Dabur India Limited Vs ACIT (ITAT Delhi)
143(1) Intimation Doesn’t Automatically Merge if AO Ignores Rectification Issues: ITAT Revives Appeal
CPC, while processing return u/s 143(1), made mechanical adjustments by adding back R&D expenditure of ₹16.19 crore despite deduction claimed u/s 35,& by not reducing provision for deferred tax of ₹140.47 crore while computing MAT u/s 115JB.
Assessee filed rectification u/s 154, which remained undisposed. Subsequently, regular assessment was completed u/s 143(3) r.w.s. 144C/144B by merely adopting income determined u/s 143(1) without examining or curing these CPC adjustments. JCIT(A) dismissed Assessee’s appeal against 143(1) intimation as infructuous on the ground of merger.
Tribunal held that although normally 143(1) merges with 143(3), such merger does not occur where AO fails to consider pending rectification issues or grievances arising from 143(1) while completing regular assessment. Since none of the authorities addressed Assessee’s substantive grievances, ITAT set aside the order & remanded the matter to JCIT(A) for fresh adjudication on merits after granting due opportunity. Appeal allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT DELHI
The assessee has filed appeal against the order of the Learned Addl./JCIT (A), Kochi [“Ld. JCIT(A)”, for short] dated 17.03.2025 for the Assessment Year 2021-22 raising following grounds of appeal :-
“1. That the Ld. CIT(A) has erred on facts and in law in holding that the appeal filed against order passed u/s 143(1) is infructuous as the order is merged with the assessment order passed u/s 143(3) r.w.s 144C(3) r.w.s 144B.
2. That the order of the ld. CIT(A) is bad in law as no opportunity of being heard was granted to the appellant.
3. Without prejudice to the ground number 1 and 2 above, the Ld. CIT failed to address the following issues on the merits of the case.
3a. The CPC has mechanically erred in adding back Rs.16.19 crs. to the income of the appellant inspite the fact that such R&D expense is already added back and the deduction of same was claimed as per the provisions of section 35.
3b. That the CPC has mechanically erred in not reducing an amount of Rs.(140.47) crs. representing provision for deferred tax in computation of MAT income as per the provisions of section 115JB.
4. The above grounds of appeal are independent and without prejudice to one another.
2. Brief facts of the case are, assessee filed its return of income for AY 2021-22 declaring total income of Rs.11,89,38,88,686/-. The total income of the assessee was determined under section 143(1) of the Income-tax Act, 1961 (for short ‘the Act’) dated 22.09.2022 by the CPC at Rs.12,05,57,19,770/- and raised a demand of Rs.34,84,16,830/-. Subsequently, the case of the assessee was also selected for scrutiny for complete scrutiny through CASS. Accordingly, the notices under section 143(2) and 142(1) of the Income-tax Act, 1961 (for short ‘the Act’) were issued and served on the assessee. The AO completed the assessment under section 143(3) r.w.s. 144C(3) r.w.s. 144B of the Act dated 25.01.2024. After completing the assessment, the AO determined the total income of the assessee after disallowing/adjustment towards transfer pricing adjustment, disallowance u/s 80G, mismatch of export data and mismatch of import data together of Rs.38,96,80,471/- by considering the income computed u/s 143(1)(a) of the Act an determined the total taxable income of Rs.12,44,54,00,241/-.
