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2025 (3) TMI 1161 - AT - Income TaxComputation of income from assessed income as per intimation u/s 143(1) when the scrutiny assessment was initiated before passing intimation order - HELD THAT - In view of the finding made in the case of MSTC Ltd. 2024 (10) TMI 1642 - ITAT KOLKATA since the adjustment made in the intimation u/s 143(1) of the Act have neither been reversed by the Ld. AO nor any adjudication has been made in the assessment order therefore the CIT(A) was justified in dismissing the appeal of the assessee on the ground that the impugned intimation was not contested in appeal. Hence we find no error in the order of the Ld. CIT(A) which is hereby upheld in view of the order of the Hon ble Jurisdictional High Court and the doctrine of merger discussed in the case of MSTC Ltd. (supra). Hence ground nos. 1 2 3 are dismissed.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Computation of Income from Assessed Income as per Intimation u/s 143(1): The relevant legal framework involves Sections 143(1) and 143(3) of the Income Tax Act, 1961. The Court examined whether the intimation under Section 143(1) loses its relevance once a scrutiny assessment under Section 143(3) is initiated. The Court noted that the scrutiny assessment did not specifically address the contingent liabilities added in the intimation. The Tribunal referenced the doctrine of merger, which suggests that an intimation under Section 143(1) should merge with the order under Section 143(3) if the latter modifies or affirms the former. However, since the scrutiny assessment did not alter the intimation's additions, the doctrine of merger was deemed inapplicable. 2. Disallowance of Contingent Liabilities: The Court considered whether the contingent liabilities, which were not claimed as deductions, should be disallowed as per the intimation. The Tribunal found that since the liabilities were not claimed in the profit and loss account or in the computation of income, the disallowance in the intimation should not have been contested in the appeal against the scrutiny assessment. 3. Doctrine of Merger: The Tribunal discussed the doctrine of merger extensively, referencing several legal precedents. The doctrine posits that a lower court's decision merges into that of a higher court if the latter modifies or affirms the former. In this case, the Tribunal concluded that since the scrutiny assessment did not address or alter the additions made in the intimation, the intimation remained operative and the doctrine of merger did not apply. 4. Addition of Rs. 1,64,597/-: The Tribunal noted that this issue was neither pressed by the assessee nor did it emanate from the order of the CIT(A). Additionally, no such addition was made by the AO while computing the income. Therefore, this ground of appeal was dismissed. SIGNIFICANT HOLDINGS The Tribunal upheld the order of the CIT(A), affirming that the intimation under Section 143(1) remains valid and operative when the scrutiny assessment under Section 143(3) does not address or alter the additions made in the intimation. The doctrine of merger was deemed inapplicable in this context. The Court stated, "The doctrine of merger does not apply when the scrutiny assessment does not address or alter the additions made in the intimation under Section 143(1)." This principle underscores the separation of the intimation and scrutiny assessment processes unless the latter explicitly modifies the former. The appeal against the intimation was considered infructuous since the scrutiny assessment did not address the additions, and the assessee did not contest the intimation in a timely manner. In conclusion, the Tribunal dismissed the appeal, affirming the CIT(A)'s decision and emphasizing the importance of addressing intimation issues separately unless explicitly merged into the scrutiny assessment. The doctrine of merger was clarified as inapplicable in cases where the scrutiny assessment does not modify or affirm the intimation's additions.
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