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Facts
The assessee, a power generation unit, claimed deduction u/s 80IA(4)(iv) but filed Form 10CCB belatedly on April 3, 2021, after filing its original return. The CPC disallowed the claim u/s 143(1), and during subsequent scrutiny assessment u/s 143(3), the AO sustained the disallowance of Rs. 5.61 crores. The CIT(A) dismissed the assessee's appeal, asserting it was not filed against the 143(1) order and that no fresh addition was made in the 143(3) order.
Held
The Tribunal held that filing Form 10CCB before the completion of assessment proceedings constitutes sufficient compliance, as the requirement is directory and not mandatory. It further ruled that the adjustment made under Section 143(1) merged with the subsequent Section 143(3) scrutiny assessment, thus making the appeal against the Section 143(3) order valid. Consequently, the assessee is entitled to the deduction u/s 80IA(4)(iv), and the AO is directed to take cognizance of the belatedly filed audit report.
Key Issues
The key legal issues were whether a deduction under Section 80IA(4)(iv) can be disallowed for belated filing of Form 10CCB, provided it was filed before assessment completion, and whether an appeal against a Section 143(3) assessment order is maintainable when the initial disallowance originated from a Section 143(1) intimation.
Sections Cited
250, 143(3), 143(1), 80IA(4)(iv), 139(1), 143(2), 246A, 144B, 80IA, 80IAB, 80IAC, 80IB, 80IC, 80ID, 80IE, 10A, 10AA, 154, Rule 34(4) of the Income Tax Appellate Tribunal Rules 1963
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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: SH. UDAYAN DASGUPTA & SH. BRAJESH KUMAR SINGH
ORDER Per: Udayan Dasgupta, J.M.: This appeal filed by assessee against order of Ld. CIT (A), NFAC, Delhi, passed u/s 250 dated 22.03.2024 emanated from the order of the AO, NFAC dated 10/09/2021, passed u/s 143(3) of the Act. 2. The grounds of appeal in Form No. 36 are as under:
1. That, the orders passed by the Ld. Commissioner of Income Tax (Appeal) vide orders dated 22.03.2024 is illegal, uncalled for and against the law & facts.
2. That, the Ld. Commissioner of Income Tax (Appeal) has sustained the additions merely on conjectures and surmises without any legal basis.
3. That, the Ld. Commissioner of Income Tax (Appeal) wrongly made disallowance of Rs. 5,61,39,920 on account of non-filling of Form 10CCB However the assessee had uploaded the form well in time before the assessment which is supported by various judicial pronouncements. It may please be allowed.
That, the Ld. Commissioner of Income Tax (Appeal) has wrongly calculated tax without considering deduction under chapter VI A amounting Rs. 5,61,39,920 that is to be allowed as it is claimed in accordance with Income Tax Act. It may please be allowed.
That, the assessee craves leave to argue on any other question of law and/or facts at the time of hearing of this appeal.”
Facts of the case in brief are that the assessee company is engaged in running a power generation unit and is eligible to claim deduction u/s 80IA(4)(iv) of the Act 61, and accordingly has filed form 10CCB (audit report), but the same has been filed (uploaded) belatedly in the portal on 3rd April, 2021. The assessee filed original return of income on 31st October, 2018, (within due date) claiming the said deduction u/s80IA(4)(iv), amounting to Rs.5,61,39,920/-, (the return being subsequently revised on 30th March, 2019 claiming additional depreciation), and the same was processed u/s 143(1) on 20th February, 2020, by CPC, Bangalore, by disallowing the claim u/s 80IA(4)(iv) of Rs.5,61,39,920/-, (in absence of any audit report in form 10CCB on record). 3.1 In between, the case was selected for complete scrutiny under the e- assessment scheme vide notice u/s 143(2) dated 28th September, 2019, on two particular issues: i) Investments/Advances/Loans, ii) Deduction Claimed for Industrial Undertaking u/s 80IA / 80IAB /80IAC/ IB/IC / IBA/80ID/80IE/10A/10AA.
4. Subsequent notices issued u/s 142(1) has been complied with and after verification of all particulars, the first issue relating to investments has been accepted to have been properly explained and no additions made on that count. Regarding the second issue relating to the claim for deduction u/s 80IA, the same has been denied for belated filing of form 10CCB on 03/04/2021, even though the said audit report was available before the AO before completion of assessment proceedings on 10th September, 2021and the assessment was completed with an addition of Rs.5,61,39,920/-, to the total income.
5. The matter was carried in appeal before the ld. First appellate authority and the ld. CIT(A) dismissed the claim of the assessee by observing as follows:
“6.1. The order of u/s 143(3) r.w.s. 144B was passed in the case of the appellant for the AY 2018-19, arriving at a taxable income of Rs.5,61,44,130/-, as against the income returned of Rs.4,210/-. In the order consideration, against which the appeal has been filed, no additions have been proposed and the income determined by the CPC of Rs.5,61,44,130/- u/s 143(1)(a) on 20.02.2020, which had disallowed the claim of deduction u/s 80IA(4)(iv) of Rs.5,61,39,920/- was retained.
6.2. The CPC did not allow the claim of deduction since Form No.10CCB, was not e-filed within the due date u/s 139(1) for the relevant Assessment Year. However, irrespective of the correctness in the claim of deduction u/s 80IA(4)(iv), the intriguing issue, needs to be adjudicated, in the appeal filed against the order u/s 143(1) and cannot be adjudged in the present appellate proceedings, as there is no addition made in the u/s 143(3) r.w.s. 144B dated 10.09.2021.
6.3. On the aspect of the right to appeal as available u/s 246A, the appellant as such right, only against an order on which he is aggrieved about. Since, no such grievance can exist against this order passed u/s 143(3) r.w.s. 144B, this appeal proceeding does not subsist and hence dismissed in limine. However, the right of appeal against the intimation u/s 143(1) is not curtailed by this order of dismissal.”
Now, the assessee is in appeal before the Tribunal on the ground contained in the memorandum of appeal.
The ld. AR of the assessee submits that in the instant case, the ld. CIT(A) was not legally justified in observing that since no appeal has been filed against the assessment order u/s 143(1) of the Act passed by CPC Bangalore disallowing the deduction claimed u/s 80IA(4)(iv), the said matter cannot be adjudicated in the present appellate proceedings because this appeal is filed against the order of assessment u/s 143(3). 7.1 On this issue the ld. AR explained that the date of processing u/s 143(1) (a) dated 20th February 2020 , by CPC, Bangalore , was after the date of selection of the case for scrutiny vide issue of statutory notice u/s 143(2) dated 28th September 2019 , for complete scrutiny specifying the issue of deduction claimed for industrial undertaking u/s 80IA , which means the very same issue was already open before the assessing authority in proceedings u/s 143(2), and was already under consideration in scrutiny proceedings and as such the same issue could not be a subject matter of disallowance u/s 143(1), because it is not as per provisions of law.
7.2 Secondly, he also submitted that on the face of the assessment order (paragraph – 1) it is categorically stated that there are two issues for which the case is selected for complete scrutiny. Firstly on account of verification of investments and secondly for verification of deduction claimed u/s 80IA, which establishes beyond doubt that the particular issue of claim of deduction u/s 80IA, has already flown from processing to scrutiny and as such, this part of the order is already merged with the scrutiny order passed u/s 143(3) dated 10th September, 2021 , and from the same , it is clearly ascertainable that the AO has thoroughly discussed the issues relating to the claim made by the assessee u/s 80IA elaborately in ( page number 2 to 7) the assessment order.
Thereafter, the ld. AR of the assessee submitted that in the instant case the audit report in form 10CCB has been uploaded belatedly on 3rd April, 2021, but before completion of assessment proceedings on 10th September, 2021, and the same was brought to the notice of the AO in course of scrutiny hearing, requesting cognizance of the said report and a further representation of the same was made through video hearing on 26th August, and again on 1st September, 2021, but to no avail.
The Ld. AR submitted that since the audit report in form 10CCB, has been filed before the assessing authority ( even though belated ) but was before the AO in course of scrutiny assessment , the same could not have been ignored and cognizance to the same has to be given and in support of his contention he relied on the decision of the Hon’ble Supreme Court in the case of G.M. Knitting Industries Pvt. Ltd. 376 ITR 456 dated 24.07.2020, where the Hon’ble Court has held that even though the assessee has not filed the audit report in Form 10CCB along with the return but has filed the same before completion of assessment proceedings that would amount to sufficient compliance. 9.1 For further support on the same issue the ld. AR relied on the judgment of Hon’ble Allahabad High Court in the case of CIT vs. Fortuna Foundation Engineers & Consultants Pvt. Ltd. 152 DTR 236 (Allahabad), judgment of the Hon’ble Karnataka High Court in the case of CIT and Anr. vs. ACE Multitaxes Systems Pvt Ltd (2009) 317 ITR 207, and also on the judgment of Hon’ble Delhi High Court in the case of CIT vs. Contimeters Electrical P. Ltd (2009) 317 ITR 249 / 178 taxman 422[Delhi]. Regarding the issue pointed out by the AO in the assessment order ( page – 9.2 7) that the judgments cited by the assessee relates to the earlier era, prior to electronic filing , and in support the AO has relied on the judgment of Hon’ble ITAT Delhi Benches in the case of Pradeep Kumar Batra vs. DCIT in dated 23.10.2020 , regarding the fact that all earlier judgments relied upon , do not pertain to the era of electronic filing of returns and documents and therefore, the same does not apply to the fact of the case. 9.3 On this issue, the ld. AR referred to the judgment of the jurisdictional Amritsar Bench of the tribunal in the case of Vinod Kumar Grover in dated 22.07.2024 ( Asst year 2017-18) to point out that the Hon’ble bench on an identical issue has followed the judgment of the Hon’ble Supreme Court in the case of G.M. Knitting Industries Pvt Ld.(supra).
Apart from that, he further referred to the judgment of the Kolkata Tribunal in the case of Surendra Steels ITA 78/Kol/2022 (Asst year 2019-20) dated 20.03.2022 and also the judgment of the Delhi Tribunal in the case of ACIT vs. Green Dot Health Foods ( Asst year 2017-18 ) , dated 09.02.2023 to point out that the Hon’ble Coordinate Benches has followed the Hon’ble Supreme Court judgments all these appeals also relates to the electronic filing era.
10.1 Further on the issue raised by the ld. CIT(A) that appeal has not been preferred against the order u/s 143(1), the ld. AR relied on the judgment of the Hon’ble jurisdictional High Court in the case of CIT vs. Arihant Industries Ltd. (dated 08th March, 2002) 255 ITR 458 (P & H) to submit that the Hon’ble High Court has examined this issue and has observed that the intimation u/s 143(1) is given without prejudice to the sub section (2) which makes the position clear that even when intimation u/s 143(1) has been issued, proceedings for assessment u/s 143(3) can be issued . 10.2 The Ld. AR concluded his arguments praying for deletion of the addition by allowing the claim for deduction u/s 80I(4)(iv) of the Act 61.
11. The ld. DR relied on the order of the ld. CIT(A).
We have heard the rival submission and considered the materials on record. Identical issue has been adjudicated by the bench of the tribunal in the case of Vinod Kumar Grover ITA 141/ASR / 2024 , Asst year : 2017-18, the relevant portion is reproduced for ready reference:
“10.3 Same view has also been taken by the other coordinate benches in the case of ACIT vs Green Dot Health Foods ITA / 8414/ Delhi / 2019 order dated 09/02/2023, and by the Kolkata ITAT in the case of Surendra Steels Kol/ 2022 dated 20/03/2022, which has been upheld by the Calcutta High Court vide order dated 03rd April 2023. (Relevant portion reproduced as under): The short issue which falls for consideration is whether the non- submission of Form 10CCB along with the Return can be a ground to deny the benefit of the deduction under Section 80-IC of the Act. The learned Tribunal, in our view, rightly took note of the decision of the Hon'ble Supreme Court in C.I.T vs. G.M. Knitting Industries Pvt. Ltd., 376 ITR 456 and held that a mere procedural irregularity is not fatal to claim deduction under Section 80-IC of the Act. In the case of M/s. Winro Commercial (India) Ltd. vs. Principal Commissioner of Income Tax-1 and Anr., ITAT 237 of 2022, dated 22nd November, 2022, this Court had considered the similar issue where the assessee failed to attach the audit report of claim deduction along with the Return of income. That being only a procedural lapse, the Court held that the assessee cannot be non-suited on the said ground. The decision of the High Court of Delhi in the case of Commissioner of Income Tax, Delhi vs. Centimeter Electricals Private Limited, 2009 178, taxmann.com, 422 (Delhi) and the decision of this Court in the case of Murali Export House vs. Commissioner of Income Tax, 1999, 238 ITR 257 (Cal.) were referred to. Thus, the Tribunal rightly decided the issue in favour of the assessee and against the revenue.
Respectfully following the decisions of various High courts and the coordinate benches of the tribunal, in the matter, we hold that the submission of form 10CCB is directory in nature and not mandatory and it is sufficient compliance if the said report is filed with the AO, before completion of assessment, which is an admitted fact in the instant case. As such the assessee is entitled to the claim of deduction u/s 80IB of the Act 61, as per claim in his return of income, and the same is allowed.
On this issue raised by the ld. CIT(A) that in the instant case, no appeal has been preferred by the assessee against the order u/s 143(1). We would like to refer to the judgment of the Hon’ble Jurisdictional High Court in the case of CIT vs. Arihant Industries Ltd. dated 08th March 2002, to submit that the Hon’ble High Court has examined this issue and has observed that the intimation u/s 143(1) is given without prejudice to sub section 2 of section 143(2) which makes the position very clear that even when intimation u/s 143(1) is issued proceeding for assessment u/s 143(3) can be initiated by the issue of notice u/s 143(2). The relevant portion of the High Court order is reproduced for ready reference:
The question is whether after the issue of notice under s. 143(2) the intimation issued under s. 143(1) is of any consequence, more particularly when a revised return has been filed. Notice under sub-s. (2) of s. 143 is relatable to the first return. The intimation under s. 143(1) is given without prejudice to the provisions of sub-s. (2). That makes the position clear that even when intimation under s. 143(1) has been given yet proceedings for assessment under s. 143(3) can be initiated by issuance of notice under s. 143(2). The order under s. 154 of the Act was passed after issuance of notice under s. 143(2) and during the pendency of the proceedings for assessment under s. 143(3). The order under s. 154 was passed on 9th March, 1992, while the order under s. 143(3) was passed on 27th March, 1992. We have made distinction between an intimation under s. 143(1) and an order issued under s. 143(3) (supra). The above being the position, if any change is permissible to be effected, the same can be done in the assessment by the AO could be termed to be a mistake apparent from the record. The scope and ambit of s. 154 has been examined in several cases. We may just note that the CIT(A) himself was not very sure as to whether the so- called mistake was one which could be considered an arithmetic error because he himself had further observed that it was a matter of law which required a long drawn process of deliberations. If it is the latter, certainly s. 154 has no application.
Moreover, on this issue we refer to the judgment of the Mumbai Tribunal in the case of Aditya Birla Housing Finance Ltd. TS 239/ITAT/2025 (Mum) where on similar identical issue the bench has observed that for a single assessment order both an intimation u/s 143(1) and an assessment order u/s 143(3) can co-exists and section 246A confirms that both are appealable before the ld. CIT(A). Distinguishes assessee’s contention that intimation u/s 143(1) merges with the assessment order u/s 143(3) and opined that merger depends on whether the adjustment made in the intimation is also a part of the scrutiny assessment and if so the adjustment merges with the assessment order which shall be subjected to review of the appellate authorities. 14.1 In the instant case, the adjustment made u/s 143(1) relating to disallowance of deduction claimed u/s 80IA for non filing of audit report, has merged with the scrutiny assessment vide notice u/s 143(2), the said claim for deduction being one of the main issue for which the case has been selected for scrutiny, and the said issue of claim u/s 80IA(4)(iv) has been exclusively adjudicated and discussed in the body of the assessment order, being one of the reason for selections. 14.2 As such, we hold that for all practical purposes the subject matter of adjustment made in the intimation u/s 143(1) being the same as the issue of selection of the case for scrutiny is already merged with the assessment order u/s 143(3) and the appeal of the assessee against the assessment order passed u/s 143(3) preferred before the first appellate authority was legal and valid.
14.3 We further refer to the Hon'ble Supreme Court in the Kunhayammedv. State of Kerala 113 Taxmann 470 (SC) 245 ITR 360 dated 19.07.2000, has aptly summed up the doctrine of merger as follows: “Where an appeal or revision is provided against an order passed by a court, tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of the law. Therefore, the Doctrine of Merger simply means that when an order passed by a lower court, tribunal or authority is subjected to the remedy of appeal available under a statute before a superior court, and the superior court either affirms or modifies the order, the order of the lower court, tribunal or authority merges with the order of the superior court.” 14.4 The Hon'ble High Court of Madras in Tamil Nadu Magnesite Ltd. v. CIT and others (W.P.) No. 17819/2001 dated 19.08.2010 held that after passing of an order under Section 143(3) of the Act, the intimation under Section 143(1)(a) of the Act gets merged with the order under Section 143(3) of the Act and the intimation under Section 143(1)(a) of the Act does not any more independently survive for rectification by the Assessing Authority under Section 154 of the Act. Therefore, the Hon'ble High Court held that after an order has been passed in terms of Section 143(3) of the Act, no rectification order under Section 154 could be passed to rectify the intimation under Section 143(1)(a) of the Act. 14.5 The Hon'ble High Court of Calcutta in C.E.S.C. Ltd. v. DCIT 134 Taxmann 647 (Cal.) dated 22.04.2003 dealt with a similar issue. The Court held that when what was accepted in the intimation has been reversed in the regular assessment and the assessee has preferred an appeal which is pending, the theory of merger is bound to apply in the present case for the reason that the intimation issued under Section 143(1)(a) is no longer operative. It was further observed that the only order which is effective, and operative is the one passed under Section 143(3) of the IT Act. 14.6 Also, the Hon’ble Supreme Court in the case of CIT vs. Gujarat Electricity Board 260 ITR 84 (SC) held that: “It is not open to the Revenue to issue intimation under section 143(1)(a) of the Income-tax Act, 1961, after notice for regular assessment is issued under section 143(2). The Legislature intended that where the summary procedure under section 143(1) has been adopted, there should be scope available D for the Revenue, either suo motu or at the instance of the assessee, to make a regular assessment under section 143(2). The converse is not available: a regular assessment proceeding having been commenced under section 143(2), there is no need for a summary proceeding under section 143(1)(a).”