Section 143(1) adjustment fails without prior show cause notice and cannot be sustained through scrutiny-style verification.

An adjustment made while processing a return under section 143(1) was treated as unsustainable where the statutory requirement of a prior show cause notice under the first proviso to section 143 had not been met. The figures were taken from the audit report, but the processing stage under section 143(1) is limited to return processing and does not permit scrutiny-style verification. On that basis, the proposed restoration for verification was found inappropriate, and the adjustment was deleted.

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Issues: Whether an adjustment made while processing the return under section 143(1) of the Income-tax Act, 1961 could be sustained when no show cause notice was issued as required by the first proviso to section 143.

Analysis: The adjustment arose from figures taken from the audit report, but the processing under section 143(1) was required to comply with the statutory requirement of prior notice before making such adjustment. Since the intimation showed that no show cause notice had been issued, the Tribunal held that the proposed restoration for verification was not appropriate in proceedings under section 143(1), which are confined to processing and not the kind of verification undertaken in scrutiny assessment.

Conclusion: The adjustment made under section 143(1) was unsustainable and was deleted.

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