RENUKESHWAR INVESTMENTS & FINANCE LTD.,RENUKOOT vs. DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX, R -1, VARANASI

IN THE INCOME TAX APPELLATE TRIBUNAL VARANASI BENCH, VARANASI BEFORE SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA No.32/VNS/2024 A.Y.-2018-19 Renukeshwar Investments, vs. The NFAC, C/o Hindalco Inds Ltd., Renukoot, Delhi Sonbhadra, U.P. PAN: AABCR8261N (Appellant) (Respondent) Assessee by: Sh. Shailesh M Bandi, C.A. Revenue by: Sh. Koushlendra Tewari, CIT DR Date of hearing: 21.01.2026 Date of pronouncement: 17.04.2026 O R D E R PER NIKHIL CHOUDHARY, A.M.: This is an appeal filed by the assessee against the orders of the ld. CIT(A), NFAC under section 250 of the Income Tax Act, 1961 dated 9.01.2024 dismissing the appeals of the assessee, against the order of the Assessing Officeer passed under section 143(3) for the A.Y. 2018-19 on 6.02.2021. The grounds of appeal are as under:- “1. On the facts and in the circumstances of the case and in law, the learned Assessing Officer ("AO"), National e-assessment center, Delhi has grossly erred in assessing total income of the appellant based on the erroneously processed return by the CPC-Bangalore as per intimation generated u/s 143(1)(a) without giving effect to the rectification application u/s 154 filed by the Appellant company against the intimation passed u/s 143(1)(a). Hon'ble Commissioner of Income tax (Appeals), National Faceless Appeal Centre ("CIT(A)") has erred in stating that the additions made u/s 143(1)(a) are in order without considering the fact that the rectification application has been filed u/s 154 before the learned AO against the intimation generated u/s 143(1)(a) and the same has not been considered by learned AO while making assessment u/s 143(3) The learned AO be directed to assess the total income of the appellant u/s 143(3) based on the return filed u/s 139(1), the rectification application u/s 154 filed by the Appellant company against the intimation passed u/s 143(1)(a) and information filed during the assessment proceedings. 1

ITA No.32/VNS/2024 Renukeshwar Investments & Finance Ltd. A.Y. 2018-19

ITA No.32/VNS/2024 Renukeshwar Investments & Finance Ltd. A.Y. 2018-19 and loss account while computing income under head 'Profit and Gains from Business or Profession. 6. On the facts and in the circumstances of the case and in law, the learned AO has erred in considering capital gains of Rs. 3,63,943 twice in the computation of total income, once under the head 'Capital Gains' and again under the head 'Profit and Gains from Business or Profession' by not reducing capital gains of Rs. 3,63,943 from Profit before tax as per profit and loss account while computing income under the head "Profit and Gains from Business or Profession'. Hon'ble CIT(A) has erred in upholding the order of the learned AO. The learned AO be directed to consider the capital gains of Rs. 3,63,943 once only under head 'Capital Gains' in the computation of the total income and reduce the same from Profit before tax as per profit and loss account while computing income under head 'Profit and Gains from Business or Profession. 7. On the facts and in the circumstances of the case and in law, the learned AO has erred in not reducing dividend income of Rs. 6,13,23,104 which is exempt u/s 10(34) from Profit before tax as per profit and loss account while computing income under the head "Profit and Gains from Business or Profession' Hon'ble CIT(A) has erred in upholding the order of the learned AO. The learned AO be directed to reduce dividend income of Rs. 6,13,23,104 which is exempt u/s 10(34) while computing income under the head 'Profit and Gains from Business or Profession'. 8. On the facts and in the circumstances of the case and in law, the learned AO has erred in not reducing unrealized gain on fair valuation of investment of Rs. 56,10,206 being notional gain from Profit before tax as per profit and loss account while computing income under the head 'Profit and Gains from Business or Profession. Hon'ble CIT(A) has erred in upholding the order of the learned AO. The learned AO be directed to reduce unrealized gain on fair valuation of investment of Rs. 56,10,206 being notional gain from Profit before tax as per profit and loss account while computing income under the head "Profit and Gains from Business or Profession. 9. On the facts and in the circumstances of the case and in law, the learned AO has erred in levying interest u/s 2348 and 234C of the Act. Hon'ble CIT(A) has erred in upholding the order of the learned AO. The learned AO be directed to consider the above grounds and delete the interest charged u/s 2348 and 234C. 10. The Appellant company reserves the right to add, alter, amend or delete any of the ground/s before or during the course of the hearing.”

ITA No.32/VNS/2024 Renukeshwar Investments & Finance Ltd. A.Y. 2018-19 assessee filed a rectification request with the jurisdictional AO vide email dated 21.04.2020. Even while this rectification request was under consideration, the case of the assessee was selected for scrutiny through CASS with the reason, “expenses earned for earning exempt income” to be examined. Notices under section 143(2) and 142(1) were issued to the assessee and the assessee made online submissions in response to the same. However, the ld. AO, without recording any detailed reasons passed an assessment order in which he held that the total income as processed by the CPC Banglore was accepted as the assessed income. 3. Aggrieved with the said order, the assessee filed an appeal before the ld. CIT(A). Before the ld. CIT(A), it was submitted that a detailed rectification request had been filed with the jurisdictional AO in respect of the intimation under section 143(1) but the ld. AO had assessed a total income of Rs.6,72,97,250/-, following the orders of the CPC, Bangalore, without considering the rectification application that had been filed by the assessee. The ld. AO had also not discussed the submissions furnished by the assessee company in the order passed under section 143(3) and had also not recorded any reasons for his non-satisfaction regarding the explanations made by the assessee. The stand of the AO was completely against the principles of natural justice and established legal procedure. The assessee further argued that certain other additions had been made on account of capital gains and dividend income, which were not required to be assessed in the hands of the assessee as they were either duplicate additions or exempt under section 10(34). The ld. CIT(A), after considering the grounds of appeal filed by the assessee and the submissions filed before him, passed an order in which he stated that under section 143(1), the AO was empowered to make adjustments and the adjustments that had been made by the CPC were in accordance with the provisions of the Act. As the grievance of the assessee was against this intimation and none of the grounds arose out of the order under section 143(3), therefore, all the grounds of appeal were infructuous and were liable to be dismissed. Accordingly, he dismissed the said appeal. 4

ITA No.32/VNS/2024 Renukeshwar Investments & Finance Ltd. A.Y. 2018-19 4. The assessee is aggrieved with this order of the ld. CIT(A) and has come before us. Sh. Shailesh M. Bandi, C.A. (hereinafter referred to as the ld. AR) took us through the facts of the case and pointed out that at no stage had these submissions of the assessee been considered by the Assessing Authorities. It had filed a detailed application for rectification, which had not been considered by the CPC as rectification rights had been transferred to the jurisdictional AO and not been considered by the jurisdictional AO also till date. The Faceless Assessment Officer had also not considered the details of the said rectification application and had also not recorded the assessee’s submissions or the findings recorded by him on such submissions, even though he was specifically required in terms of the scrutiny parameters to examine this. Thereafter, the ld. CIT(A) had refused to consider the submissions of the assessee on account of his belief that the cause of action lay against the processing under section 143(1)(a), without considering the fact that the AO, after considering the submissions of the assessee under section 143(3) had chosen to reiterate the findings in a proceeding under section 143(3). Therefore, it was prayed that the decision of the lower authorities was completely wrong and assessee should be heard on the facts of the case. Our attention was invited to the decision of the ITAT Jaipur Bench in the case of Shri Paras Kuhad vs. The DCIT in ITA No. 260/JP/2022, wherein the ITAT Jaipur Bench had held that the consequent demand from the adjustment under section 143(1) merged into the order of the AO passed under section 143(3) of the Income Tax Act. Our attention was also invited to the decision of the ITAT Delhi Bench in the case of South India Club vs. ITO (2024) 163 taxman.com 479 (Delhi-Trib) where also the ITAT held that where an assessment was made under section 143(1) and subsequently a regular assessment was done under section 143(3), the order passed under section 143(1) merged with the assessment order passed under section 143(3), rendering the appeal against the intimation under section 143(1) as infructuous. Accordingly, he prayed that the action of the ld. CIT(A) was wrong and therefore, the assessee was fully within its rights to contest the additions made in the course of this appeal.

ITA No.32/VNS/2024 Renukeshwar Investments & Finance Ltd. A.Y. 2018-19 5. On the other hand, Sh. Koushlendra Tewari, CIT DR (hereinafter referred to as the ld. DR) argued that it was apparent that were mistakes in the return filed by the assessee and the assessee had not revised its return within due time therefore, the processing that was done by the CPC was correct and since there was failure to revise the return, the ld. AO was also justified in assessing the income at the amount determined by the CPC. He, therefore, submitted that there was no infirmity in the orders of the AO. He also argued that since the grievance arose out of the processing and not the regular assessment under section 143(3), the assessee should have gone in appeal if the application under section 154 had not been addressed within time.

ITA No.32/VNS/2024 Renukeshwar Investments & Finance Ltd. A.Y. 2018-19 submissions and pass a reasoned order in accordance with law. Accordingly, as the matter stands restored back to the file of the AO for de novo assessment, the appeal of the assessee is held to be allowed for statistical purposes.