Limited scope of return processing under section 143(1) bars substantive expenditure disallowance at the intimation stage.

Processing a return under section 143(1) permits only limited adjustments; it does not authorise a substantive disallowance of expenditure at the intimation stage. An incorrect return by the assessee, by itself, was insufficient to expand the CPC's scope of adjustment. The impugned intimation was therefore treated as unsustainable in law and quashed in favour of the assessee.

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Issues: Whether the disallowance of expenditure in the intimation issued under Section 143(1) of the Income-tax Act, 1961 was a permissible adjustment and whether the intimation was liable to be quashed.

Analysis: The adjustment made in the processing of the return went beyond the limited scope of Section 143(1) of the Income-tax Act, 1961. The fact that the assessee had filed an incorrect return did not authorise the CPC to make a substantive disallowance of expenditure at the intimation stage. The order also treated the impugned intimation as unsustainable in law.

Conclusion: The adjustment was impermissible and the intimation was quashed in favour of the assessee.

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