Section 143(1)(a)

Section 143(1)(a) — the law in short

What the courts have decided on section 143(1)(a), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• CIT v Tasgaon Taluka S.S.K. Ltd Supreme CourtCuts both ways
  The Assessing Officer has disallowed the whole difference between the statutory minimum cane price and the State advised price my sugar co-operative paid its members. Can he?
  No — not the whole difference. The Supreme Court held that only that component of the final or additional cane price fixed under Clause 5A of the Sugarcane (Control) Order 1966 which represents profit is an appropriation of profit; the rest is deductible expenditure. The Assessing Officer must actually do the exercise of identifying the profit component from the accounts and the material supplied to the State Government, and all the orders below were set aside and the matters remitted for that purpose.
• Dy CIT v Zuari Estate Development & Investment Co Ltd Supreme CourtHelps department
  My return was only processed under section 143(1) and now the officer wants to reopen it. Can I say he is changing his opinion?
  No. The Supreme Court held that where a return is accepted under section 143(1), no assessment order is made and no opinion is formed, so the change of opinion objection simply does not arise. The point was held to be squarely covered by Rajesh Jhaveri Stock Brokers. The Bombay High Court had quashed the reopening notice without addressing this contention at all, and its judgment was set aside. The Tribunal's order, which had merely followed the High Court, went with it, and the appeal was remitted to the Tribunal to be decided on merits.
• ACIT v Rajesh Jhaveri Stock Brokers P Ltd Supreme CourtHelps department
  My return was only processed under 143(1). Does that stop the department reopening it later?
  No. An intimation under s.143(1) is not an assessment, so it does not bar the officer from later starting reassessment proceedings.
• Bax India Ventures v CPC High CourtHelps taxpayer
  CPC made a section 143(1)(a) adjustment without first putting the proposed adjustment to me. The department says my reply could not have changed anything. Does that save the intimation?
  No. The Bombay High Court held that the first proviso to section 143(1)(a) is mandatory, so no intimation making an adjustment to the return can be passed unless the proposed adjustment is first intimated to the assessee and he is given a chance to respond. The Court rejected the department's argument that giving the intimation would have been an exercise in futility, pointing out that the assessee could, for example, have obtained an order condoning the delay in filing Form 10-IC. The intimation of 1 December 2025 was quashed and set aside, and the department was left free to issue the notice, consider the response and pass a fresh intimation.
• Raj Kumar Bothra v DCIT High CourtHelps taxpayer
  CPC disallowed my late-deposited PF and ESI under 143(1)(a). Was a summary adjustment even open to them?
  No, not for an intimation issued in December 2021. The Chhattisgarh High Court held the issue was genuinely debatable on that date, with conflicting High Court authority and the matter pending in the Supreme Court, so the officer had to take scrutiny under s.143(3) rather than adjust summarily.
• Ranbaxy Laboratories Ltd v CIT High CourtHelps taxpayerNo later treatment found
  Same point, in Delhi: if the recorded grounds fail, can the officer still tax an unrelated item?
  No. Once the officer accepts that the recorded items did not escape assessment, it means he had no reason to believe, and the notice becomes invalid. Every new issue needs a fresh s.148 notice.
• Tamil Nadu Magnesite Ltd v CIT High CourtHelps taxpayer
  The Assessing Officer has rectified my old s.143(1)(a) intimation under s.154 after already completing a s.143(3) assessment. Can he do that?
  No. Once a notice under section 143(2) has gone out and a regular assessment has been made under section 143(3), the earlier intimation under section 143(1)(a) merges into that assessment and no longer stands as an order of its own. There is then nothing left for section 154 to rectify. The Madras High Court set aside a rectification made in December 1998 on an intimation of 7 March 1994, which had charged additional tax of Rs 4,70,346 more than three years after the scrutiny assessment of 22 November 1995 was over, and set aside the revisional order that had confirmed it. The rectification was held to be wholly without jurisdiction.
• CIT v Franco Tossi Ingegneria S.P.A. High CourtHelps taxpayerNo later treatment found
  The officer has applied s.44BBB to the whole contract value in the year the turnkey power project was completed. Can he do that?
  No. Section 44BBB is a deeming provision that charges ten per cent of the amount paid or payable to the foreign company during the year. Unless an amount is paid or payable in the previous year, there is nothing on which the ten per cent can operate, and the completion of the contract in that year does not let the officer aggregate payments received in earlier years.
• Utkal Galvanizers P. Ltd. v ACIT High CourtHelps taxpayer
  The Assessing Officer has issued a section 154 notice on an item my CIT(A) appeal already dealt with. Can he do that?
  No. The Orissa High Court held that the scope of s.154(1A) is limited to mistakes apparent from the record and does not include a power to revise, review or reappraise the officer's own order, and that letting him rectify a matter already carried in appeal would let him override the appellate order. If the Revenue was dissatisfied with the CIT(A) it had to file a second appeal to the Tribunal.
• CESC Ltd v DCIT High CourtHelps taxpayer
  The Assessing Officer has issued a section 154 notice to rectify my section 143(1)(a) intimation after a scrutiny notice under section 143(2) was already served. Can he do that?
  No. The Calcutta High Court quashed the section 154 notices. Once a notice under section 143(2) has been issued the department cannot fall back on the summary procedure of section 143(1)(a), and rectifying the intimation is only another way of activating that procedure, so it is equally impermissible. The Court added a second and independent reason: where a regular assessment under section 143(3) has been completed on the same item, the order under section 143(1)(a) ceases to be operative and merges in the final order, so there is nothing left to rectify. The notices for the four years before the Court were quashed.
• Life Insurance Corporation of India v Union of India High CourtHelps taxpayerHigh Courts differ
  Is there any High Court authority the other way on the LIC development officers' conveyance and additional conveyance allowance, and how far does it actually go?
  Yes. The Rajasthan High Court held that development officers of the LIC are entitled to claim exemption under s.10(14) for conveyance allowance and additional conveyance allowance, and directed the Department not to insist on the LIC deducting tax at source on them. But the holding is expressly conditional: it applies only upon the officers satisfying that the allowances were actually spent wholly, necessarily and exclusively in the performance of duties, and the Court twice said the ultimate liability of claiming and proving the exemption is on the employee.
• S.R.F. Charitable Trust v Union of India High CourtHelps taxpayer
  The department adjusted my return under section 143(1)(a) simply because I did not attach proof of my claims. Can it do that?
  No. The Delhi High Court held that an adjustment under the first proviso to section 143(1)(a) can be made only where the claim is prima facie inadmissible on the information available in the return, the accounts or the accompanying documents. The conclusion must flow from the return as filed. No power is given to disallow a claim merely because proof has not been furnished. If the officer wants proof he must ask for it, which means issuing a notice under section 143(2). The intimation was quashed.
• Bhandari Bros v ITO, Bundi ITATHelps taxpayer
  Tax was deducted in my PAN under s.194Q on the whole mandi turnover, but I am a kachha arahtiya and I only offer my commission to tax. CPC has cut my TDS credit down in proportion. Can I still claim the whole deduction?
  Yes, on this order. A commission agent in the Bundi grain mandi declared commission receipts of Rs 2,94,975 and claimed TDS of Rs 2,37,479, of which Rs 74,072 had been deducted by purchasers under s.194Q on sale proceeds that belonged to the farmers; CPC allowed Rs 10,037 under s.143(1)(a) and the Commissioner (Appeals) upheld the withholding of the s.194Q component. The Jaipur SMC Bench held that once an amount has been deducted from the assessee's income and paid into the Government treasury against his PAN, credit cannot be refused on the ground that the deduction ought to have been made in somebody else's hands, and found no merit in the Commissioner (Appeals)'s reliance on s.199 read with rule 37BA(2). Note what this is not: the Tribunal did not decide any question about the scope or correct application of s.194Q, and expressly proceeded on the footing that the deduction may have been made wrongly.
• Khalsae-Vehicles Pvt. Ltd. v DCIT, Circle-3(1)(1) ITATHelps taxpayerNo later treatment found
  I filed Form 10-ID and my first return under s.115BAB after the s.139(1) due date but within the s.139(4) time. The CPC has now denied me the 15 per cent rate in a later year. Is the option gone for good?
  Not on these facts. The Delhi Tribunal held that where the substantive conditions of s.115BAB are undisputedly satisfied, the failure to file Form 10-ID on or before the s.139(1) due date is a procedural lapse and is not a fatal flaw, and allowed the appeal for AY 2023-24. The Form there had been filed in the very first year, along with a first return that was belated but within the s.139(4) window.
• Kailash Narayan Shridhar v DCIT ITATHelps taxpayer
  The processing centre cut down my exemption claim in the intimation without ever telling me it proposed to. Is the intimation valid?
  No. The Ahmedabad Tribunal held the intimation invalid and quashed it. The first proviso to section 143(1)(a) permits no adjustment unless intimation of the proposed adjustment is first given to the assessee and any response is considered. That requirement is not merely procedural: it goes to the root of the validity of the proceedings. Here the processing centre restricted the leave encashment exemption from Rs 17,71,010 to Rs 3,00,000 without any prior notice, which was admitted. Following coordinate bench decisions and in the absence of any contrary decision of the jurisdictional High Court, the Tribunal held the intimation bad and did not go into the merits of the exemption.
• Samsung C and T Corporation India P Ltd v DCIT ITATHelps taxpayerNo later treatment found
  CPC issued the section 143(1)(a) notice and passed the intimation a week later, and the portal shows a response I never filed. Is that intimation valid?
  No. The Delhi Tribunal held that the intimation under section 143(1) dated 30 March 2019 was bad in law because the adjustment was made seven days after the notice of proposed adjustment issued on 23 March 2019, long before the thirty days allowed for a response had run. The proviso requires that any response be considered, and that adjustments be made only where no response is received within thirty days of the issue of the notice. The Tribunal did not accept the portal entry showing a response filed on the very day the notice issued, preferring the assessee's screenshots and affidavit. The disallowance of Rs. 74,08,038 was deleted.
• Shree Maheshwari Vidyalaya v ITO ITATHelps taxpayerNo later treatment found
  The CPC adjusted your return under s.143(1)(a) without warning. Can it do that?
  No. An adjustment under s.143(1)(a) requires a prior show cause notice. Made without one, a Rs 4.20 crore disallowance was deleted — and on the facts the audit report had in any event been filed on time.
• Rashmi Subhash Jha v ITO — 'consultancy' is not 'technical consultancy', and deduction under s.194J does not make the receipt professional ITATHelps taxpayerNo later treatment found
  The CPC has re-cast my client's s.44AD return as a s.44ADA return under s.143(1)(a) because her clients deducted tax under s.194J. Is a consultant a professional for this purpose?
  No, on this order. The word 'consultancy' does not appear in s.44AA(1), which speaks of 'technical consultancy', and technical consultancy means the rendering of technical services; a consultant is therefore carrying on a business and may return income under s.44AD. The rate at which a client deducts tax while paying the assessee is of absolutely no relevance to the character of the receipt in the recipient's hands, and the adjustment made by the Assessing Officer and the CPC under s.143(1)(a) was held bad in law.
• Arthur Bernard Sebastine Pais v DCIT (CPC) ITATHelps taxpayer
  CPC has processed my return, decided that my receipts belong under s.44ADA at 50 per cent instead of s.44AD at 8 per cent, and raised a demand. Can that be done in a s.143(1) intimation?
  No. The Tribunal held that the whole of the gross receipts had in fact been included in the return, under s.44AD, so the condition for an adjustment under s.143(1)(a)(vi) — that income appearing in Form 26AS has not been included in computing the total income — was simply absent, and the addition fell on that ground alone. It went further and said that whether the income has to be taxed under s.44AD or under s.44ADA cannot be the subject matter of a decision in processing under s.143(1)(a). Be careful what you take from this. The Tribunal expressly declined to decide whether the assessee's management consultancy receipts were assessable under s.44ADA or s.44AD, and nothing in the order holds that they were not professional receipts.
• JCIT v Tata Cummins Ltd ITATHelps taxpayerNo later treatment found
  The officer's order under s.139(9) says your return is invalid and that you are not entitled to carry forward the loss. Can he decide that in a s.139(9) order?
  No. The Tribunal held that an order under s.139(9) can be made only to determine whether there was a defect in the return and whether it was rectified. An officer who goes on to rule on entitlement to carry forward the loss has made an assessment order, with the consequence that it is appealable. On the facts the Tribunal also held that the acknowledgement sheet is not part of the return prescribed under Rule 12, and that a signature defect, once removed, relates back to the date the return was originally filed.
• Kalpesh Synthetics Pvt Ltd v DCIT, CPC ITATHelps taxpayerOverruled
  The CPC disallowed my late PF under section 143(1)(a) purely because my auditor filled in clause 20(b) of Form 3CD. Is the auditor's entry enough to found the adjustment?
  This order held it was not, and read down section 143(1)(a)(iv) so that an adjustment cannot be made where the audit report takes a stand contrary to the law laid down by the courts above. It is set out here because it is the most fully reasoned statement of that argument, but the reader must know at once that it no longer stands: it was recalled by the Tribunal itself under section 254(2) on 13 April 2023 and the appeals were re-decided against the assessee on 20 June 2023, following Checkmate Services.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.