MJUNCTION SERVICES LTD.,KOLKATA vs. DCIT, CIR. 1(1), KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH KOLKATA BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No.203/KOL/2024 Assessment Year: 2017-18

Mjunction Services Limited DCIT, Circle-1(1), Kolkata Godrej Waterside, Tower 1, 3rd Floor, Plot No. 5, Block – Vs. DP, Sector V, Salt Lake, Kolkata-700091. (PAN: AACCM5881C) (Appellant) (Respondent)

Present for: Appellant by : Shri Ashis Agarwal, CA Respondent by : Shri P. P. Barman, Addl. CIT, Sr. DR Date of Hearing : 15.04.2024 Date of Pronouncement : 18.04.2024 O R D E R PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of Ld. Commissioner of Income Tax (Appeal), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “the Ld. CIT(A)” vide order No. ITBA/NFAC/S/250/2022-23/1044483460(1) dated 04.08.2022 passed against the assessment order u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”), dated 07.12.2019 by ACIT, Circle- 2(1), Kolkata for AY 2017-18. Grounds of appeal raised by the assessee are reproduced as under:

“1.That on the facts and circumstances of the case, the Ld. Commissioner of Income-tax (Appeals) ['Ld. CIT(A)'] has erred on facts and in law in not adjudicating the grounds raised in appeal against the order under section 143(3) of the Income Tax Act, 1961 ('the Act') dated 07 December 2019.

2 ITA No. 203/Kol/2024 Mjunction Services Ltd. , AY 2017-18 2 That on the facts and circumstances of the case, the Ld. CIT(A) in the impugned order has erred in law in adjudicating the grounds of appeal raised against intimation under section 143(1) dated 29 March 2019 instead of grounds of appeal in relation to Appeal No. CIT(A), Kolkata -1/10302/2019-20 filed against order passed under sec 143(3) 3. That the Ld AO erred in making a disallowance of Rs.13,03,224 under sec 14A read with Rule 80 of the Rules. 4. That on the facts and circumstances of the case, the Learned Assessing Officer ('Ld. AO') has erred on facts and in law in mechanically making the additions under section 14A of the Act r.w. Rule 80 of the Rules without providing any cogent reasons as to why the Ld. AO is not in agreement with the suo-mote disallowance made by the Appellant in its return of income. 5 The Ld AO erred in not applying the ratio of ITAT decision of ACIT vs. Vireet Investment Pvt Ltd. (ITA 502/Del/2012 dated 16/06/2017)(Delhi Tribunal (SB)) though the same was specifically argued by the assessee before the AO and in ignoring the fact that the suo moto disallowance was higher than the disallowance computed applying the ITAT decision of Vireet Investments(supra). 6. The Appellant craves leave to add to or alter, by deletion, substitution or otherwise, any or all of the above grounds of appeal, at any time before or during the hearing of the appeal.” 2. The appeal of the assessee is time barred by 120 days and condonation petition has been filed. However, as is discussed in subsequent paragraphs, since the Ld. CIT(A) has not decided the appeal filed against the order u/s. 143(3) of the Act by the AO, as the grounds decided are those which emanate from the order of the AO u/s. 143(1), therefore, the appeal against the order u/s. 143(3) of the Act is still pending for adjudication before the Ld. CIT(A) and the application for condonation of delay becomes infructuous being premature. 3. Ground nos. 1 and 2 relate to the Ld. CIT(A) not adjudicating the grounds of appeal raised in the appeal against the order passed u/s. 143(3) of the Act dated 07.12.2019 and instead adjudicating grounds of appeal raised against intimation u/s. 143(1) dated 29.03.2019.

3 ITA No. 203/Kol/2024 Mjunction Services Ltd. , AY 2017-18 Rs.4,934/-. The same was processed u/s. 143(1) of the Act vide intimation dated 29.03.2019 wherein certain disallowances were made by the AO. The assessee filed an appeal against the disallowances before the Ld. CIT(A). Subsequently, the return was also taken up for assessment u/s. 143(3) and the following disallowances were made: “i) Disallowance under sec. 14A of the Act r.w. rule 8D of the Income Tax rules, 1962 towards alleged additional expenses incurred for exempt income earned from investments. – Rs.13,03,224/- ii) Disallowance under sec. 36(1)(va) towards alleged delay in payment of ESI contribution. – Rs.3,263/-.”

4 ITA No. 203/Kol/2024 Mjunction Services Ltd. , AY 2017-18 29.03.2019 issued by the DCIT, CPC, Bangalore with the section erroneously mentioned as 143(3) – the heading on the first page. 7. Further, a perusal of the appeal order dated 16.03.2023 passed subsequently shows that the same is against the intimation u/s. 143(1) of the Act dated 29.03.2019 and various relief have been provided on the basis of either subsequent developments or as per the reliefs provided in the order dated 04.08.2022 of the CIT(A) and the assessee has not pressed any of the grounds of appeal. Para 4 relating to the decision of ld. CIT(A) is extracted as under: “From the above, it is clear that the appellant is not pressing any of the grounds of appeal. It is found from the perusal of documents submitted by the appellant, that order u/s. 143(3) of the Act and consequential order u/s. 250 of the Act have already been passed in this case. Further the Assessing Officer has also passed order u/s. 154 dated 17.10.2022. Therefore, it is concluded that when the order u/s. 250 of the Act, vide order dated 04.08.2022, has already been passed by the CIT(A), in the appeal against the order u/s. 143(3), the present appeal against the order u/s. 143(1) of the Act becomes infructuous. Therefore, the appeal of the appellant is dismissed. and thereby appeal of the assessee has been dismissed since the appeal against the order u/s. 143(1) of the Act had become infructuous. 8. We have examined the facts and heard rival submissions and carefully perused the material available on record. We note that serious discrepancy has crept in both the orders of the Ld. CIT(A) and while the order mentioning the appeal against sec. 143(3) with the date of order being 07.12.2019 is in effect and in substance an appeal against the intimation u/s. 143(1), however, the appeal filed against the order u/s. 143(3) before the Ld. CIT(A) has remained to be adjudicated upon. In the grounds of appeal at Sl. Nos. 3, 4 and 5 the assessee has challenged the addition u/s. 14A read with Rule 8D of the Rules which has not been adjudicated upon by the Ld. CIT(A). At the time of hearing, we were inclined to pass an order on facts. However, on reappraisal of the facts, we note that since the appeal against the order u/s. 143(3) has not yet been decided by the Ld. CIT(A) and in fact two orders have been passed

5 ITA No. 203/Kol/2024 Mjunction Services Ltd. , AY 2017-18 against the intimation u/s. 143(1), the later order treating the appeal as infructuous, it would be appropriate in the scheme of the Act that the Ld. CIT(A) passes an order on the pending appeal against the order u/s. 143(3), which remains to be decided/adjudicated upon as the appeal before the Tribunal can be filed only against an order u/s. 250 of the Act by the Ld. CIT(A). Since the grounds of appeal pertain to the scrutiny assessment u/s. 143(3) the appeal against which is still pending, therefore, deciding the appeal at this stage would tantamount to a direct appeal against the order u/s. 143(3) of the Act of the AO by the Tribunal, which would not be in accordance with law. Hence, the appeal is being treated as premature and the assessee is advised to approach the Ld. CIT(A) with the request for expeditious disposal of the pending appeal and, thereafter, if aggrieved by the order of the Ld. CIT(A), it shall be at liberty to file the appeal before the Tribunal. Accordingly, as held in para 2 (supra) the application for condonation of delay is also not adjudicated upon being infructuous/premature in nature. The appeal of the assessee is dismissed being infructuous. 9. In the result, appeal of the assessee is dismissed as indicated above. Order pronounced in the open court on 18th April, 2024. Sd/- Sd/- (Rajpal Yadav) (Rakesh Mishra) Vice President Accountant Member Dated: 18th April, 2024 JD, Sr. P.S. Copy to: 1. The Appellant: 2. The Respondent. 3. CIT(A), NFAC, Delhi . 4. The Pr. CIT, 5. DR, ITAT, Kolkata Bench, Kolkata //True Copy// By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata