Rectification under section 154 overrides an earlier processing intimation when the appellate order ignores the revised assessment position.

Where a return processed under section 143(1) was later rectified under section 154 to accept the returned income, the original appellate confirmation of the addition could not stand because it was passed ex parte on the basis of the earlier intimation and ignored the subsequent rectification. The later rectification order altered the assessment position, so the appellate order confirming the original adjustment was set aside and the assessee succeeded on the effective ground.

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Issues: Whether the appellate order confirming the intimation under section 143(1) of the Income-tax Act, 1961 was liable to be set aside in view of the subsequent rectification order under section 154 accepting the returned income.

Analysis: The assessee's return had initially been processed by making an addition to the returned income, but the assessee thereafter sought rectification. The processing authority later passed a rectification order and accepted the returned income. The first appellate order was passed ex parte and proceeded on the basis of the original intimation, without taking note of the rectification order that had already modified the assessment position. In these circumstances, the appellate confirmation of the original addition could not be sustained.

Conclusion: The appellate order was rightly set aside and the assessee succeeded on the effective ground.

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