Variation in assessment: processing-intimation enhancements require de novo adjudication and permit the taxpayer to present evidence.

Enhancements arising from processing of a return that were incorporated into the draft assessment computations are treated as variations requiring adjudication on merits by the assessing officer where rectification applications are pending; therefore such processing-intimation adjustments must be examined afresh with the assessee given an opportunity to file and rely on explanations and evidence. The matter was remitted to the assessing officer for de novo consideration of the additions reflected in the intimation, with several grounds allowed for statistical purposes and other grounds treated as consequential.

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Issues: Whether the enhancement of income effected by processing the return under section 143(1) and reflected in the intimation could be treated as a variation within the DRP/draft assessment proceedings and required adjudication by the assessing officer on merits, including consideration of pending rectification proceedings.

Analysis: The processing adjustment under section 143(1) was carried into the draft and final assessment computations such that the intimation effectively merged with the draft assessment under section 144C(1). Evidence of pending rectification applications filed under section 154 before the jurisdictional and faceless officers, and communications made by the assessee in that regard, were on record. Given these facts, the enhancements originating in the 143(1) intimation fell within the scope of variations that required adjudication in the assessment proceedings; therefore those adjustments ought to be examined on merits after permitting the assessee to produce and rely upon relevant explanations and evidence.

Conclusion: The matter is restored to the file of the Assessing Officer for de novo adjudication on the additions made in the intimation under section 143(1), permitting the assessee to file/add evidence and requiring the AO to decide the adjustments on merits. Grounds 1 to 6 are allowed for statistical purposes; grounds 7 to 9 are consequential.

Final Conclusion: The appeal is disposed by restoring the issue of enhancements made in the 143(1) intimation to the Assessing Officer for fresh adjudication and by allowing the appeal for statistical purposes.

Ratio Decidendi: Where enhancements in a 143(1) intimation are incorporated into draft assessment computations and rectification proceedings are pending, those enhancements constitute variations requiring merit adjudication and entitlement to opportunity to present evidence; therefore the assessment must be reopened for de novo consideration.

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