Loading judgment…
Facts
The assessee's case was selected for limited scrutiny for 'Expenditure of Personal Nature,' leading to an addition of Rs. 72,98,630/- under Section 143(1)(a). The assessee appealed to the CIT(A) against an order passed under Section 143(3), but the CIT(A) dismissed it, stating the appeal should have been against the intimation under Section 143(1). The core dispute involves the taxability of compensation received from the compulsory acquisition of agricultural land.
Held
The Tribunal found that the Ld. CIT(A) erred by not adjudicating the issue on merits, especially regarding the compensation from agricultural land acquisition. It directed the CIT(A) to re-examine the supporting evidences and adjudicate the matter on merits. The case was remitted back to the file of the Ld. CIT(A) for fresh adjudication.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal without adjudicating the merits of the addition, particularly concerning compensation from compulsory acquisition of agricultural land, and the procedural correctness of appealing against a Section 143(3) order versus a Section 143(1) intimation.
Sections Cited
143(1), 143(1)(a), 143(2), 142(1), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM
Before: SHRI RAVISH SOOD, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
आदेश /O R D E R
PER SHRI S. BALAKRISHNAN, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [in short “Ld. CIT(A)”] vide DIN & Order
I.T.A.No.556/VIZ/2025 Nemani Veera Venkata Satyanarayana No.ITBA/NFAC/S/250/2025-26/1078566063(1) dated 16.07.2025 for the A.Y.2018-19 arising out of order passed under section 143(3) of Income Tax Act, 1961 (in short ‘Act’) dated 04.08.2020.
Brief facts of the case are that, assessee case was selected for limited scrutiny on the issue of examining “Expenditure of Personal Nature”. Thereafter notice under section 143(2) of the Act and 142(1) of the Act was issued and served on the assessee on various dates through e-filing portal. On perusal of the information provided by the assessee, the Ld. Assessing Officer [hereinafter in short “Ld. AO"] made an addition of Rs.72,98,630/- as assessed under section 143(1)(a) of the Act.
3. On being aggrieved by theorder of the Ld. AO, assessee filed an appeal before the Ld. CIT(A). Ld. CIT(A) observed that the assessee has not filed the appeal against the intimation passed under section 143(1) of the Act but has filed against the order passed under section 143(3) of the Act. Ld. CIT(A) observed that decision made by the Ld. AO is as per the income assessed under section 143(1) of the Act and held that assessee ought to have filed the appeal against order passed under section 143(1) of the Act and not against order passed under section 143(3) of the Act. He therefore dismissed the appeal of the assessee.
Page. No 2
I.T.A.No.556/VIZ/2025 Nemani Veera Venkata Satyanarayana 4. On being aggrieved by the order of the Ld. CIT(A), assessee is in appeal before us by raising following grounds of appeal: -
1. The order of Learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case.
2. The learned Commissioner of Income Tax (Appeals) is not justified in refusing to adjudicate the issue of addition of the compensation amount received from the Government towards compulsoryacquisition of agricultural land on the ground that the addition was made in the Intimation u/s 143(1) and not in the assessment order against which the appeal was filed.
The learned Commissioner of Income Tax (Appeals) ought to have directed the assessing officer to allow the exemption in respect of the compensation of Rs.65,24,240 received towards compulsory acquisition of agricultural land.
Any other ground that may be urged at the time of appeal hearing.”
The only contention of the assessee is the Revenue Authorities has made the addition under section 143(1) of the Act whereas during the scrutiny assessment proceedings the Ld. AO has confirmed the addition made by CPC under section 143(1) of the Act.
At the outset, Ld. Authorised Representative [hereinafter “Ld.AR”] submitted that the demand has been raised once based on the intimation under section 143(1) of the Act for Rs.26 lakhs and also against the order passed under section 143(3) of the Act by raising a demand for an amount of Rs.29 lakhs. He further submitted that the Ld. CIT(A) has not adjudicated the issue on addition of the compensation amount received from the government towards compulsory
Page. No 3
I.T.A.No.556/VIZ/2025 Nemani Veera Venkata Satyanarayana acquisition of agricultural land. The Ld. CIT(A) erred in upholding the order of the Ld. AO based on the scrutiny assessment. He therefore pleaded that the issue may be remitted back to the file of the Ld. CIT(A) for adjudication of the issue on merits.
Per contra, Ld. Departmental Representative [hereinafter in short “Ld.DR”] submitted that the scrutiny assessment under section 143(3) passed by the Ld. AO subsumes the addition made under section 143(1) and hence there are not two additions for the same income. He therefore pleaded that the order of the Revenue Authorities be upheld.
We have heard both the sides and perused the material available on record. It is an undisputed fact that Ld. AO while framing the assessment has made the addition as follows: - Total income as per Income Tax return Rs.7,74,390/- Assessed Income as 143(1a) of the Act Rs.72,98,630/- Addition under section 143(3) of the Act NIL
The only grievance of the assessee is that the demand is outstanding as per section 143(1a) of the Act and also as per the scrutiny assessment order passed under section 143(3) of the Act. Further, there is merit in the argument of the Ld.AR that the Ld. CIT(A) has failed to adjudicate the case on merits.
Page. No 4
I.T.A.No.556/VIZ/2025 Nemani Veera Venkata Satyanarayana Considering the evidences provided by the assessee with respect to the compensation received towards compulsory acquisition of agricultural lands, we direct the Ld. CIT(A) to adjudicate the issue with respect to compensation received by the assessee after examining the supporting evidences and therefore remit the matter back to the file of Ld.CIT(A). Thus, the grounds raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 05th December, 2025.