2022 (9) TMI 1321

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....ssessee, vide intimation issued u/s 143(1)(a) of the Income Tax Act (the Act), arbitrarily. 1.1 That, Id. CIT(A) further erred in confirming the adjustments made to the total income vide intimation issued u/s 143(1) by grossly ignoring the submission made by assessee that assessment for the year under appeal was completed u/s 143(3) of the Act vide order dated 20.12.2019, whereby no such addition was made. Appellant prays that once assessment is completed after thorough examination/verification of details, such order attains finality and intimation issued u/s 143(1)(a) merges into same by virtue of Doctrine of Merger. Since, the adjustments made vide intimation u/s 143(1)(a) do not find place in order passed u/s 143(3), it implies satisfaction of assessing officer on such issues, therefore addition made vide intimation deserves to be deleted. 1.2 That, ld.CIT(A) has further erred in not considering the submission made by assessee and the copy of "Rectification Application" filed against intimation was furnished before Id.AO and the adjustments made vide intimation were found uncalled for in Assessment order passed u/s 143(3) of the Act. It is therefore prayed that....

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....exempt income which has been reduced from the Schedule of Business Income (BI) is only Rs. 9,65,342. The exempt income shown in the schedule of Exempt Income (EI) in the form of "Long Term Capital Gains from transactions on which STT is paid of Rs. 5,54,67,094 has nothing to do with the income credited to P & L account considered under other heads/or chargeable u/s 115 BBF in the form of Capital Gains of Rs. 3,62,21,756. The appellant has reduced only Rs. 9,65,342 from the profit & loss account on account of exempt income. The appellant could not correlate the Capital Gains income which has been reduced from the business with any of the incomes shown by him in the Exempt Income (El) Schedule. The appellant has shown only Rs.19,86,017 in the schedule of Capital Gains. The addition made by the Assessing Officer do not suffer from any infirmity. Therefore, the Ground of Appeal 2 is hereby dismissed. It is seen from the above that the appellant has reduced an amount of Rs. 1,01,24,337 from the schedule of Business Income (BP) as income from Other Sources considered under other head, but an amount of only Rs. 2,79,081 has been shown in the Schedule of Capital Gains income. The ....

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....e of Gujarat Poly-Ax Electronics Ltd. v. CIT, 1996 SCC OnLine Guj 147: (1996) 222 140, that "exercise of powers under Section 143(1) is not made permissible after issuance notice under Section 143(2) of the Act. ... we are of the opinion that after issuance of notice Section 143(2) of the Act, it is not open for the assessing officer to make adjustment or to order under Section 143(1) of the Act but he has to make assessment in accordance with i.e. under Section 143(3) of the Act.". (Para 10.1.2 @ Pg. 34). Vide notice dated 24.10.2019, assessee was intimated that the case was taken up for complete scrutiny. Details sought during scrutiny assessment were furnished and assessment proceedings 143(3) were completed by ld. ACIT Circle-7, Jaipur in physical mode vide order dated 20.12.2019 (i.e. jurisdictional AO), whereby addition of Rs.1,37,53,473/- was made on account difference in professional receipts as per ITR vis-à-vis ITS Data (APB 36-48). Basically, difference arose for the reason that assessee always followed cash system of accounting, whereas the clients of the assessee deducted tax at source on accrual basis without the actual payment having been received by the asses....

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....tanding demand on 25.02.2020 for A.Y. 2017-18, which demand only pertained in respect to the order passed u/s 143(3) (APB 55-56). Moreover, no demand appears payable as of now and at the time of passing the order in appeal under challenge, on the income tax portal of the assessee pertaining to intimation u/s 143(1) (APB 57). It is thus assumed that the ld. AO having taken cognizance of the fact of issuance of notice u/s 143(2) acted upon removing the demand created u/s 143(1) which is a positive act on the part of the ld. AO and as such this has been an act of fair recognition of the theory of merger having proper legal mandate and authority. However, Id. CIT(A), while adjudicating the appeal totally skipped the issue raised before him in respect to the merger of the 143(1) order dated 25.03.2019 into the subsequent order dated 20.12.2019 passed u/s 143(3). The ld. AR of the assessee further submitted that no soon the proceedings u/s 143(2) are commenced the impact and effect of intimation u/s 143(1) totally vanishes and such an intimation becomes nonest. Based on these set of arguments the ld. AR of the assessee submitted that on this score along the order in appeal deserve to be ....