Section 143(1) Additions Can’t Survive If Not Upheld in Section 143(3) Order

DCIT Vs Interglobe Aviation Limited (ITAT Delhi)

Income Tax Appellate Tribunal (ITAT), Delhi Bench, has dismissed an appeal by the Deputy Commissioner of Income Tax (DCIT) against Interglobe Aviation Limited (IndiGo), upholding the deletion of a Rs. 11.05 crore disallowance made under Section 37 of the Income-tax Act. The Tribunal’s decision was based on the fact that the initial disallowance, made during a preliminary processing of the return under Section 143(1), had merged with a subsequent comprehensive assessment order under Section 143(3), which ultimately confirmed the assessee’s nil income.

The revenue had challenged the order of the Joint Commissioner of Income Tax (Appeals)-5, Chennai, for Assessment Year 2019-20. The dispute arose when the Assessing Officer (AO), during the automated processing of IndiGo’s return under Section 143(1), disallowed expenditures amounting to Rs. 38,48,85,884/- under Section 37. The assessee, however, had already declared a nil income in its return.

On appeal, the JCIT (A) deleted the disallowance, accepting IndiGo’s contention that the disallowed amount had already been offered to tax in its income computation, and that maintaining the disallowance would lead to double taxation. The revenue argued before the ITAT that the JCIT (A) should have sought more details or reconciliation from the assessee.