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Facts
The assessee challenged adjustments made by the CPC under Section 143(1) for ICDS differences and sundry balances written off. The CIT(A) dismissed the appeal, holding it to be infructuous as the adjustments merged with a subsequent assessment under Section 143(3).
Held
The Tribunal held that the adjustments made under Section 143(1) are separate from those made under Section 143(3). It was noted that the assessee had already offered these amounts to tax, and further adjustment would lead to double taxation. The matter was set aside to the AO for verification.
Key Issues
Whether the adjustments made by the CPC under Section 143(1) merge with a subsequent assessment under Section 143(3) and if such adjustments, already offered to tax, lead to double taxation.
Sections Cited
143(1), 143(3), 144C(3), 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH, BANGALORE
Before: SHRI NARENDER KUMAR CHODHRY & SHRI WASEEM AHMED
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order passed by the ld. CIT(A), Kochi vide order dated 12-03-2025 for the assessment year 2021-22.
The only effective issue raised by the assessee in Ground Nos. 3 and 4 is that the learned CIT(A) erred in confirming the disallowance of the adjustment made by the CPC under section 143(1) of the Act. The adjustment was on account of ICDS differences and sundry balances written off, amounting to ₹2,84,09,902 and ₹16,52,304 respectively.
In the present case, the assessee filed the return of income declaring income of ₹1,74,21,80,570.00 only. This return was processed under section 143(1)(a) of the Act after making certain upward adjustments as detailed below: • ICDS-related difference: ₹2,84,09,902.00
• Sundry balances written off: ₹16,52,304.00
In view of the above, the total income was determined at ₹1,77,22,42,780.00 only. The assessee challenged the adjustments before the learned CIT(A). However, the ld. CIT(A) dismissed the appeal by observing that the adjustments made by the CPC had merged with the assessment framed under section 143(3) read with section 144C(3) and section 144B of the Act vide order dated 13-02-2024. Therefore, the ld. CIT(A) held that the appeal filed by the assessee was infructuous and liable to be dismissed.
Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us.
The learned AR before us submitted that the appeal filed against the intimation under section 143(1) is maintainable. He pointed out that the issue arises from a separate order dated 22 September 2022. Furthermore, the AO, in the assessment framed under section 143(3) read with section 144C(3) and section 144B of the Act, has not dealt with the issues raised in the intimation under section 143(1) of the Act. In addition, the learned AR submitted that the adjustments made by the CPC under section 143(1) for ICDS differences and sundry balances written off had already been offered to tax in the return of income.
Therefore, any further adjustment would result in double taxation. The learned AR drew attention to page 34 and 17 of the paper books to support his claim.
The learned AR also fairly admitted that none of the lower authorities had verified the necessary details to check whether the CPC's adjustments were already offered to tax in the return of income. Accordingly, the learned AR requested that the matter be set aside to the AO for fresh adjudication as per the law.
On the other hand, the learned DR could not controvert the arguments made by the learned AR for the assessee.
We have heard both sides and considered the materials on record. From the above discussion, we note that the adjustments made by the CPC were already offered to tax by the assessee in the return of income. This can be verified from the computation of income on page 34 and the profit and loss account schedule at page 17 of the paper book. Therefore, any further adjustment would lead to double addition, which is not justified under the law.
9.1 However, it is admitted that the lower authorities have not verified these facts. Hence, we set aside the findings of the learned CIT(A) and direct the AO to delete the addition after necessary verification. The assessee is at liberty to file all relevant documents in support of the claim.
9.2 It is important to note that the adjustments made in the proceedings under section 143(1) of the Act are separate and independent from the disallowance/ addition made in the assessment order passed under section 143(3) read with section 144C(3) and section 144B of the Act. In this case on hand, the AO in the final assessment started the computation of income as determined in the intimation under section 143(1) of the Act, without any further discussion on the CPC's adjustments. In view of the above, we set aside the issue to the file of the AO for fresh adjudication as per law. Hence, the ground of appeal raised by the assessee is allowed for statistical purposes.
9.3 It is also important to note that there was no argument advanced by the learned AR for the assessee with respect to the issues raised in ground of appeal bearing numbers 1 and 2 and 5, therefore we are not inclined to deal with those grounds of appeal. As such, we hold them as infructuous and dismiss the same.
In the result, the appeal of the assessee is partly allowed for statistical purposes.