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Issues: Whether the ICDS adjustment made in an intimation under Section 143(1) of the Income-tax Act, 1961 was made without complying with the jurisdictional requirements of the first and second proviso to Section 143(1) (i.e., without giving intimation to the assessee and considering the assessee's response), and whether that adjustment is liable to be quashed.
Analysis: Section 143(1), read with its first and second provisos, mandates that no adjustment under Section 143(1)(a) shall be made unless an intimation of the proposed adjustment is given to the assessee in writing or electronic mode and any response received from the assessee is considered before making the adjustment. On the facts found in the record, no intimation was served on the assessee in respect of the ICDS adjustment and the department has not disputed that no notice for the proposed adjustment was issued; consequently, the statutory pre-conditions for making the adjustment were not complied with. The absence of the required intimation and opportunity to respond constitutes breach of the jurisdictional requirements and of the principles of natural justice. The availability of appellate or alternate remedies does not preclude relief by writ where there is such a breach and where effective adjudication has not occurred in a timely manner.
Conclusion: The ICDS adjustment made in the intimation under Section 143(1) is quashed and set aside; the writ petition is allowed insofar as the impugned ICDS adjustment is concerned.
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