South India Club Vs ITO (ITAT Delhi)
Summary: ITAT Delhi partly allowed the appeal of South India Club for Assessment Year 2018-19 and held that once the regular assessment under Section 143(3) was completed, the earlier intimation under Section 143(1) merged with that assessment and ceased to have an independent existence. The assessee had filed its return on 30.03.2019 claiming exemption under Section 11, but CPC denied the claim because Form 10B had not been filed along with the return. Subsequently, scrutiny proceedings were undertaken and an assessment under Section 143(3) was completed on 08.02.2021. The Tribunal agreed that the Section 143(1) intimation merged with the regular assessment and therefore the appeal against that intimation became infructuous.
However, it held that after reaching this conclusion, the CIT(A) ought not to have proceeded to give findings on the merits of the Section 11 exemption because the regular assessment and that substantive issue were already under challenge before another appellate authority. On the assessee’s contention regarding registration, the Tribunal recorded that registration under Section 12A had been granted on 05.01.2021 while the scrutiny assessment for AY 2018-19 was still pending, and observed that the assessee was eligible to claim the benefit of the first proviso to Section 12A(2), subject to the applicable conditions, there being no change in its objects and activities. Nevertheless, that issue was required to be decided in the appeal against the Section 143(3) assessment. The Tribunal accordingly held that the Section 143(1) intimation did not have legs to stand on its own and that the demand raised through that intimation did not survive.
