2023 (3) TMI 480 - AT - Income Tax

Validity of assessment proceedings u/s.143(1) once order passed u/s.143(3) - Deduction u/s.80P denied - Validity of additions made u/s.143(1) - case has been selected for limited scrutiny to verify deductions from total income under Chapter-VIA of the Act, and the AO has completed assessment u/s.143(3) of the Act, on 29.03.2021, and allowed deduction claimed u/s.80P - HELD THAT:- Once proceedings have been initiated u/s.143(3) of the Act, and assessment has been completed thereunder, then earlier assessment order passed u/s.143(1)(a) of the Act, is no long operative for that assessment year, because, the first assessment order passed u/s.143(1) of the Act, is merged with the proceedings initiated u/s.143(3) of the Act. Therefore, we are of the considered view that when the AO has allowed the claim of deduction u/s.80P of the Act, in assessment proceedings u/s.143(3) of the Act, then order passed u/s.143(1) of the Act, by rejecting deduction claimed u/s.80P of the Act, in assessment proceedings u/s.143(1) of the Act, cannot survive.

Because, the moment proceedings u/s.143(3) of the Act, is initiated, the proceedings u/s.143(1) of the Act, merged with proceedings u/s.143(3) of the Act. Since, the AO has allowed the claim of the assessee u/s.80P of the Act, in proceedings u/s.143(3) of the Act, the additions made by the AO in assessment proceedings u/s.143(1) of the Act, by rejecting deduction u/s.80P of the Act, is no longer survives and thus, we direct the AO to delete addition made towards deduction claimed u/s.80P of the Act, and consequent demand raised in the intimation issued u/s.143(1)(a) of the Act. Appeal filed by the assessee is allowed.