Section 143(1) intimation automatically merges with regular assessment under section 143(3) for same year

The ITAT Delhi held that an intimation issued under section 143(1) automatically merges with a regular assessment under section 143(3) when both proceedings relate to the same assessment year. The assessee's appeal against the section 143(1) intimation denying section 11 exemption for non-filing of Form 10B became infructuous once regular assessment proceedings were initiated. The tribunal found that the CIT(A) correctly identified the merger but erred by deciding the merits of section 11 exemption when the same issue was already under appeal before another appellate authority regarding the regular assessment order. The appeal was partly allowed, with the demand under section 143(1) not surviving due to the merger.

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Issues Involved:
1. Denial of exemption u/s 11 due to non-filing of Form 10B.
2. Merger of intimation u/s 143(1) with assessment order u/s 143(3).
3. Applicability of second proviso to Sec. 12A(2) for claiming exemption u/s 11.

Summary:

Issue 1: Denial of exemption u/s 11 due to non-filing of Form 10B
The assessee, a registered society, filed for registration u/s 12A on 27/03/2019 and subsequently filed its ROI for AY 2018-19 on 30/03/2019, claiming exemption u/s 11. The CPC denied the exemption in the intimation u/s 143(1) dated 10/11/2019 due to non-filing of Form 10B. The Ld. CIT(A) upheld this denial, stating that Form 10B must be filed before or along with the ROI for exemption u/s 11 to be granted.

Issue 2: Merger of intimation u/s 143(1) with assessment order u/s 143(3)
The assessee argued that the intimation u/s 143(1) merges with the assessment order u/s 143(3) once regular assessment proceedings are initiated. The Ld. CIT(A) agreed, stating that the appeal against the intimation becomes infructuous. However, the Ld. CIT(A) proceeded to make findings on the merits of the exemption claim, which was not required since the issue was already under appeal in the regular assessment.

Issue 3: Applicability of second proviso to Sec. 12A(2) for claiming exemption u/s 11
The assessee contended that the second proviso to Sec. 12A(2) applies as the registration was granted on 05/01/2021, and the assessment for AY 2018-19 was pending. The Tribunal observed that the assessee is eligible for exemption u/s 11 due to the pending assessment at the time of registration, provided there is no change in objects and activities. However, this issue should be addressed in the appeal against the regular assessment order u/s 143(3).

Conclusion:
The Tribunal held that the intimation u/s 143(1) merges with the regular assessment order u/s 143(3) and becomes infructuous. The demand raised in the intimation does not survive. The findings on the merits by the Ld. CIT(A) were deemed unnecessary, and the issue of exemption u/s 11 should be decided by the FAA in the appeal against the regular assessment order. The appeal was partly allowed.

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