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TMI Blog2024 (4) TMI 920X X X X Extracts X X X X X X X X Extracts X X X X ..... as reproduced above makes it apparent that the income determined vide intimation u/s 143(1) was taken as income for making further additions u/s 143(3) assessment. Certainly that was a mistake apparent from record as the intimation u/s 139(1) stood final after withdrawal of the appeal by the assessee. Accordingly, the difference between the returned income and the assessed income u/s 143(1) was erroneously ignored while passing order u/s 143(3). Therefore we are of view AO had committed no error in exercising the rectification powers u/s 154. As with regard to applicability of the doctrine of merger of intimation u/s 143(1) and the assessment order u/s 143(3) the proposition of law in case Title M/s. Areca Trust [ 2024 (3) TMI 707 - ITAT BANGALORE] where the additions made under intimidation u/s 143(1) and !43(3) are on different issues and heads and intimation u/s 143(1) of the Act stood final after withdrawal of appeal by assessee, on what so ever erroneous belief, there was no merger of two orders. Whether addition could be made by learned AO by exercising powers u/s 154 of the Act where learned AO had accepted the return filed u/s 139 of the Act vide intimation u/s 143(1) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals) on 13.01.2020. Assessee has claimed that since the assessing officer did not make the addition on the subject of order u/s 143(1) for which the assessee had filed the appeal, so the assessee thought that the subject of 143(1) order has been merged and duly considered by the assessing officer in the assessment u/s 143(3). So the assessee withdrew the appeal on 17.03.2021 against the order u/s 143(1). But the department after passing the order u/s 143(3), rectified the order under section 154 on 31.03.2021. Rectification was made relating to the additions of Rs 12,82,64,760/- by giving reason that addition was missed by the assessing officer while passing order u/s 143(3). 4. It is submitted for assessee by Ld. AR that while passing assessment order u/s 143(3), all the issues pending at the time of assessment for that year have been considered. Once additions were not made on the subject of section 143(1) order, it is understood that the matter has been considered in the assessment u/s 143(3). It was submitted that addition u/s 36(1)(va) cannot be made u/s 143(1) or 154 because it is not a prima facie adjustment. 5. That the assessee filed his Grounds of appeal stating that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order u/s 143(1) because the order u/s 143(1) was merged with assessment u/s 143(3). The learned CIT(A) has misunderstood that the assessee has not disputed the addition /disallowance in order u/s 143(1). 3. Because the learned CIT(A) erred in upholding the order of the AO u/s 154 r.w.s. 143(3) and 143(1) in disallowing a sum of Rs. 12,82,40,760/- being Employees Contribution to PF and ESI, as disallowance of employees contribution is not within the ambit of section 143(1)(a)(iv). 4. Because the learned CIT(A) erred in upholding the order of the AO u/s 154 r.w.s. 143(3) and 143(1) in disallowing a sum of Rs. 12,82,40,760/- being Employees Contribution to PF and ESI, as disallowance of employees contribution is not reported by the tax auditor which is the mandate of section 143(1 )(a)(iv), 5. Because the learned CIT(A) erred in upholding the order of the AO u/s 154 r.w.s. 143(3) and 143(1) in disallowing a sum of Rs. 12,82,40,760/- being Employees Contribution to PF and ESI, as the case of assessee is not covered by Supreme Court decision in checkmate services Private Limited v. CIT [2022] 448 ITR 518. 6. Because the assessing officer has erred in making rectification u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 143(1) of the Act an adjustment was done in regard to delay in depositing Employees Contribution of PE/ESI and on account of income of house property and thereby the returned income of Rs. 18,10,42,260/- was recomputed at Rs. 30,93,07,020/-. Admittedly, assessee had preferred an appeal against this intimation and the same was withdrawn for which assessee claims. The reason for withdrawal was that regular scrutiny assessment u/s 143(3) was initiated. 10.1 Now if we look at the assessment order dated 29.12.2019 u/s 143(3) of the Act it mentions that return was processed u/s 143(1) of the Act and the case of assessee was selected under CASS for the following reasons ; "i. Large deduction under chapter VI-A from total income. ii. Opening written Down Value of fixed assets as per ITR of current year is greater than closing written down Value of fixed assets as per ITR of preceding year. iii. Sale consideration of property in ITR is less than sale consideration reported in FORM 26QB. iv. Large Loss from currency fluctuations. v. Expenses debited to P & L A/c for earning exempt income as per schedule BP of ITR is significantly lower as compared to investments made to earn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the assessed income u/s 143(1) of Rs. 309,307,020/-, was erroneously ignored while passing order u/s 143(3). Therefore we are of view Ld. AO had committed no error in exercising the rectification powers u/s 154. 13. As with regard to applicability of the doctrine of merger of intimation u/s 143(1) and the assessment order u/s 143(3) the proposition of law as discussed by the Bangalore Bench of the Tribunal in ITA No. 433/Bang./2023 in case Title M/s. Areca Trust Vs CIT (Appeals) (ITAT Bangalore) order dated 26/07/2023 for A.Y. 2018-19, is relevant and para 8 and 9 are reproduced below for further convenience of discussion : "8. 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 at Rs. 23,29,62,420/- as per the intimation passed under section 143(1) of the Act. Therefore, the cause of action for the assessee arises from the intimation issued under section 143(1) of the Act and appeal ought to have been filed as against the same. The assessment completed under section 143(3) of the Act merely adopts the assessed figures in the intimation order passed under section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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