2024 (3) TMI 707 - AT - Income Tax

Maintainability of appeal against Scrutiny assessment u/s 143(3) or intimation u/s 143(1) - Cause of action for appeal arising from assessment or intimation - Application for rectification of intimation pending - AR contended that the income was assessed at 10% as per the intimation u/s 143(1) of the Act whereas in the assessment completed u/s 143(3) of the Act, it was treated as business profit and taxed at 30% as against 10% at special rate u/s 115BBDA HELD THAT - On perusal of the impugned Assessment Order passed u/s 143(3) it is clear that AO has assessed the total income solely relying on the adjustment made by the AO/CPC in the intimation made u/s 143(1). In the impugned Assessment Order passed u/s 143(3) there is no independent discussion as regards the income assessed at Rs. 23,29,62,420/-. Section 246A specifically provides for an appeal as against intimation issued under section 143(1) of the Act. In the instant case, total income has been assessed as per the intimation passed u/s 143(1). Therefore, the cause of action for the assessee arises from the intimation issued u/s 143(1) and appeal ought to have been filed as against the same. The assessment completed u/s 143(3) of the Act merely adopts the assessed figures in the intimation order passed under section 143(3) of the Act. Therefore, no cause of action arises from the order passed u/s 143(3) of the Act. Section 143(4) of the Act only mentions that on completion of regular assessment under section 143(3) or 144 of the Act, the tax paid by assessee under section 143(1) of the Act shall be deemed to have been paid toward such regular assessment. That by itself does not mean there is merger of intimation under section 143(1) with that of regular assessment under section 143(3) / 144 (unless issue has been discussed and adjudicated in regular assessment under section 143(3) / 144 of the Act). Assessee, against the intimation under section 143(1) of the Act, has filed a rectification application under section 154 of the Act and the same is pending disposal. CIT(A) in the impugned order has directed the AO to dispose off the said rectification application - Moreover, if assessee is advised to file an appeal as against the intimation u/s 143(1) a liberal approach may be taken for condonation of delay since assessee s application for rectification of the intimation under section 143(1) of the Act has been filed within time and same is pending disposal. With the above said observation, the grounds of the assessee are rejected.

Summary

Issues Involved:
The appeal challenges the CIT(A)'s order under section 250 of the Income Tax Act, 1961 for the Assessment Year 2018-19.

Issue 1: Validity of Appellate Order
The appellant contended that the CIT(A)'s order was bad in law, void ab initio, and contrary to the facts and circumstances of the case. The appeal raised concerns about the addition made in the intimation under section 143(1) of the Act and the subsequent assessment under section 143(3) of the Act. The appellant argued that the CIT(A) erred in not adjudicating on certain grounds raised before him.

Issue 2: Treatment of Income
The appellant, a Trust, declared total income at Nil for the Assessment Year 2018-19. However, the AO/CPC processed the return and considered an amount as income chargeable to tax. The assessment under section 143(3) of the Act assessed the total income at a different amount, leading to a discrepancy in the treatment of income. The CIT(A) directed the AO to tax the income at a specific rate, partly allowing the appellant's appeal.

Issue 3: Merger of Intimations
The Tribunal examined the assessment order passed under section 143(3) of the Act and noted that it solely relied on the adjustment made in the intimation under section 143(1) of the Act. The Tribunal emphasized that the cause of action for the appeal arose from the intimation under section 143(1) and not the assessment under section 143(3). It clarified that the tax paid under section 143(1) is deemed to have been paid towards regular assessment, but this does not imply a merger unless discussed and adjudicated in the regular assessment. The Tribunal rejected the appellant's grounds, emphasizing the need for a liberal approach for condonation of delay in filing appeals against intimation orders.

Conclusion:
The Tribunal dismissed the appeal, stating that the cause of action for the appeal was based on the intimation under section 143(1) of the Act rather than the assessment under section 143(3). It highlighted the importance of addressing discrepancies in the treatment of income and the need for a liberal approach in condoning delays in filing appeals against intimation orders.