ITAT upholds Assessment Order passed u/s 143(3) of Income Tax Act based on intimation  made by section 143(1) of Act [Read Order]

The Income Tax Appellate Tribunal (ITAT) Bangalore bench upheld the assessment order passed under Section 143(3) of Income Tax Act, 1961 based on the intimation made by section 143(1) of the Income Tax Act, 1961.

Assessee Areca Trust is a Trust. The return of income was filed by declaring total income at Nil. The return of income was processed by the AO/CPC under Section 143(1) of the Income Tax Act.

In the said intimation, an amount of Rs.23,29,62,417/- was considered as income chargeable to tax @ 10% at special rate other than under Section 115BB of the Income Tax Act.

After completing the scrutiny assessment order was passed under Section  143(3) of  Income Tax Act by assessing the total income at Rs,23,29,62,420/- as per the intimation issued under Section 143(1) of the  Income Tax Act.

Aggrieved by the order, the assessee filed an appeal  before the Commissioner of Income Tax (Appeals)[ CIT(A)].

Before the CIT(A), assessee submitted that  assessee earns dividend income of Rs.23,29,62,417/- on mutual funds registered with SEBI and hence the exemption claimed under section 10(35) r.w.s. 10(23) of the Income Tax Act is to be granted.

Counsel for assessee submitted that  c the income was assessed at 10% as per the intimation under Section 143(1) of the Income Tax Act  whereas in the assessment completed under section 143(3) of the   Income Tax Act, it was treated as business profit and taxed at 30% as against 10% at special rate under Section 115BBDA of the  Income Tax Act.

Afterwards, it was concluded by the CIT(A) that an appeal against the order passed under section 143(3) of the  Income Tax Act is not maintainable and he did not adjudicate on merits.

Further as regards the rate of tax, the CIT(A) directed the AO to tax the income of Rs.23,29,62,420/- at 10% as per Section 115BBDA of the Act as it is done in the intimation under Section 143(1) of the  Income Tax Act.

Aggrieved by the order assesee filed the appeal before the tribunal.

Sumeet Khurana, counsel appeared for assessee and Sunil Kumar Singh , counsel appeared for the revenue.

It was observed by the tribunal that  AO has assessed the total income at Rs.23,29,62,420/- solely relying on the adjustment made by the AO/CPC in the intimation made under section 143(1) of the Act. Also  there is no independent discussion as regards the income assessed.

Further the tribunal found that 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 Income Tax Act Merely adopted the assessed figures in the intimation order passed under section 143(3) of the Income Tax Act. Therefore, no cause of action arises from the order passed under section 143(3) of the  Income Tax Act.

After  analysing the material facts the two member bench of Laxmi Prasad Sahul, (Accountant Member) and George George K, (Vice-President) upheld the assessment order passed under Section 143(3) of Income Tax Act, 1961 based on the intimation made by section 143(1) of the Income Tax Act, 1961.

Therefore the bench dismissed  the appeal filed by the assessee.

To Read the full text of the Order CLICK HERE

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