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Facts
The assessee filed its return for A.Y. 2023-24, where the CPC issued an intimation u/s 143(1) making an addition of Rs.6,54,16,880/- by forcibly applying Section 115BAA(1) and denying Section 80IAC deduction. This occurred because the CPC changed the assessee's opted taxation option from "no" to "yes" for Section 115BAA applicability, and the JCIT(A) confirmed this. The assessee appealed, arguing that no opportunity was provided and the adjustment was beyond the scope of Section 143(1).
Held
The Tribunal held that an intimation u/s 143(1) making adjustments without providing prior opportunity to the assessee is invalid, as stipulated by the proviso to Section 143(1)(a). It further ruled that the CPC's action of changing the assessee's chosen taxation option under Section 115BAA from "no" to "yes" is beyond the permissible scope of Section 143(1) of the Act. Consequently, the adjustment made by the CPC was directed to be deleted.
Key Issues
1. Whether an intimation under Section 143(1) is valid if passed without providing the assessee an opportunity to be heard regarding proposed adjustments. 2. Whether the CPC can change the assessee's chosen taxation option, specifically for Section 115BAA, during processing under Section 143(1) of the Act.
Sections Cited
143(1), 115BAA(1), 80IAC, 250
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Income Tax Appellate Tribunal, DELHI BENCH “A” NEW DELHI
Before: SHRI CHALLA NAGENDRA PRASAD & SHRI AVDHESH KUMAR MISHRA
Assessee by Shri Bhupenderjit Kumar, Adv. & Ms. Raina Majumdar, Adv. Revenue by Shri Ajay Kumar Arora, Sr. DR सुनवाईक�तारीख/ Date of hearing: 11.08.2025 26.09.2025 उ�ोषणाक�तारीख/Pronouncement on आदेश /O R D E R PER C.N. PRASAD, J.M.
This appeal is filed by the Assessee against the order of the Ld. Addl./JCIT-2, Pune dated 30.11.2024 for the AY 2023-24. The assessee raised the following grounds:
1. “That the Ld. Joint Commissioner of Income-tax (Appeal)
2. Pune (hereinafter referred to as “JCIT(A)”) has erred in passing the impugned order dated 30.11.2024 u/s 250 of the Income Tax Act, 1961 confirming the intimation order dated 12.01.2024 passed by the Deputy Director of Income-tax, Centralized Processing Center, Bengaluru (hereinafter referred 1 to as the “AO”) u/s 143(1) of the Act in the case of the Appellant for the Assessment Year (hereinafter referred to "AY”) 2023-24, wherein an addition of Rs.6,54,16,880/- was made by the AO to the total Income declared by the Appellant on account of forcible application of the provisions of section 115BAA(1) of the Act which resulted in denial of the Appellant's claim of deduction under section 80IAC of the Act made in computing the total income in the return of income filed by the Appellant for A.Y. Act 2023-24.
2. That the Ld. JCIT(A) has erred in passing the impugned order dated 30.11.2024 confirming the intimation order dated 12.01.2024 passed by the AO under section 143(1) of the Act because the said intimation order has been passed in violation of the settled principles of natural justice, without providing reasonable and sufficient opportunity to the Appellant, thus completely ignoring the First Proviso and the Second Proviso to clause (a) of the sub-section (1) of the Section 143 of the Act.
3. That the Ld. JCIT(A) has erred in confirming the intimation order dated 12.01.2024 passed by the AO under section 143(1) of the Act, because the AO exceeded his jurisdiction which was permissible under section 143(1) of the Act and therefore, the intimation order is vitiated by lack of jurisdiction.
4. That the impugned order dated 30.11.2024 confirming the intimation order dated 12.01.2024 passed by the AO under section 143(1) of the Act is illegal and bad in law as it has been passed in violation of the Proviso of sub-section (1) of the section 115BAA of the Act read with sub-section (2) of Section 115BAA of the Act.
5. That the Appellant craves leave to add, amend, alter or delete any of the grounds of appeal.”
The Ld. Counsel for the assessee, at the outset, submitted that in this case intimation u/s 143(1) was passed without providing any opportunity to the assessee as per proviso to clause (a) of section 143(1) of the Act. Referring to the said proviso Ld. Counsel 2 submitted that this proviso clearly prohibits making of any adjustment unless an intimation is given to the assessee in writing/electronic mode proposing any such adjustment in passing the intimation u/s 143(1) of the Act. Therefore, it is submitted that the provision for giving an opportunity to the assessee before making any adjustment u/s 143(1) of the Act is mandatory.
In support of the above contentions, the Ld. Counsel for the assessee placed reliance on the following decisions:
S.No. Particulars Page No. 1. Income-tax Officer (E) vs. Camellia Educare Trust 1-10 [2023] 152 taxmann.com 304 (Kolkata – Trib.) 2. Samsung C And T Corporation India Pvt. Ltd. vs. DCIT 11-20 [ITAT, Delhi in dated 06.06.2025] 3. Dynamic Powertech P. Ltd. vs. DCIT 21-41 [ITAT, Jaipur in dated 08.05.2025] 4. DCIT vs. Adidas Marketing P. Ltd. 42-53 dated 24.07.2024
Coming to the adjustment made by the CPC, Ld. Counsel for the assessee submitted that the impugned intimation is bad in law and void because the AO changed the taxation option opted by the assessee in the return of income from “yes” to “no” in the intimation, which an adjustment clearly beyond the scope of section 143(1) of the Act. Ld. Counsel referring to the provisions of section 143(1) submitted that the adjustment made by CPC falls under none of the adjustments mentioned in clause (a) of sub-section (1) of section 143 of the Act. Ld. Counsel therefore submitted that section 3 143(1)(a) does not empower the AO/CPC to make an adjustment of the taxation option opted by the assessee thereby changing any such option by the AO/CPC, illegally and it is beyond the scope of said section.
Heard rival submissions, perused the orders of the authorities below.
On perusal of proviso to sub-clause (a) of section 143(1) clearly stipulates that no adjustment provided in sub-clause (a) shall be made unless an intimation is given to the assessee of such adjustments either in writing/electronic mode. It is the contention of the Ld. Counsel the CPC before making adjustments no intimation/opportunity is given to the assessee to make its submissions. Attention of the Bench was also drawn to page 243 of the Paper Book which is the Income tax portal which do not suggests of giving any intimation to the assessee before making any adjustment. Therefore, since no intimation is given before passing the intimation u/s 143(1) as provided in proviso to clause (a) such intimation is bad in law.
We also further observed that the option of the assessee in the return of income opted as “no” for the applicability of provisions of section 115BAA was changed to option “yes” by the CPC an adjustment which is clearly beyond the scope of section 143(1) of the Act. The CPC while processing the return u/s 143(1) cannot tinker with any of the options opted by the assessee. Such an adjustment is beyond the scope of the provisions of section 143(1) of the Act.
Hence, the adjustment made by the CPC is directed to be deleted.
In the result, appeal of the Assessee is allowed.
Order pronounced in the open court on 26.09.2025