TTP TECHNOLOGIES PRIVATE LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 7(1)(1), BANGALORE, BANGALORE

In this appeal, the assessee has raised the following grounds: - 1. Disallowance under section 14A of Rs. 21,34,217/- 1.1. On the facts and circumstances of the case, the learned Commissioner of Income Tax(Appeals) erred in disallowing a sum of Rs. 21,34,217/- under section 14A of the Income Tax Act, 1961. 1.2. On the facts and circumstances of the case, the learned Commissioner of Income Tax(Appeals) erred in not appreciating the fact that the amount of Rs. 21,34,217/- had already been disallowed in the computation of total income under the head Any other item or items of addition under section 28 to 44DA and further disallowance in this regard has resulted in a double disallowance. 2. Disallowance of provision for MSME interest of Rs. 44,71,802/- 2.1. On the facts and circumstances pf the case, the learned Commissioner of Income Tax(Appeals) erred in disallowing a sum of Rs. 44,71,802/- as interest disallowable under section 23 of the Micro, Small and Medium Enterprises Development Act,2006. 2.2. On the facts and circumstances of the case, the learned Commissioner of Income Tax(Appeals) erred in not appreciating the fact that the amount of Rs. 44,71,802/- had already been disallowed in the computation of total income under the head Any other item or items of addition under section 28 to 44D and further disallowance in this regard has resulted in a double disallowance. 3. On the fact and circumstances of the case, the learned Commissioner of Income Tax(Appeals) erred in rejecting the appeal raised on the ground that above disallowances were not made under the respective heads of disallowances mentioned in the ITR.

We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee company is engaged in the business of manufacturing and exporting radiators for Power Transformers. During the year under consideration, the assessee filed its return of income on 23/03/2022, declaring a total income of INR 43,74,92,280. The return filed by the assessee was processed vide intimation issued under section 143(1) of the Act, determining the total income of the assessee at INR 44,19,64,080. Subsequently, the return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. During the scrutiny proceedings, it was observed that the assessee has made substantial purchases from suppliers who are either non-filers or have filed non-business ITRs or have reported lower turnover in their ITRs. Accordingly, in order to verify the identity and genuineness of the transaction, notice was issued to the suppliers calling information under section 133(6) of the Act on various dates. On perusal of the information received from suppliers, it is observed that they have supplied the goods to the assessee and in support of the same, a copy of the Ledger account, a copy of the acknowledgement of ITR and computation of Income, a copy of the invoices and a copy of the Bank statement were provided by the suppliers as called for. Since on verification of information received from each such supplier(s), no discrepancies were noticed, the Assessing Officer (“AO”), vide assessment order dated 13/12/2022 passed under section 143(3) of the Act, did not make any adverse inference on this issue and made no addition to the income of the assessee computed vide intimation issued under section 143(1) of the Act.

The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee on the basis that the issues raised by the assessee do not arise from the assessment order passed under section 143(3) of the Act. The learned CIT(A) held that the assessee's grievance lies with the intimation issued under section 143(1) instead of the assessment order passed under section 143(3) of the Act. Being aggrieved, the assessee is in appeal before us.

Having considered the submissions of both sides and perused the material available on record, we find that only the issue of bogus purchases was examined by the AO during the scrutiny assessment proceedings, and after considering various documents placed on record, the AO, vide assessment order passed under section 143(3) of the Act, did not draw any adverse inference against the assessee. In the appeal before us, the assessee has raised the grounds challenging the disallowance made under section 14A of the Act and the disallowance of the provision for MSME interest. It is pertinent to note that none of these additions arises from the assessment order passed under section 143(3) of the Act. On the other hand, it is undisputed that both these additions/disallowances arose from the intimation issued under section 143(1) of the Act. Therefore, we do not find any infirmity in the order passed by the learned CIT(A) in rejecting the assessee’s appeal, as these issues do not emanate from the assessment order which resulted in the present appellate proceedings. As on these issues, there was no merger of the intimation issued under section 143(1) of the Act and scrutiny assessment order passed under section 143(3) of the Act, the impugned order passed by the learned CIT(A) is upheld. Accordingly, the grounds raised by the assessee are dismissed.

In the result, the appeal by the assessee is dismissed. Order pronounced in the open court on 6th July, 2026