M/S SHIKHAR ENTERPRISES, BILASPUR,BILASPUR vs. ITO, WARD-1(1), BILASPUR, BILASPUR

ITA 440/RPR/2026Status: DisposedITAT Raipur06 July 2026AY 2019-2011 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the additional adjustment made in the intimation under Section 143(1)(a) of the Income Tax Act, 1961, amounting to Rs. 75,88,188/-, was invalid. The Tribunal followed the binding judicial pronouncements of the Hon'ble High Court of Bombay in Rallies India Limited Vs. Central Processing Centre & Ors. and Bax India Ventures Private Limited Vs. Central Processing Centre. These judgments established that Section 143(1) and its provisos mandate that an assessee must be given an intimation of proposed adjustments and their response must be considered before any adjustment is made. The Tribunal found that in this case, the final addition was substantially higher than what was initially proposed in the show cause notice, and no opportunity of hearing was granted for this increased amount. This constituted a clear breach of the principles of natural justice and contravened the jurisdictional requirements of Section 143(1). Consequently, the additional adjustment of Rs. 75,88,188/- was deleted, and the order of the Ld. ADDL/JCIT(A) was set aside on this ground alone.

What were the facts?

The assessee, M/s. Shikhar Enterprises, filed an appeal against the order of the Ld. ADDL/JCIT(A), Kochi, for Assessment Year 2019-20. The assessee's counsel pointed out that a show cause notice dated 31.12.2019 proposed an adjustment of Rs. 1,13,800/- under Section 143(1)(a) of the Income Tax Act, 1961, concerning ESI & PF disallowance. However, the final intimation under Section 143(1) dated 26.05.2020 made total additions of Rs. 75,88,188/-. The assessee contended that this significant increase in additions was made without any prior show cause notice, opportunity of hearing, or compliance with natural justice principles, deviating from the initially proposed adjustment.

What were the issues?

1. Whether the addition of Rs. 75,88,188/- made in the intimation under Section 143(1)(a) of the Income Tax Act, 1961, is valid when the proposed adjustment in the show cause notice was only Rs. 1,13,800/- and no further opportunity of hearing was provided to the assessee? Assessee's Contention: The assessee argued that the substantial addition of Rs. 75,88,188/- in the final intimation, significantly exceeding the Rs. 1,13,800/- proposed in the show cause notice, was made without issuing a fresh show cause notice, without providing an opportunity of hearing, and in violation of the principles of natural justice. They relied on the judgment of the Hon'ble High Court of Bombay in Rallies India Limited Vs. Central Processing Centre & Ors. and Bax India Ventures Private Limited Vs. Central Processing Centre, which emphasized the mandatory requirement of intimation and consideration of the assessee's response before making adjustments under Section 143(1), and that breach of natural justice is an exception to alternate remedy. Revenue's Contention: The Revenue relied heavily on the orders of the subordinate authorities.

Which sections of the Income-tax Act were involved?

Section 143(1)(a),Section 36(1)(va),Section 145A,Section 35(1)(iv)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAIPUR BENCH “DB”, RAIPUR

Before: SHRI PARTHA SARATHI CHAUDHURY & SHRI AVDHESH KUMAR MISHRA

For Appellant: Shri Sakshi Gopal Agrawal, CA
For Respondent: Shri Piyush Tripathi, Sr. DR
Hearing: 03.07.2026

PER PARTHA SARATHI CHAUDHURY, JM: The present appeal preferred by the assessee emanates from the order of the Ld.ADDL/JCIT(A), Kochi, dated 17.03.2026 for the assessment year 2019-20 as per the grounds of appeal on record.

2.

The Ld. Counsel for the assessee at the time of hearing has brought to the notice of the Bench at Page 67 of the paper book, wherein show cause notice has been sent to the assessee proposing ad

The order continues below.

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