ITAT Delhi Clarifies: Appeal Not Maintainable When No Fresh Addition in Section 143(3) Order

Background and Context

The Delhi Bench of the Income Tax Appellate Tribunal, in the case of Marmo Home Private Limited Vs DCIT, has examined whether an assessee can maintain an appeal against an assessment order passed under Section 143(3) of the Income Tax Act, 1961, when that order merely accepts the income already determined under Section 143(1) without making any fresh additions.

The Tribunal upheld the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, New Delhi, and dismissed the assessee’s appeal on the core reasoning that:

  • An appeal under Section 246A requires the assessee to be actually aggrieved by the specific order under challenge; and
  • When an order under Section 143(3) does not make any new addition or disallowance, there is no fresh grievance arising out of that order.

The ruling provides important guidance on the interplay between intimation under Section 143(1) and regular assessment under Section 143(3), and on the limited applicability of the doctrine of merger in such a situation.

Procedural History

Filing of Return and Processing under Section 143(1)

  1. The assessee filed its return of income for Assessment Year 2018-19 on 11.10.2018, declaring a total income of Rs. 2,29,05,790.
  2. The return was processed by the Central Processing Centre (CPC), Bengaluru, under Section 143(1).
  3. While processing, CPC made certain adjustments and determined the total income at Rs. 12,80,92,944 by way of additions.
  4. The assessee moved rectification applications under Section 154, but those attempts did not result in any favourable rectification.

Scrutiny Assessment under Section 143(3)

  1. The case was subsequently selected for scrutiny.
  2. The Assessing Officer, by order dated 15.04.2021 under Section 143(3), accepted the income already determined under Section 143(1), i.e. Rs. 12,80,92,944, and made no fresh additions or disallowances.

Appeal before CIT(A)/NFAC

  1. The assessee filed an appeal against this Section 143(3) order before the CIT(A)/NFAC.
  2. The CIT(A) dismissed the appeal as infructuous, holding that:
    • No addition or disallowance had been made in the Section 143(3) order; and
    • The assessee had already challenged the Section 143(1) intimation separately by filing a separate appeal.

The assessee then approached the ITAT, challenging the correctness of the CIT(A)’s approach.

Assessee’s Contentions Before ITAT

The assessee raised multiple grounds, all broadly converging on one main issue: the CIT(A) should have treated the Section 143(3) assessment order as independently appealable and decided the matter on merits. Key arguments were:

1. Assessment under Section 143(3) is Independently Appealable

  • The assessee contended that an assessment order under Section 143(3) is a distinct and final order determining total income and tax liability.
  • It was argued that once the Assessing Officer adopted the income at Rs. 12,80,92,944 (as per Section 143(1)) in the scrutiny assessment, that very adoption/confirmation itself constituted an adverse determination, thus giving rise to a valid grievance.
  • Therefore, according to the assessee, the order under Section 143(3) was independently appealable under Section 246A, regardless of whether the variations originated at the Section 143(1) stage.

2. Non-Compliance with Section 250(6) and Principles of Natural Justice