Challenge to section 143(1) intimation remains maintainable despite scrutiny notice; appellate merits must be examined.

For assessment years beginning on or after 1 April 2017, processing of a return under section 143(1) is not barred merely because notice under section 143(2) has been issued. The intimation under section 143(1) therefore remains in existence and can still be challenged on appeal. An appeal against such an intimation cannot be dismissed as infructuous solely because scrutiny proceedings were later initiated or completed. The first appellate authority must examine the adjustments made in the intimation on merits. The matter was remitted for fresh appellate decision on the merits of the processing adjustment.

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Issues: Whether an appeal against an intimation under section 143(1) of the Income-tax Act, 1961 survives when a notice under section 143(2) has been issued and the assessment is subsequently completed on scrutiny, and whether the first appellate authority ought to decide such appeal on merits.

Analysis: For assessment years commencing on or after 1 April 2017, section 143(1D) does not bar processing of a return under section 143(1) merely because notice under section 143(2) has been issued. The earlier intimation therefore does not cease to exist or become incapable of challenge on that ground alone. The dismissal of the appeal as infructuous without examining the adjustments made in the intimation was therefore not justified.

Conclusion: The appeal against the intimation remained maintainable and had to be adjudicated on merits; the matter was remitted to the first appellate authority for fresh decision.

Final Conclusion: The assessee obtained a remand for merits-based disposal of the challenge to the processing adjustment, and the earlier dismissal as infructuous was set aside.

Ratio Decidendi: For assessment years to which section 143(1D) no longer applies, processing under section 143(1) survives notwithstanding issuance of notice under section 143(2), and an appeal against such intimation cannot be treated as infructuous solely on that basis.

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