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Facts
The assessee appealed an intimation under Section 143(1) for AY 2018-19, which the CIT(A) dismissed as time-barred with a 675-day delay. Concurrently, a scrutiny assessment under Section 143(3) for the same year, involving similar adjustments made by CPC and suo-moto disallowances, was previously challenged before the Tribunal and remanded to the AO.
Held
The Tribunal found the appeal infructuous because the issues raised, primarily concerning adjustments by CPC, were already covered by a prior Tribunal order for the same assessment year. That order had remanded similar adjustments to the AO for reconsideration in the context of the scrutiny assessment. Therefore, the AO was directed to consider these issues in the already remanded proceedings.
Key Issues
Whether an appeal against a Section 143(1) intimation, dismissed by CIT(A) on limitation grounds, becomes infructuous when the core issues are already part of a separate, remanded scrutiny assessment under Section 143(3) for the same assessment year.
Sections Cited
143(1), 143(3), 144C(13), 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
Before: Shri Vijay Pal Rao & Shri Manjunatha G.
PER VIJAY PAL RAO, VICE PRESIDENT:
This appeal filed by the assessee is directed against the order dated 06.12.2024 of the Addl/JCIT(A)-2, Noida, arising from intimation/order u/s 143(1) of the Income Tax Act, 1961 (“the Act”) of the CPC for the A.Y.2018-19.
At the time of hearing, the Ld.AR has submitted that in the case of the assessee, the assessment was also selected for scrutiny and assessment order dated 28.07.2022 passed u/s 143(3) r.w.s. 144C(13) of the Act, which was challenged by the assessee before this Tribunal in and this Tribunal vide composite order dated 21.04.2025 has held that the processing of return of income by the CPC u/s 143(1) dated 02.12.2019 has merged with the scrutiny assessment and also directed the AO to verify about the suo-moto disallowance made by the AO, which was also disallowed and adjustment made by the CPC while processing the return of income and then decided the issue as per law. Thus, the Ld.AR has submitted that, in view of the order of this Tribunal in the appeal arising from the order passed u/s 143(3) r,w,s, 144C(13), this matter may be set aside to the record of the AO.
On the other hand, the Ld.DR has submitted that the appeal of the assessee has been dismissed by the Ld.CIT(A) as not maintainable, being barred by limitation, as there was a huge delay of 675 days in filing the appeal before the Ld.CIT(A).
The Ld.AR has submitted that the delay was explained before the Ld.CIT(A) as the majority of the period of delay was covered in the COVID-19 pandemic period and therefore, the dismissible of appeal by the Ld.CIT(A) is highly arbitrary and unjustified.
Having considered the rival submissions and careful perusal of the impugned order, at the outset, we note that this appeal of the assessee is arising from the adjustment made by the CPC, while processing the return of income u/s 143(1) of the Act. The assessee also challenged the order of the AO passed u/s 143(3) r.w.s.144C(13) dated 28.07.2022 in Hyd/2022, which has been decided by the Tribunal vide order dated 21.04.2025. The relevant part of the order of this Tribunal in para 30 to 32 is as under :
“30. We have heard the Ld.AR as well as the Ld.DR and considered the relevant material on record. These adjustments were made by the CPC, while processing the return u/s 143(1) vide order dated 02.12.2019. It is pertinent to note that at the time of issue of intimation u/s 143(1), the assessment proceedings were already undertaken for scrutiny vide notice u/s 143(2) issued on 23.09.2019. Therefore, the adjustment made by the CPC while processing the return u/s 143(1) merges with the assessment proceedings already taken up by the assessing officer and all these issues were required to be verified after considering the explanations as well as the relevant records available before AO. The Ld.AR has submitted that the CPC as well as the AO has not considered the suo-moto disallowance made by the assessee in respect of these items, which were disallowed by the CPC while processing the return u/s 143(1) of the Act. He has thus, pleaded that the AO may be directed to verify the record and determine the correct amount of disallowance if any on this account.
On the other hand, the Ld.DR has submitted that the DRP has already directed the AO to verify the claim and suo- moto disallowance made by the assessee to avoid double addition on this account. He has further submitted that since these adjustments were made by the CPC while processing the return u/s 143(1) and the assessee has not challenged the said order of the CPC, consequently, the assessee missed the opportunity and cannot challenge the same in the assessment proceedings.
We have considered the rival submissions and perused the material on record. The assessment was taken up for scrutiny by issue of notice u/s 143(2) on 23.09.2019,
whereas, the CPC has processed the return u/s 143(1) vide order dated 02.12.2019 and therefore, once the assessment proceedings were already pending, the assessee was not supposed to challenge the intimation u/s 143(1) separately. Even otherwise, processing of return merges with the assessment proceedings and therefore, once the assessee has objected to the adjustments made by the CPC, the AO ought to have examined and verified the same from the relevant record. It is the duty of the AO to ensure that there should not be any double addition, even on account of adjustment made by the CPC. Therefore, in the facts and circumstances of the case and in the interest of justice, we set aside these non TP issues, where the CPC has made adjustment, to the record of the AO to verify about suo-moto disallowance made by the assessee and determine the correct amount of disallowance if any. As regards, the disallowance made on account of belated payment towards employees contribution, though this issue is decided by the DRP in favour of the assessee, however, the AO has not given effect to the directions of the DRP. Now this issue is covered by the judgement of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. Vs. CIT [2022] 143 taxmann.com 278 (SC) and therefore, the AO is directed to verify and decide this issue as per law.”
Thus, in view of the order of this Tribunal in the appeal arising from the assessment order passed u/s 143(3) r.w.s. 144C(13) of the Act, the present appeal of the assessee becomes infructuous. Therefore, we direct the AO to consider the issues arising from the adjustment made by the CPC in the proceedings already remanded to the record of the AO vide order dated 21.04.2025 as reproduced above. Accordingly, this appeal of the assessee is disposed of.
As a result, appeal of the assessee is dismissed as infructuous.
Order pronounced in the Open Court on 30th July, 2025.