TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 235
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....of processing under section 143(1) of the Income-tax Act, 1961 ("the Act"), despite the very same claim having been specifically examined and accepted in a subsequent regular scrutiny assessment under section 143(3). One appeal relates to the quantum assessment order passed under section 143(3) dated 08.10.2025; the other appeal assails the adjustment made while processing the return under section 143(1), which culminated in the appellate order dated 27.03.2022 passed by the NFAC on the same issue. Since the factual matrix is interwoven and the legal issue substantially overlaps, both appeals have been heard together and are disposed of by this consolidated order. 2. Briefly stated, the assessee is TML Benefit Trust, formulated on 05.12.....
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....dited to Profit & Loss account which is exempt (shown at item 5(d)) was inconsistent with the exempt income schedule / reporting, and consequently the entire amount of exempt dividend was adjusted to income. The adjustment sheet reflects that the figure of Rs.86,40,00,000/- was picked up and treated as liable to be added, thereby nullifying the assessee's claim of exemption. 5. Parallelly, and significantly, the assessee's case thereafter travelled through scrutiny assessment proceedings under section 143(3). During the course of assessment, the Assessing Officer raised a specific and pointed query on the very same dividend receipt. The Assessing Officer noticed that the assessee had claimed exempt income on account of dividend of Rs.86,....
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....consciously accepted the returned position. Thus, the scrutiny assessment order reflects a clear application of mind to the very issue which was earlier subjected to mechanical adjustment at the processing stage. 8. The assessee has strongly contended before us that once the claim of exemption on dividend income was examined and accepted in the regular assessment under section 143(3), any adjustment made under section 143(1) on that very issue cannot be sustained. It is submitted that section 143(1) contemplates only prima facie adjustments and does not authorize a re-characterization of income or rejection of a substantive exemption claim which requires legal interpretation. The learned counsel emphasized that the dividend income was fu....
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.... processing. 12. More significantly, the subsequent scrutiny assessment under section 143(3) has specifically examined the issue. A pointed query was raised; the assessee furnished a detailed explanation; and the Assessing Officer, after considering the statutory provisions and the assessee's submissions, accepted the claim. The assessment under section 143(3) is a conscious and reasoned determination of income after enquiry and application of mind. 13. Once a regular assessment has been framed accepting the exemption claim, the earlier processing under section 143(1) cannot survive to the extent it takes a contrary view on the same issue. A summary intimation cannot override or contradict a concluded scrutiny assessment. To hold othe....
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....t under section 143(1) is allowed, and the addition/adjustment of exempt dividend income of Rs.86,40,00,000/- stands deleted. 18. As regards the scrutiny assessment under section 143(3) dated 08.10.2025, it is an admitted and undisputed position that no adverse addition on account of dividend income was made therein. The Assessing Officer, after raising a specific query and examining the explanation of the assessee in detail, accepted the claim of exemption and completed the assessment accordingly. 19. In such circumstances, no grievance adverse to the assessee survives in the scrutiny assessment on this issue. Rather, the acceptance of the claim in scrutiny assessment reinforces and fortifies the conclusion that the adjustment made u....