2026 (2) TMI 319 - HC - Income Tax

Validity of assessment under Section 143(1)(a): mandatory intimation required before adjustments, intimation order quashed.

Failure to issue the intimation required by the first proviso to Section 143(1)(a) renders any adjustment in the filed return void because the proviso is ... Validity of assessment on non comply with the provisions of Section 143(1)(a) - HELD THAT:- Admittedly, no intimation was given to the assessee as contemplated in the first proviso to Section 143 (1) (a). The first proviso, in our opinion, is clearly mandatory in nature, as it clearly stipulates that no adjustment ‘shall be made’ unless an intimation is given to the assessee of such adjustment either in writing or in electronic mode. Once this is a mandatory provision, no intimation order under Section 143(1)(a) can be passed, making any adjustment in the Return of Income filed by the assessee, unless such proposed adjustment is first intimated to the assessee and he has been given a chance to respond thereto. In the facts of the present case, no intimation as contemplated under the first proviso to Section 143(1)(a) was ever issued to the Petitioner. This is an undisputed fact. On this ground alone, the intimation order dated 1st December, 2025, issued under Section 143(1)(a), is liable to be quashed and set aside. We are unable to agree with the submission of Revenue that this exercise would be an exercise in futility because in the facts of the present case, admittedly, Form 10-IC was not filed by the due date. There could very well be a case where, after belatedly filing a return and belatedly filing Form 10-IC, and before the intimation order is passed u/s143 (1)(a), the Petitioner could have obtained an order seeking condonation of delay in filing form 10-IC under Section 119(2)(b) of the IT Act. This could possibly be the response that the assessee may give to the CPC in respect of the notice issued under the first proviso to Section 143(1)(a) and contend that the proposed adjustment ought not to be made. It is therefore incorrect to suggest that the intimation proposing an adjustment, as contemplated under the first proviso to Section 143(1)(a), would be an exercise in futility. Once we find that the said provision is mandatory in nature, the same has to be complied with by the Revenue. The Revenue cannot decide in which case it would be futile and in which case it would not. Issues: Whether an intimation passed under Section 143(1)(a) of the Income-tax Act, 1961 is valid where no prior intimation as required by the first proviso to Section 143(1)(a) was issued to the assessee.Analysis: The statutory text of Section 143(1)(a) and its first and second provisos mandate that before any adjustment is made in processing a return the assessee must be given an intimation of the proposed adjustment either in writing or electronic mode and any response received within thirty days must be considered. The proviso uses mandatory language that no adjustment 'shall be made' unless the intimation requirement is complied with. Non-compliance with these jurisdictional requirements engages principles of natural justice because the assessee is deprived of an opportunity to present grounds (including applications for condonation under Section 119(2)(b)) before any adjustment is finalized. The Revenue's contention that providing such intimation would be futile where Form 10-IC was belatedly filed was rejected because the Department cannot pre-judge the possible responses or reliefs that the assessee might obtain; statutory compliance is required in all cases. The Court further relied on the reasoning in the earlier decision addressing identical provisos and non-issuance of intimation, which found such non-compliance fatal to the intimation.Conclusion: The intimation dated 1st December, 2025 issued under Section 143(1)(a) is quashed for failure to comply with the mandatory intimation and opportunity-to-respond requirements; the Revenue may re-issue an intimation complying with the provisos and consider any response before passing a fresh intimation.