After notice u/s 143(2) is issued in scrutiny proceedings, summary processing u/s 143(1) is not permissible – ITAT
In a recent judgment, ITAT Bangalore has held that once scrutiny proceedings initiated by issue of notice u/s 143(2), the assessment proceedings are set in motion under the regular assessment mechanism and thereafter recourse to summary processing u/s 143(1) is not permissible.
ABCAUS Case Law Citation:
5155 (2026) (05) abacus.in ITAT
Important Case Laws relied upon by Parties
In the instant case, the return of income of the appellant assessee was processed u/s 143(1) of the Act wherein certain adjustments on account of GST collected by assessee and u/s 43B were made.
However, a notice u/s 143(2) already stood issued to the assessee whereas intimation u/s 143(1) was issued subsequently. The CPC/AO processed the return u/s 143(1) and made prima facie adjustments despite the fact that scrutiny proceedings had already been initiated by issuance of notice u/s 143(2) of the Act.
Before the Tribunal, the assessee submitted that once notice u/s 143(2) of the Act has been issued, the Department cannot resort to processing the return of income u/s 143(1) of the Act. It was contended that the adjustments made u/s 143(1) of the Act are without jurisdiction and void ab initio. The assessee placed reliance on the decision of the Hon’ble Supreme Court.
It was contended that issuance of notice u/s 143(2) of the Act sets the assessment in motion under regular assessment proceedings and thereafter recourse to section 143(1) of the Act for specified adjustment is not permissible. It was submitted that in the present case, notice under section 143(2) of the Act was issued prior to 143(1) of the Act intimations, and therefore the entire adjustment was without jurisdiction.
On the contrary, the Revenue submitted that processing u/s 143(1) of the Act is a statutory requirement and the adjustments made are valid. It was contended that the issuance of notice u/s 143(2) does not automatically invalidate the intimation u/s 143(1) of the Act.
The Tribunal observed that it is a settled legal position that once a notice u/s 143(2) is issued, the assessment proceedings are set in motion under the regular assessment mechanism and thereafter recourse to summary processing u/s 143(1) is not permissible as held by Hon’ble Supreme Court.
The Tribunal held that In the present case, since the notice u/s 143(2) of the Act preceded the intimation issued u/s 143(1) of the Act, the impugned adjustments made u/s 143(1) were without jurisdiction and could not be sustained.
Accordingly, the adjustments made u/s 143(1) were directed to be deleted and the ground of appeal of the assessee was allowed.
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