THE INDIA THERMIT CORPORATION LIMITED,NEW DELHI V. DCIT, CIRCLE-25(1), NEW DELHI

ITA 4435/DEL/2024

AI Insights

The case involves The India Thermit Corporation Ltd, which appealed against the order of the CIT(A), Noida, concerning the assessment year 2018-19. The primary contention was the dual initiation of proceedings under sections 143(1)(a) and 143(2) of the Income Tax Act, 1961, for the same assessment year. The assessee argued that the adjustments made to their declared income under section 143(1)(a) were invalid as scrutiny proceedings had already been initiated under section 143(2). The Tribunal, referencing the Supreme Court's decision in Gujarat Electricity Board, agreed with the assessee, leading to the deletion of the income adjustments made under section 143(1)(a).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 26206 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2018-2019
• Other Referred Cases: Commissioner Of Income-Tax vs Gujarat Electricity Board, 260 ITR 84 SC
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT KATOCH
• Assessee Lawyers: VIPIN JAIN
• Keywords: Reasonable cause; TDS; Earning of tax free income
• Section: 143(3); 143(2); 143(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘E’ BENCH, NEW DELHI BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER, AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 4435/DEL/2024 [A.Y. 2018-19] The India Thermit Corporation Ltd Vs. The Dy. C.I.T World Mark 3, 5th Floor, Office 503 Circle 25(1) Asset 7, Aero City, New Delhi New Delhi PAN – AAACT 7462 Q (Applicant) (Respondent) Assessee By : Shri Vipin Jain, CA Department By : Shri Amit Katoch, Sr. DR Date of Hearing : 05.03.2025 Date of Pronouncement : 12.03.2025 ORDER PER NAVEEN CHANDRA, A.M:- This appeal by the assessee is preferred against the order of the ld. CIT(A), Noida dated 31.08.2024 for A.Y 2018-19. ITA No. 4435/DEL/2024 The India Thermit Corpn Page 2 of 8 2. The assessee has raised the following grounds of appeal: “1. That delay in filing the appeal before the CIT(A) on account of Covid 19 be condoned and that the appeal of the assesse company be heard on merits and on legal grounds. 2. That in view of the notice dated 22.09.2019, issued u/s 143(2) of the Income Tax Act, 1961, and the law explained by The Hon'ble Supreme Court of India, in \"Commissioner Of Income-Tax vs Gujarat Electricity Board, 260 ITR 84 SC\", intimation dated 25.12.2019 issued u/s 143(1)(a) was not required to be framed and that the income determined and the tax demand created vide intimation dated 25.12.2019 u/s 143(1)(a) is bad in law and is required to be deleted. 3. That variance made to income in proceedings u/s 143(1) without first confronting the assessee… 4. That on the facts and in the circumstances of the case and in law, the Ld. DCIT CPC Bangalore has erred in determining the income of the appellant company u/s 143(1)(a) at Rs. 97,27,61,400 as against the return filed showing income at Rs. 90,20,78,855, after making variance (addition/ disallowance) to the income declared as under: ITA No. 4435/DEL/2024 The India Thermit Corpn Page 3 of 8 Exempt income: Profit from AOP: Rs 1,37,989 Wealth Tax Refund: Rs 14,159 Liabilities written back: Rs 28,65,697 Profit on sale of fixed assets: Rs 3,70,779 Fair Value change in Financial Assets: Rs 7,51,01,192 Dividend on investment: Rs 3,22,555 Interest from AOP: Rs 3,69,610 Total: Rs 7,91,81,981 Less LTCG on sale of shares Rs 1,15,15,323 Net: Rs 6,76,66,658 Addition on account of alleged delay in deposit of ESI & PF Amounts (Rs 34,21,039 Rs 4,05,153): Rs 30,15,886 Total addition to income: Rs 7,06,82,544 5. That the assessee company craves leave to amend, delete, modify all or any of the grounds of appeal above, and or incorporate fresh ground of appeal, at any time before or during the appeal proceedings.” 3. In addition to the above, the assessee has filed an application for raising additional ground of appeal which reads as under: ITA No. 4435/DEL/2024 The India Thermit Corpn Page 4 of 8 “That in view of the notice dated 22.09.2019, issued u/s 143(2) of the Income Tax Act, 1961, read with the law explained by The Hon'ble Supreme Court of India, in \"Commissioner Of Income-Tax vs Gujarat Electricity Board, 260 ITR 84 SC\", intimation dated 25.12.2019 issued u/s 143(1)(a) could not be passed was not required. The income and the tax demand intimated vide intimation dated 25.12.2019 issued u/s 143(1)(a) is bad in law and is required to be deleted.\" 4. As the issue raised vide additional ground goes to the root of the matter, we allow the additional ground to be raised. 5. Vide Ground No. 1, the assessee has prayed for condonation of delay on account of Covid 19 and subsequent lockdown. An affidavit has been filed in this regard by the Managing Director of the company and furnished on record. Considering the affidavit and submissions of the ld. counsel for the assessee, we find that there is reasonable cause for delay in filing the appeal. We, therefore, condone the same and admit the appeal. ITA No. 4435/DEL/2024 The India Thermit Corpn Page 5 of 8 6. The assessee vide ground no 2 and the additional ground has raised the issue that as the assessee was issued as notice u/s 143(2) of the Income-tax Act, 1961 [the Act, for short] for scrutiny assessment, the AO subsequently can not process the return u/s 143(1) of the Act for making adjustment of income. 7. The assessee vehemently argued that two proceedings cannot be initiated simultaneously and once proceedings u/s 143(2) has been initiated, proceedings u/s 143(1) cannot be undertaken. For this proposition, the ld. counsel for the assessee relied upon the decision of the Hon'ble Supreme Court in the case of Gujarat Electricity Board order dated 12.11.2002 reported in 260 ITR 84(SC). 8. Per contra, the ld. DR relied upon the orders of the authorities below. 9. We have heard the rival submissions and have perused the relevant material on record. We find force in the contentions of the ld. counsel for the assessee. We find that the assessee company filed ITA No. 4435/DEL/2024 The India Thermit Corpn Page 6 of 8 its return on 29.11.2018. The Assessing Officer issued notice on 22.09.2019 u/s 143(2) of the Act to verify the issue under CASS with regard to claim of amounts allowable as deduction in Schedule BP and defaults in TDS as well as duty draw back. The DCIT, CPC-Bangalore, subsequent to the issue of notice u/s 143(2), has processed the return of income and has issued intimation u/s 143(1)(a) of the Act dated 25.12.2019. The issue for adjudication is whether once the scrutiny assessment u/s 143(3) has commenced vide notice u/s 143(2), can the AO conduct processing of the return u/s We find that the Hon'ble Supreme Court in the case of Gujarat Electricity Board [supra] has decided this issue in favour of the assessee as follows: “Even otherwise, the view taken by the Gujarat High Court seems to be correct on principle. There is no dispute that Section 143(1)(a) of the Act enacts a summary procedure for quick collection of tax and quick refunds. Under the scheme if there is a serious objection to any of the orders made by the Assessing Officer determining the income, it is open to the assessee to ask for rectification under Section 154. Apart therefrom, the provisions of Section 143(1)(a)(i) indicate that the intimation sent under Section 143(1)(a) shall be without prejudice to the provisions of Sub-section (2). The Legislature, therefore, intended that, where the summary procedure under Sub-section (1) has been adopted, there should be scope available for the Revenue, ITA No. 4435/DEL/2024 The India Thermit Corpn Page 7 of 8 either suo motu or at the instance of the assessee to make a regular assessment under Sub-section (2) of Section 143. The converse is not available; a regular assessment proceeding having been commenced under Section 143(2), there is no need for a summary proceeding under Section 143(1)(a),” 10. Respectfully following the Hon’ble Apex Court decision in the above case, we hold that where regular assessment proceedings, having been commenced u/s 143(2) of the Act, there is no need for summary proceedings u/s 143(1) of the Act and delete the adjustment u/s 143(1). 11. In the result, the appeal of the assessee in ITA No. 4435/DEL/2024 is allowed. The order is pronounced in the open court on 12.03.2025. Sd/- Sd/- [MADHUMITA ROY] [NAVEEN CHANDRA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 12th MARCH, 2024. VL/ ITA No. 4435/DEL/2024 The India Thermit Corpn Page 8 of 8 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) Asst. Registrar, 5. DR ITAT, New Delhi Sl No. PARTICULARS DATES 1. Date of dictation of Tribunal Order… 2. Date on which the typed draft Tribunal Order is placed before the Dictation Member 3. Date on which the fair Tribunal Order is placed before the Dictating Member for pronouncement 4. Date on which the approved draft Tribunal Order comes to the Sr. P.S./P.S. 5. Date on which the fair Tribunal Order is placed before the Dictating Member for pronouncement 6. Date on which the signed order comes back to the Sr. P.S./P.S 7. Date on which the final Tribunal Order is uploaded by the Sr. P.S./P.S. on official website 8. Date on which the file goes to the Bench Clerk alongwith Tribunal Order 9. Date of killing off the disposed of files on the judiSIS portal of ITAT by the Bench Clerks 10. Date on which the file goes to the Supervisor (Judicial 11. The date on which the file goes to the Assistant Registrar for endorsement of the order 12. Date of Despatch of the Order "