section 143(1) merged with the assessment order. As a result of this merger, the cause of action arising from the intimation under Section 143(1) ceased to exist independently. Consequently, the appeal challenging the intimation became infructuous.
The Tribunal clarified that it had not expressed any opinion on the issues arising from the assessment order passed under Section 143(3), which formed the subject matter of separate appellate proceedings pending before the CIT(A). Those proceedings would be decided independently in accordance with law. On this basis, the Tribunal dismissed the appeal as infructuous.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This appeal filed by the assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi vide Order No. ITBA/NFAC/S/250/2021-22/1037401774(1) dated 01.12.2021 passed against the order by the DCIT, CPC, Bangalore u/s. 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) dated 04.12.2019.
2. At the outset, we note that appeal of assessee is time barred by 99 days and a condonation petition has been placed on record. The impugned order of Ld. CIT(A) is dated 01.12.2021 and the assessee had received the order on the same day itself. The present appeal ought to have been filed by 29.01.2022. It is noted that the period of delay falls during the time of Pandemic of Covid-19 which has been excluded by the Hon’ble Supreme Court in the case of Suo moto Writ Petition (C) No. 3 of 2020 dated 10.01.2022 by which the period from 15.03.2020 to 28.02.2022 has been directed to be excluded for the purpose of limitation. Vide this order a further period of 90 days has been granted for providing the limitation from 01.03.2022. Accordingly, we condone the delay and proceed to adjudicate upon the matter.
3. Grounds raised by the assessee are reproduced as under:
“General
1. erred in confirming the action of Ld. AO in computing total income of the Appellant at Rs. 41,55,30,701 as against income of Rs. 41,15,79,882 offered to tax by the Appellant in Revised Return of Income for the subject assessment year;
CIT(A) Order is bad in law:
2. erred in not adjudicating on grounds raised before Hon’ble CIT(A) by treating the appeal as infructuous without appreciating the fact that the additions made in the Intimation under Section 143(1) of the Act passed by the Ld. AO against Revised Return of Income has not been dealt with in the Assessment Order passed under Section 143(3) of the Act;
Non grant of sufficient opportunity of being heard
3. erred in not issuing show cause notice before issuing Intimation under Section 143(1) of the Act and thereby not granting sufficient opportunity of being heard to the Appellant leading to violation of the principles of natural justice;
Wrongly taxing exempt income under Section 115BBDA of the Act:
4. erred in levying tax on dividend income of Rs. 30,27,331 received from investment in units of Mutual-Funds under Section 115BBDA of the Act treating it as income received from domestic company without appreciating the fact that the same is which is exempt u/s 10(35) of the Act;
5. without prejudice to the above, erred in levying tax on dividend income of Rs.19,23,488 once under the head “Income from Profit and Gains of Business or Profession” and also under Section 115BBDA of the Act thereby leading to double taxation of same income;
Short grant of TDS credit
6. erred in granting TDS credit of Rs. 8,94,70,175 as against TDS credit of Rs.14,74,78,853 as claimed in Revised Return of Income, thereby granting short credit of TDS of Rs. 5,80,08,678;
Levy of interest under Section 234B of the Act
7. erred in levying interest under Section 234B of the Act of Rs. 1,76,36,982; Levy of interest under Section 234C of the Act
8. erred in levying interest under Section 234C of the Act of Rs. 26,17,929;
The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing of the appeal, so as to enable the Learned Hon’ble ITAT to decide this appeal according to law.”
4. Brief facts of the case are that return was filed on 30.10.2017 reporting total income of Rs.41,15,79,882/-which was processed by the Central Processing Unit (CPC), Bengaluru u/s. 143(1) of the Act at total taxable income of Rs.41,55,30,701/-. In respect of adjustment made in the processing of return u/s. 143(1) of the Act, assessee went in appeal before the Ld. CIT(A). During the pendency of appeal before ld. CIT(A), return of the assessee for the impugned year i.e. AY 2017-18 was selected for scrutiny and the assessment order was passed u/s. 143(3) of the Act dated 24.12.2019. In the assessment order passed u/s. 143(3) of the Act, disallowance has been made in respect of claim of exemption on account of provision for leave encashment amounting to Rs.1,30,53,246/- u/s. 43B(f) of the Act. The said assessment order is placed on record in the paper book at page 100. Assessee is in appeal before the Ld. CIT(A) against the disallowance made in the assessment completed u/s. 143(3) of the Act and is pending for disposal. The issue raised in the said assessment order is not before us in the present appeal by the assessee which in effect pertains to the adjustment made and levying tax on dividend income as well as short grant of TDS credit (refer grounds of appeal reproduced supra).
5. From the perusal of the assessment order passed u/s. 143(3) of the Act, we note that Ld. AO has proceeded to compute the assessed income by making an addition to the returned income of the assessee and not the income processed u/s. 143(1) of the Act. However, it is noted that in the said order u/s. 143(3) of the Act, there is no addition made in respect of dividend income received from investment in units of mutual funds u/s. 115BBDA of the Act. We note that since the assessment order u/s. 143(3) of the Act has already been passed in the present case before us, the intimation u/s. 143(1) of the Act against which the assessee is in appeal before us got merged with the aforesaid assessment order. Once the present intimation u/s. 143(1) of the Act having got merged in the assessment order passed u/s. 143(3) of the Act, the cause of action for the present appeal itself has vanquished, rendering the instant appeal as infructuous. While doing so, we would make it very clear that we have not expressed any views in respect of the matter raised in the assessment order passed u/s. 143(3) of the Act for which appeal by the assessee before the Ld. CIT(A) is pending for adjudication. That is a separate proceeding and the outcome of the same may be taken up in separate appellate proceedings under the relevant provisions of the Act at the discretion of the concerning parties. Considering the above observation and finding, we dismiss the appeal of the assessee as infructuous.
In the result, appeal of the assessee is dismissed.
Order pronounced in the open Court on 24th November, 2022
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