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Facts
The assessee, Indus Towers Limited, appealed against an intimation order under Section 143(1) for AY 2019-20, which included certain adjustments. The CIT(A) dismissed this appeal as infructuous, reasoning that the issues would be addressed in a separate appeal against a regular assessment under Section 143(3) involving the same issues for the same assessment year.
Held
The Income Tax Appellate Tribunal (ITAT) found that the CIT(A) erred by summarily dismissing the appeal. The ITAT held that an appeal against an intimation order under Section 143(1) has an independent cause of action under Section 246A(1)(a) and must be adjudicated on its merits. Therefore, the ITAT set aside the CIT(A)'s order and restored the appeal for fresh adjudication by the CIT(A).
Key Issues
Whether an appeal filed against an intimation order under Section 143(1) can be dismissed as infructuous on the ground that a separate appeal against a regular assessment under Section 143(3) for the same assessment year and issues is pending, and whether an appeal against an intimation has an independent cause of action.
Sections Cited
Section 143(1), Section 143(3), Section 246A, Section 250, Section 36(1)(va)
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Income Tax Appellate Tribunal, DELHI BENCH “C” DELHI
Before: SHRI PRADIP KUMAR KEDIA & SHRI SUDHIR PAREEK
PER PRADIP KUMAR KEDIA - A.M.: The captioned appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre, Delhi (‘CIT(A)’ in short) dated 08.06.2023 arising from the intimation order dated 03.02.2021 passed under Section 143(1) of the Income Tax Act, 1961 (the Act) concerning AY 2019-20.
When the matter was called for hearing, the ld. counsel for the assessee straightaway referred to paragraph 6.3 of the first appellate order passed under Section 250 of the Act and submitted that the CIT(A) had declined to adjudicate issues arising from the intimation drawn under Section 143(1) of the Act on the ground that the impugned issues arising from the intimation shall be adjudicated based on the merits of the case while deciding the appeal against the regular assessment framed under Section 143(3) of the Act which is also subject matter to appeal.
2.1 In the mater, the ld. counsel referred to the decision rendered by the Co-ordinate Bench in M/s. Areca Trust vs. CIT(A), order dated 26.07.2023 Assessment Year 2018-19 to submit that Section 246A specifically provides for an appeal against intimation issued under Section 143(1) of the Act and assessment completed under Section 143(3) of the Act merely adopts the assessed figure in the intimation order passed under Section 143(3) of the Act. Therefore, a clear cause of action is available to the assessee against the order of the CIT(A).
2.2 The ld. counsel thus submitted that the view taken by the CIT(A) holding the appellate proceedings against the intimation under Section 143(1) making substantial adjustments, is infructuous, is contrary to the present scheme of the Act.
2.3 The ld. counsel thus urged for setting aside the order of the CIT(A) and restore the matter back to the file of the CIT(A) for adjudication of the grounds raised on merits in accordance with law.
The ld. DR for the Revenue did not express any opinion and left the matter to the wisdom of the Tribunal.
As pointed out on behalf of the assessee, certain adjustments were made in the intimation order passed under Section 143(1) of the Act dated 3rd February, 2021 passed by ADIT, CPC. The assessee challenged such adjustments before the National Faceless Appeal Centre (NFAC) for seeking redressal of grievances arising from intimation. The NFAC passed order under Section 250 of the Act holding the appeal to be infructuous and does not call for any adjudication in view of ongoing appellate proceedings in the regular assessment against the order passed under Section 143(3) involving and including same issues.
The relevant operative paragraphs of the first appellate order is reproduced hereunder:
6.1 The appellant has preferred an appeal against disallowances proposed in summary order u/s 143(1) of the I. T. Act. On perusal of records it is observed that the appellant filed one more appeal (bearing appeal no. NFAC/2018-19/10093059) against the order was passed by learned AO u/s 143(3). On comparison of grounds of appeal pertaining to appeal no. NFAC/2018-19/10012492 (which is filed against 143(1) order) are similar to that of grounds of appeal no. NFAC/2018-19/10093059
6.2 For the sake of conveniences the grounds of appeal no. NFAC/2018- 19/10012492 are mapped with grounds of appeal no.NFAC/2018- 19/10093059 as under.
Sl.No. Description of Amount Ground Corresponding Ground number Ground number 143(1) 143(3) (appeal (Appeal No.NFAC/2018- N.NFAC/2 19/10093059) 018- 19/100124 92)
1 Disallowance of Rs. 3,39,382 Ground Ground No. 10.1, employees’ No.2 10.3 contribution towards provident fund amounting to INR 3,39,382/- under Section 36(1)(va) of the Act 2. Denial of claim for Rs. Ground Ground No.4.1, 4.2 long term capital 3,11,52,89,182 No.3. loss of INR 3,11,52,89,182 3. Denial of claim for Rs.7,94,11,880 Ground Ground No.4.3 short term capital No.4 loss of INR 7,94,11,880 4. Short grant of Rs.1,06,42,795 Ground Ground No.11.1 credit of TDS No.5
6.3 In view of the above, it is observed that while adjudicating grounds of appeal for appeal no. NFAC/2018-19/10093059, above grounds (i.e., for appeal no. NFAC/2018-19/10012492) will also be adjudicated based on merits of the case and therefore the appeal no.NFAC/2018-19/10012492 is found to be infructuous and accordingly disposed off.
6. On a bare reading of such observations, it is apparent that CIT(A) has not examined the grievances raised in the first appeal on merits and dismissed the appeal summarily as infructuous. The approach adopted by the CIT(A) is totally incomprehensible and is clearly opposed to the provisions of the Act. While processing the ROI under Section 143(1), the CPC arm of Revenue is competent to make adjustment to the total income on points enumerated in 143(1)(a) of the Act subject to reasonable opportunity to assessee. Hence, as per the process ordained by law, the intimation comprising of adjustments of the nature specified in Section 143(1)(a) carried out after opportunity to assessee acquires the character of assessment on such points. Consequently, the grievances arising from the intimation passed under Section 143(1) of the Act calls for independent adjudication in terms of statutory dictate of Section 246A(1)(a) of the Act. The Co-ordinate Bench in M/s. Areca Trust (supra) has also echoed the similar view.
7. We thus have no hesitation to hold that the CIT(A) has misdirected himself in law in dismissing the appeal of the assessee in limine as infructuous. The impugned order of the CIT(A)-NFAC is thus set aside and the appeal filed by the assessee is restored for fresh adjudication by CIT(A) in accordance with law after giving reasonable opportunity to the assessee. The CIT(A) shall decide the grievances arising from intimation under Section 143(1) on merits as called upon him in law.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 08 May, 2024.