Assessment demand cannot survive where the assessment order records no addition to returned income, the Madras HC held.

A computation sheet and consequential notice of demand could not be sustained where the assessment order itself recorded that no addition was made to the returned income. The return had been processed under section 143(1), and on scrutiny the assessment order concluded that no further addition was necessary. Because the demand raised in the computation sheet was inconsistent with that assessment order and disclosed a patent error, the impugned demand was unsustainable and was quashed in favour of the assessee.

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Issues: Whether the computation sheet and consequential notice of demand could be sustained when the assessment order itself recorded that no addition was made to the returned income.

Analysis: The return for the relevant assessment year had been processed under section 143(1) of the Income-tax Act, 1961, and, upon scrutiny, the assessment order concluded that no addition was necessary. The demand raised in the computation sheet and the notice of demand was inconsistent with that assessment order and disclosed a patent error. In these circumstances, the impugned demand could not stand.

Conclusion: The computation sheet and the consequential notice of demand were unsustainable and were quashed in favour of the assessee.

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