Adjustment u/s 143(1) by CPC unsustainable if assessment completed u/s 143(3) accepting the return of income – ITAT
ABCAUS Case Law Citation:
ABCAUS 3713 (2023) (04) ITAT
In the instant case, the assessee had challenged the order passed by the NFAC/CIT(A) in confirming the adjustment made by the CPC vide intimation u/s 143(1) of the Income Tax Act, 1961 (the Act).
The assessee was running a school having registration u/s 12AA of the Act. The return of the appellant assessee was processed by Centralised Processing Centre (CPC) u/s 143(1) by making adjustments i.e. denying the exemption claimed and disallowing the entire expenditure.
The assessee submitted that subsequent to the intimation issued 143(1) of the Act, scrutiny assessment u/s 143(3) of the Act had been completed wherein, the returned income had been accepted and the income of the assessee had been determined at Nil after granting the assessee benefit of deduction u/s 10(23C) of the Act and after considering the registration u/s 12AA of the Act.
It was the submission of the assessee that as the scrutiny assessment completed and all details were examined and accepted, the adjustment as made in the intimation u/s 143(1) of the Act could not be considered as a prima facie adjustment.
The ITAT observed that admitted fact was that after the intimation u/s 143(1) issued to the assessee, assessment for the impugned assessment year had been completed u/s 143(3) of the Act and after examination of all the issues, the assessee had been held to be eligible for deduction u/s 10(23C) and 12AA of the Act.
The Tribunal opined that clearly, the adjustment as made by the CPC in the intimation u/s 143(1) was nothing but a debatable issue, which could not have been considered as a mistake apparent from the record.
Accordingly, the ITAT held that intimation u/s 143(1) was unsustainable and consequently, same was set aside.
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