JUBILANT INGREVIA LIMITED,BHARTIAGRAM vs. ASSISTANT COMMISSIONER OF INCOME TAX, MORADABAD

That on the facts and circumstances of the case and in law, the Ld. ACIT erred in levying interest under section 234A of the Act without appreciating that the return of income being filed within the extended statutory due date.

That on the facts and circumstances of the case and in law, the Ld. ACIT erred in levying interest under section 234C of the Act on the impugned assessed income.

That on the facts and circumstances of the case and in law, the Ld. ACIT erred in initiating penalty under section 270A of the Act.”

We have heard the rival submissions and perused the materials available on record. The assessee company filed its return of income for the assessment year 2021-22 on 2-3-2022 declaring total income of Rs. 55,07,00,800. The assessee company is engaged in the business of manufacturing and sale of chemicals in India and abroad. The chemicals are used in range of applications such as aromatics, adhesives, food, packaging, beverages, crop protection chemicals, textiles and other solvents. The return filed by the assessee was duly processed by the Learned CPC Bangalore under section 143(1) of the Act on 20-10-2022 wherein the assessee’s income has been enhanced to Rs. 59,36,06,080 as against Rs. 55,07,00,800 declared by the assessee in the return. Aggrieved by the enhancement made by the Learned CPC, the assessee filed a rectification request under section 154 of the Act for reversal of income to the declared value. The said application was rejected by the Learned CPC. During the course of scrutiny assessment proceedings, the case of the assessee was referred to Learned Transfer Basing Officer (TPO) under section 92CA(1) of the Act to determine the arm's length price of the international transactions undertaken by the assessee. The Learned TPO passed an order under section 92CA(3) of the Act dated 30-10-2023 suggesting the transfer basing adjustment of Rs. 14,60,01,550 which stood deleted by the Learned DRP vide its directions dated 30-9-2024. The final assessment order stood framed under section 143(3) read with section 144C(13) of the Act on 29-10-2024 determining the total income at Rs. 59,36,06,080 which is same as the income determined in the intimation under section 143(1) of the Act. The assessee had filed a rectification application under section 154 of the Act against the intimation under section 143(1) of the Act. The said rectification as stated earlier stood rejected by the Learned CPC. The Learned AO while completing the draft assessment and final assessment directly started with the income determined in the intimation under section 143(1) and thereafter proceeded to determine the total income accordingly. Against the draft assessment order, the assessee preferred objections before the Learned DRP objecting to the enhancement made by the Learned CPC under section 143(1) of the Act. The Learned DRP in para 14.2 of its directions stated that the adjustments made by the Learned CPC under section 143(1) of the Act does not emanate out of the draft assessment order and the same would not fall within the ambit of variations proposed by the Learned AO. Aggrieved by this, the assessee is in appeal before us.

The issue in dispute before us is only with regard to the enhancement of income made by the Learned CPC under Section 143(1) of the Act while processing the return of income of the assessee. As stated earlier, the Learned AO, both in the draft assessment order as well as in the final assessment order, started his computation of income from the income determined by the Learned CPC under Section 143(1) of the Act. By this process, the intimation under Section 143(1) of the Act stood merged with the draft assessment order framed by the Learned AO under Section 144C(1) of the Act. Hence the issue is certainly before the Learned DRP, which it ought to have adjudicated. Apart from this, we also find that the assessee had even preferred rectification application before the Learned Jurisdictional Assessing Officer (JAO)which fact is evident from the screenshot of ITBA portal enclosed in Page 119 of the Paper Book 2. Again the assessee also filed rectification application before the Faceless Assessing Officer (FAO). Hence it is clear that the rectification application under section 154 of the Act was pending before both the JAO and FAO. The assessee had even filed a reminder before the FAO for disposal of the rectification application. The assessee even filed a detailed written submission before the FAO on 5-1- 2023 in the rectification application proceedings. This is enclosed in Pages 122 to 125 of the Paper Book 2. The assessee had even filed a letter dated 11-1-2023 clearly mentioning that it was in receipt of intimation under section 143(1) of the Act and that there were certain errors in the said intimation for which rectification application was pending before the Learned CPC. The evidence in this regard is enclosed in Page 154 of the Paper Book 2 filed before us. Given all these proceedings, the Learned AO ought to have taken cognizance of the grievance of the assessee in the scrutiny assessment order framed both under section 143(3) r.w.s. 144C(1) and 143(3) r.w.s. 144C(13) of the Act.

In view of the above, we deem it fit and appropriate, in the interest of justice and fair play, to restore this entire appeal to the file of the Learned AO for denovo adjudication in accordance with law qua the additions made in the intimation under section 143(1) of the Act. The Learned AO is directed to adjudicate each of the additions made in the intimation under section 143(1) of the Act on merits after duly considering the detailed explanation and replies filed by the assessee. The assessee is also given liberty to furnish fresh evidences, if any, in support of its contentions. With these directions, the grounds 1 to 6 raised by the assessee are allowed for statistical purposes. The grounds 7 to 9 raised by the assessee are consequential in nature.

In the result, the appeal of the assessee is allowed for statistical purposes.