Scrutiny notice bars later prima facie adjustment under income-tax summary procedure, especially on a debatable disallowance issue.

After scrutiny proceedings are initiated by notice under section 143(2), the Assessing Officer cannot shift to an intimation under section 143(1)(a) for a prima facie adjustment; the earlier scrutiny process is not displaced by a later summary adjustment. A disallowance of guest house expenses also fell outside section 143(1)(a) because the underlying issue was debatable and therefore not amenable to prima facie disallowance. On that basis, the Revenue's appeal did not succeed and no substantial question of law arose.

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Issues: (i) Whether, after issuance of notice under section 143(2) of the Income-tax Act, 1961, the Assessing Officer could resort to an intimation under section 143(1)(a); (ii) whether disallowance of guest house expenses could be sustained as a prima facie adjustment when the issue was debatable.

Issue (i): Whether, after issuance of notice under section 143(2) of the Income-tax Act, 1961, the Assessing Officer could resort to an intimation under section 143(1)(a).

Analysis: Once scrutiny proceedings had been initiated under section 143(2), the statutory scheme did not permit the course to be changed by issuing an intimation under section 143(1)(a). The expression preserving sub-section (2) was treated as saving action already initiated under scrutiny, not as authorising a subsequent prima facie adjustment after notice under section 143(2) had been issued.

Conclusion: The intimation under section 143(1)(a) after notice under section 143(2) was impermissible.

Issue (ii): Whether disallowance of guest house expenses could be sustained as a prima facie adjustment when the issue was debatable.

Analysis: The disallowance could not be justified under section 143(1)(a) because the underlying question was debatable and therefore outside the scope of a prima facie adjustment.

Conclusion: The disallowance of guest house expenses could not be sustained.

Final Conclusion: No substantial question of law arose, and the Revenue's appeal did not succeed.

Ratio Decidendi: After a notice under section 143(2) has been issued, the Assessing Officer cannot resort to section 143(1)(a) for a prima facie adjustment, especially on a debatable issue.

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