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TMI Blog2024 (10) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... this sub-section shall be sent after the expiry of one year (9 months as applicable at that point of time) from the end of financial year. Since, in the present case, intimation was passed on 22.09.2022 assessee could have filed rectification application u/s 154 of the Act and the same has to be disposed off within 6 months from the date of reference. In the given case, the regular assessment itself was passed on 28.12.2022. That means assessee could have raised this issue before the AO in the regular assessment itself. Since this is a peculiar case wherein the addition was proposed based on the apparent mistake on record, which was not appreciated by the authorities. Considering these facts on record with the moto of our institution Impartial, Easy Speedy Justice , in our considered view, ld. CIT (A) even though having co-terminus power had failed to appreciate the real facts on record and we do not want to toe the same line of argument of ld. DR CIT (A), particularly when we noticed that the assessee has not made any claim of the contingent liability in its profit loss account and merely based on the mistake of the tax auditor, who wrongly mentioned at Col.21(a) of the tax audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 12.09.2022 was issued to the assessee and assessee submitted relevant information relating to various informations called for in questionnaire of notice u/s 142(1) of the Act on 26.08.2022. 5. It is relevant to note that intimation u/s 143 (1) was passed on 22.09.2022 with the total assessed income at Rs. 3317,74,52,060/- by the CPC by making the following addition :- (i) A sum of Rs. 26,54,02,75,354/- towards the additional amount of any liability of a contingent nature which has been allegedly debited to the profit and loss account to the extent disallowable under section 37 of the IT Act, as mentioned in paragraph 21 (g) of Form 3CD. (ii) Rs. 17,50,00,000/- towards disallowance of deduction under 80M of the IT Act in respect of inter-corporate dividends (Page 263 of the paper book). 6. Subsequently, the assessment order u/s 143(3) was passed on 28.12.2022 without making any adjustment in the regular assessment and determined the taxable income as per the intimation passed u/s 143 (1) of the Act. 7. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A) against the assessment order and filed detailed submissions. After considering detailed submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case in passing the Impugned Order without considering the documents substantiating that Rs. 26,54,02,75,345/- was inadvertently reported by the tax auditor in Form 3CD and not debited by the Appellant to the profit and loss account which goes against the principles of natural justice. 7. The Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and circumstances of the case in not appreciating that the assessment order was issued by the Assessment Unit without issuing a show cause notice and a draft assessment order, which goes against the statutory procedure and principles of natural justice. 8. The Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and circumstances of the case in not appreciating that Section 144B of the IT Act mandatorily provides for the issuance of a show cause notice and draft assessment order by the National Faceless Assessment Centre before issuing a final assessment order. 9. The Appellant craves leave to add to and/or amend and/or delete and/or modify and/or alter the aforesaid grounds of appeal as and when the occasion demands. 10. All the aforesaid grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angalore, (Sl. No. 2 of the case law compendium), Madhya Pradesh Gramin Bank (formerly known as Narmada Jhabua Gramin Bank) v. ACIT, CPC-TDS Ghaziabad, 2022 (11) TMI 771 - ITAT INDORE (Sl. No. 3 of the case law compendium), and Shivganga Drillers Private Ltd. v. CPC, Income Tax, Indore Bangalore, 2022 (5) TMI 1427 - ITAT Indore (SI. no. 4 of the case law compendium). 11. Ld. AR further stated that in the instant case, there is no basis to pay tax on the addition of Rs. 26,54,02,75,345/- as this amount has not been debited from the profit and loss statement by the assessee. He submitted that the assessee had inadvertently mentioned the amount in paragraph 21(g) of Form 3CD. Thus, the AO and the CIT(A) erred in affirming the addition of the said amount simply because it did not appeal against the intimation issued by the CPC under Section 143(1) of the IT Act. 12. As regards violation of section 144B of the Act, ld. AR for the assessee submitted that that Section 144B(l)(xvi)(b) of the Act mandatorily provides for the issuance of a prior show cause notice and draft assessment order before issuing a final assessment order. Since in the present case no show cause notice as well as draf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book, SI. nos. 4, 5, and 7). As the Assessment Order under Section 143(3) of the IT Act was passed by the AO after the intimation by CPC, the AO ought to have followed the procedure provided under Section 144B of the IT Act. If such a notice would have been issued, the assessee would have had the opportunity to provide the clarification and bring the facts on record before the AO. Therefore, the justification for non-application of the procedure laid down under Section 144B of the IT Act is invalid. 15. At the time of hearing, a query was raised by the Bench to submit a clarification from the tax auditor and also the details of outstanding contingent liability which are pending as on that date of balance sheet which assessee has not claimed in the profit loss account, however by clerical mistake of the auditor, the same was wrongly mentioned in auditor s report in Form 3CD. The assessee has submitted detailed clarification from the auditors and details of pending contingent liability which is placed on record dated 09.08.2024. 16. On the other hand, ld. DR for the Revenue brought to our notice page 74 of the paper book which is the auditor s report in Form 3CD and he brought to ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee has not debited the same in its profit loss account. Since the auditor has wrongly specified the details of contingent liability at point 21(a) of the auditor s report in Form 3CD, this lead to the understanding that the assessee had claimed the contingent liability u/s 37 of the Act during the year. The CPC by noticing the abovesaid information available in Form 3CD proceeded to make the addition of the same in the intimation order u/s 143(1) of the Act and the intimation was passed on 22.09.2022. Subsequently on 28.12.2022, regular assessment order was also passed u/s 143(3) of the Act without making any addition in regular assessment. 19. Aggrieved with the above order, assessee filed an appeal before the ld. CIT(A) and also submitted a signed clarification of the tax auditor with regard to above clerical mistake recorded in From 3CD. The ld. CIT(A) dismissed the appeal filed by the assessee and held that the grievance of the assessee lies in the intimation order passed u/s 143(1) of the Act and it should have filed an appeal against the intimation order passed u/s 143(1) and not against the regular assessment passed u/s 143 (3) of the Act. After considering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion application u/s 154 of the Act and also the case was selected for scrutiny even before the intimation u/s 143(1) of the Act was passed. 22. It is well-settled law that assessee cannot be taxed at an amount which is not legally imposable. As per the facts on record, assessee chose to address the grievance against wrong order, however we noticed that the intimation u/s 143(1) of the Act was passed after selection of the case for regular assessment and the assessee was not given opportunity before making such addition. We also noticed that after passing of the intimation order u/s 143(1) of the Act within three months, the regular assessment u/s 143(3) was also passed. As per the Second Proviso to Section 143(1) of the Act, no intimation under this sub-section shall be sent after the expiry of one year (9 months as applicable at that point of time) from the end of financial year. Since, in the present case, intimation was passed on 22.09.2022 assessee could have filed rectification application u/s 154 of the Act and the same has to be disposed off within 6 months from the date of reference. In the given case, the regular assessment itself was passed on 28.12.2022. That means asses ..... 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