Double Addition/Double Disallowance in Income Tax Assessment: ITAT Considers Doctrine of Merger Applicable [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, heard a case in which double addition and double disallowance was done in the assessment proceedings. The tribunal held that the doctrine of merger would be applicable in the present case.

The appeal before ITAT came from the order passed by the Commissioner of Income Tax (Appeal) [ADDL/JCIT(A)], Panchkula dated 24.06.2025 for AY 2020-21. The assessee declared income of INR 3,93,87,570/- on 27.01.2021, while filing the return of income (ROI) the assessee had disallowed expenses of INR 8,54,970/-. The ROI was processed under Section 143(1) and the intimation was passed on 15.02.2021 where the Assessing Officer (AO) had disallowed the same amount in a different clause and audit report under Section 44AB.

Later, after having bona fide belief and depositing the demand on 30.03.2022, the assessee filed a rectification application under Section 154 of the Act. Accordingly, a rectification order was passed where a fresh demand of the same amount was passed on 23.12.2022, such was the case of double addition.

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The assessee appealed to the CIT(A) but it was dismissed as it was held that the additions were made by the AO under Section143(1) and the rectification order was passed under Section 154, both of which were held to be separately appealable. CIT remanded the matter back to the AO for statistical purposes.

The counsel for the assessee argued before the tribunal that the CIT had failed to consider the Statutory Auditors Certificate while upholding the action of making double addition. The tribunal made note of the fact that the disallowance had already been made by the assessee suo moto which was again made by the Assessing Officer. This was done as per Section 37(1) of the Act.

However, the tribunal also observed that there was a direct connection with the rectification order passed by the AO. The tribunal disagreed that the doctrine of merger was not possible in the mentioned case. The two member bench of Raj Kumar Chauhan (Judicial Member) and Rifaur Rahman (Accountant Member) remitted the issue to the file of the Jurisdictional Assessing Officer to reconsider the submissions as per law and allowed the appeal for statistical purposes.

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