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Facts
The assessee filed an appeal against the order of the CIT(A) which dismissed the appeal in limine. The appeal was delayed by 64 days, which was condoned by the tribunal. The assessee's primary contention was the invalidity of the assessment order passed by the National E-Assessment Center, Chennai, and the subsequent dismissal by the CIT(A).
Held
The tribunal held that the doctrine of merger does not apply in this case because both the order under section 143(1) and section 143(3) are appealable orders and can be contested independently. The CIT(A) was correct in dismissing the appeal as the assessee was aggrieved by the order under section 143(1) and not the order under section 143(3).
Key Issues
Whether the doctrine of merger applies to orders passed under Section 143(1) and 143(3) of the Income Tax Act, and whether the CIT(A) was justified in dismissing the appeal without adjudicating the grounds on merits.
Sections Cited
143(1), 143(3), 246(1)(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: HON’BLE SHRI MANU KUMAR GIRI & HON’BLE SHRI AMITABH SHUKLA
Assessment Years: 2018-19 Mr.Jayaram Subramaniam, The Deputy Commissioner of No.9A NN Laxmi Street, Income Tax, Valasaravakkam, Central Circle-2(1), Aswathy, Chennai Chennai- 600 087. [PAN: AFAPS5678H] (प्रत्यर्थी/Respondent) (अपीलार्थी/Appellant) अपीलार्थी की ओर से/ Assessee by : Ms.Lavanya, CA प्रत्यर्थी की ओर से /Revenue by : Smt.Samantha Mullamudi, Addl.CIT सुनवाई की तारीख/Date of Hearing : 24.03.2025 घोषणा की तारीख /Date of Pronouncement : 23.04.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M :
This appeal is filed by the assessee against the order bearing DIN & Order No.ITBA / APL / S / 250 / 2024-25 / 1067869903(1) dated 22.08.2024 of the Learned Commissioner of Income Tax [herein after “CIT(A), for the assessment years 2018-19.
2.0 It has been noted that there is a delay of 64 days in the case, in filing of this appeal before the tribunal. In its affidavit the assesse has pleaded that the assesse was pre occupied with his only son’s wedding as also some pressing professional commitments .All these activities contributed to the delay which was neither willful nor wanton. The assesse submitted that there will not be case of any non-compliance now. We have considered the justification put forth by the assesse and we are satisfied with their adequacy. We are also conscious of the fact that no litigant gains by intentionally delaying its own matters. The Ld. DR did not pose any serious objections to the delay. Accordingly, we hereby condone the delay and proceed to adjudicate this appeal.
3.0 We have noted that the twin issues raised in this appeal by the appellant assessee are regarding firstly the invalidity of the assessment order passed by the National E-Assessment Center, Delhi and secondly the action of the Ld.CIT(A) in dismissing the appeal in limine.
4.0 As regards the issue regarding the invalidity of the assessment order passed by the National E-Assessment Center, Delhi, it is the case of the appellant assessee that it was assessed under Central Circle-2(1), Chennai and therefore assessment by AO of National E-Assessment Center, Delhi is vitiated. We have noted that nothing has been adduced Page - 2 - of 7 by the assessee to support its case. In the absence thereof the contest raised by the assessee cannot be answered. Accordingly, the ground of appeal raised by the assessee is dismissed.
5.0 We have noted that the next challenge raised by the assessee is regarding the action of the Ld. CIT(A) in dismissing the appeal . Brief facts of the case are that an order u/s 143(1) dated 25.10.2019 was passed determining tax liability at Rs.4,61,990/-. This had arisen on account of gross total income determined at Rs.1,57,89,054/- u/s 143(1) as against income returned of Rs.1,47,53,002/-. Subsequently, the case of the assessee was selected for scrutiny and order u/s 143(3) was passed on 20.02.2020 without making any additions. The assessee had contested before the Ld. CIT(A) that the Ld. AO had adopted its income from business at Rs.1,52,91,508/- as against returned business income of Rs.1,48,58,402/-. It was submitted that the differential amount is on account of profit earned from the sale of car of Rs.4,26,261/-, which was added u/s 143(1) supra. The Ld. CIT(A) dismissed the appeal by observing as under:-
“….The undersigned after having carefully examined the assessment order, against which the present appeal is filed vide Form 35 dated 9.03.2020 for the year under consideration observes that when the AO has made no adverse findings in the order u/s. 143(3) of the Act dated
Page - 3 - of 7 20.02.2020 and has completed the Limited Scrutiny assessment proceedings by accepting the return of income for the AY-2018-19, there can be no ground on the part of the appellant to raise issues against the order u/s 143(3) of the Act dated 20.02.2020. Therefore the undersigned of the considered view there is no need to adjudicate any of the grounds raised by the appellant. Accordingly all the grounds raised are treated as dismissed….”
6.0 We have heard the rival submissions in the light of material available on records. We have noted that the principal issue seminal to the controversy is as to whether doctrine of merger would be applicable in this case or not. The moot question is whether the disturbances made vide order u/s 143(1) can be challenged qua subsequent order passed u/s 143(3) where no independent addition was made. In this regard, we have noted that in the case of Termoplast Pollypacks Italy India Private Limited dated 12.07.2024 this tribunal had passed the following order :-
“……3.0 Before us the Ld.AR has argued that as per the principles of doctrine of merger the order u/s 143(1) dated 29.03.2019 has merged with the assessment order u/s 143(3) dated 09.02.2021 of the AO and consequently Ld.CIT(A) ought to have adjudicated the grounds contested before it qua order u/s 143(3). It was argued that when the returned income was accepted there was no case for making any addition. Accordingly, the Ld.AR requested that the order of the Ld.AO demanding tax of Rs.2,23,98,723/- be deleted or else Ld.CIT(A) be directed to readjudicate the matter. 4.0 The Ld.Sr.DR argued that the assesse appeal is non-maintainable in as much as no injury has been caused to the assesse qua order u/s 143(3) dated 09.02.2021 in which no addition has been made. It was Page - 4 - of 7 informed that the assesse has itself committed mistake having furnished wrong facts in its return. It was further argued that within the meaning of section 246(1)(a) of the Act order u/s 143(1) is an appealable order and hence the assesse ought to have contested the same which is primarily responsible for generation of the impugned demand. 5.0 We have heard rival submissions in the light of facts of the case and material brought on records. It is an undisputed fact of the case that the assesse itself had committed the mistake of showing the amount of Rs.2,77,64,495/- being dividend income from foreign company, under schedule-EI of the return as exempted income. It is also an undisputed fact of the case that the impugned interference to the assessee’s returned income and the corresponding generation of demand of Rs.2,23,98,723/- has arisen from u/s 143(1) dated 09.11.2020. Section 246 of the income tax act provides that an assesse aggrieved by orders passed by Income Tax Authorities under various sections are entitled to file appeal before the Ld.CIT(A). Section 143(1) is one such section included in section 246(1)(a) and reads as under:..
Appealable orders.—(1) Subject to the provisions of sub- section (2), any assesse aggrieved by any of the following orders of an Assessing Officer (other than the Deputy Commissioner) may appeal to the Deputy Commissioner (Appeals) 3[before the 1st day of June, 2000] against such order an order against the assesse, where the assesse denies his liability to be assessed under this Act 4[or an intimation under sub-section (1) or sub- section (1B) of section 143, where the assesse objects to the making of adjustments,] or any order of assessment under sub- section (3) of section 143 or section 144, where the assesse objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed. 6.0 Facts of the case discussed above indicates that the assesse was aggrieved by the order u/s 143(1) and hence was eligible to file an appeal against the same before the first appellate authority. The action of the CPC in alleged double taxation and incorrect application of tax rates etc. squarely constituted an event to cause grievance to the assesse. In view of the clear statutory position of section 246(1)(a) above, the hypothesis of doctrine of merger do not arise in this case. We find that the first appellate authority has rightly dismissed the assessee’s appeal as it was not aggrieved by any action of the AO qua Page - 5 - of 7
order u/s 143(3). The assesse in the right scheme of things should have contested the order u/s 143(1) passed by the CPC on 29.03.2019. We also hold the view that the Tribunal comes to rescue of an assesse only when there is an error in the order of the first appellate authority. The Ld.CIT(A) has rightly concluded that there is no error in the order of the AO and that the grounds of appeal raised before him are not emanating order u/s 143(3). In the instant case no such facts are available on records. Accordingly, all the grounds of appeal raised by the assesse are dismissed…..”
7.0 Further similar view was taken by this tribunal in the case of Kumbakonam Central Cooperative Bank, Chennai in 584/Chny/2024 dated 21.02.2025 affirming the above views. Thus, it is trite law that as both order u/s 143(1) and u/s 143(3) are appealable orders and can be contested independently before the Ld. CIT(A), the doctrine of merger would not apply. The doctrine of merger would have been applied only if the order u/s 143(1) had got legally subsumed under order passed u/s 143(3). Both being independent statutory orders, the theory of merger would not apply. Accordingly, we are of the considered view that no case for any interference with the order of the Ld.CIT(A) is made out in this case. Consequently, the same is confirmed and all the grounds of appeal raised by the assessee on this issue are dismissed.
Page - 6 - of 7 8.0 In the result, the appeal of the assessee is dismissed. Order pronounced on 23rd , April-2025 at Chennai. Sd/- Sd/- (मनु कुमार धिरर) (अधमताभ शुक्ला) (MANU KUMAR GIRI) (AMITABH SHUKLA) न्याधयक सदस्य / Judicial Member लेखा सदस्य /Accountant Member चेन्नई/Chennai, धदनांक/Dated: 23rd , April-2025. KB/- आदेश की प्रतितिति अग्रेतिि/Copy to: 1. अिीिार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT - Chennai 4. तिभागीय प्रतितिति/DR 5. गार्ड फाईि/GF
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