The Mumbai Bench of Income Tax Appellate Tribunal(ITAT) upheld the remand of the issue concerning the non-reduction of profit from the sale of fixed assets to the Assessing Officer (AO) for verification.
MSC Agency (India) Private Limited,appellant-assessee,filed its return of income on 30.11.2018, declaring Rs. 405,76,11,380/-, and a revised return on 29.03.2019, declaring Rs. 401,71,18,820/-. The case was selected for scrutiny, and the AO passed an assessment order on 04.03.2021, determining total income at Rs. 405,86,96,408/- after making additions.
The assessee appealed against the order, challenging the non-reduction of Rs. 10,85,026 profit from the sale of fixed assets. The Commissioner of Income Tax(Appeals)[CIT(A)] remanded the issue to the AO for verification, stating it was not part of the assessment order.
The assessee’s counsel argued that the profit from the sale of fixed assets was already reduced in the Section 143(1) intimation and that the AO made a double addition. The counsel said that, even though no appeal was filed against the Section 143(1) order, the doctrine of merger applied, making the issue valid for appeal.
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In response,the Revenue counsel disagreed, stating the assessee should have appealed the Section 143(1) intimation instead of challenging it in the appeal against the Section 143(3) order.
The tribunal noted that the AO did not address the issue of non-reduction of profit on the sale of fixed assets amounting to Rs. 10,85,026/- in the assessment order under section 143(3) of the Act. The CIT(A) also did not consider the issue, stating it was not part of the assessment order.
The appellate tribunal explained that the intimation under section 143(1) and the assessment order under section 143(3) do not merge automatically when the AO has not addressed the issue during the scrutiny assessment. It also stated that the assessee could not challenge the addition made under section 143(1) in an appeal against the section 143(3) order.
The two member bench comprising Kavitha Rajagopal(Judicial Member) and Om Prakash Kant(Accountant Member) relied on previous decisions and dismissed the ground of appeal, allowing the assessee to appeal the section 143(1) intimation before the CIT(A) for a decision on merits.
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