Mandatory prior intimation under return-processing rules is required before denying concessional tax treatment and adjusting tax liability.

An adjustment made during processing of a return under section 143(1)(a) cannot validly deny the concessional tax rate under section 115BAB unless the assessee is first given mandatory prior intimation of the proposed adjustment in writing or electronically and an opportunity to respond. The Tribunal applied the statutory precondition in the first proviso to section 143(1)(a) and treated it as mandatory, so the CPC's direct levy of tax at the normal rate without prior notice was held procedurally defective and unsustainable. The consequential adjustment and related orders were liable to be set aside.

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Issues: Whether the adjustment made while processing the return by denying the concessional tax rate under section 115BAB without issuing prior intimation under the first proviso to section 143(1)(a) was sustainable.

Analysis: The adjustment made at the processing stage fell within clause (a) of section 143(1), but the first proviso required that no such adjustment be made unless the assessee was first intimated of the proposed adjustment in writing or electronically and given an opportunity to respond. The Tribunal followed the binding view that this requirement is mandatory. Since the CPC denied the concessional rate and levied tax at the normal rate without any prior intimation, the adjustment suffered from non-compliance with the statutory procedure and could not be sustained.

Conclusion: The issue is decided in favour of the assessee. The adjustment under section 143(1) was invalid for want of mandatory prior intimation, and the consequential orders were liable to be set aside.

Final Conclusion: The appeal succeeded on the procedural legality of the processing adjustment, and the denial of the concessional tax treatment could not stand.

Ratio Decidendi: An adjustment under section 143(1)(a) cannot be made unless the assessee is first given mandatory prior intimation of the proposed adjustment and an opportunity to respond; failure to follow this statutory precondition vitiates the adjustment.

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