2023 (9) TMI 254

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....7-18 respectively. The assessee has raised common grounds for both the assessment years. Grounds for A.Y.2016-17 are as under: "1. That on the facts and in the circumstances of the case and in law, the order u/s. 143(1) is bad in law, hence be quashed. 2. That on the facts circumstances of the case and in and law the adjustment of Rs. 166979223 and Rs. 27781175 is beyond the scope of section 143(1) and therefore said two adjustments be kindly quashed. 3. That on the facts and in the circumstances of the case and in law, the denial of the deduction of revenue expenditure u/s 143(1) of Rs. 16,69,79,223 as claimed in the return is wholly unjustified and un lawful, hence the same be kindly allowed. 4. That on....

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..... DCIT 134 Taxman 647 (Cal) 3. On the other hand Ld. DR has not disputed the fact that for these two assessment years at the time of passing impugned order by CPC the assessing officer already initiated the scrutiny assessment by issuing notice u/s 143(2) of the Act. However, the Ld. DR has submitted that in the subsequent assessment order passed by the AO this addition has been made which is subject matter of the appeals filed by the assessee, therefore, the order u/s 143(1) has merged with order passed u/s 143(3). The Ld. DR has relied upon the orders of the authorities below. 4. We have considered the rival submissions as well as relevant material on record. There is no dispute that for A.Ys.2016-17 & 2017-18 the AO initiated the s....

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.... 212 ITR 496. In view of the Calcutta High Court when once notice under Section 143(2) has been issued there is no scope for Assessing Officer either to make prima facie adjustment on the basis of the return as filed or issue intimation under Section 143(1)(a) of the Act. Emphasis is given to the omission by the legislature with regard to savings of powers as is found in sub-section (1) of Section 143. If issuance of notice under Section 143(2) would have been without prejudice to "intimation under Section 143(1) it could be said that parallel proceedings are permitted. The legislature specifically provided that issuance of intimation under Section 143(1)(a) would be without prejudice to provisions of Section 143(2). The provision is made s....

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....ld issue appropriate orders or directions to prevent such consequences. The existence of such alternative remedies as appeals and reference to the High Court was not, however, always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action. When the Constitution conferred on the High Courts the power to give relief it became the duty of the courts to give such relief in fit cases and the courts would be failing to perform their duty if relief were refused without adequate reasons." 16. In this view of the matter, we are of the opinion that after issuance of notice under Section 143(2) of the Act, it is not open for the Assessing Officer....

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.... initiated through notice under sub-section (2) of Section 143, must determine whether any refund is due and payable. If the return itself is under probe and scrutiny, such return cannot be the foundation to sustain a claim for refund till such scrutiny is not complete. Considering the nature of power exercisable under these two limbs of Section 143, the inescapable conclusion is that the processing of return under sub-section (1) of Section 143 must await the further exercise of power of scrutiny assessment under sub-sections (2) and (3) of Section 143. If the power under sub-section (2) of Section 143 of the Act is initiated in a manner known to law, there cannot be any insistence that the processing under sub-section (1) of Section 143 b....

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....s contingency reserve as a business expenditure and appeals therefrom are pending. A further question therefore arises whether assessment or the provisional assessment or to be more precise, the assessment made on the basis of the return itself under section 143(1)(a) the Act accepting appropriation to contingency reserve as an allowable expenditure merged in the order passed under section 143(3) of the wherein the aforesaid appropriation to contingency reserve was disallowed ? What was accepted in the intimation has been revered in regular assessment and the assessee has preferred an appeal which is pending. I am firmly of the view that this is a case where the theory merger is bound to apply because the intimation issued under section 143....