2026 (4) TMI 1180

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....1 (hereinafter referred to as 'the Act') relating to Asst. Year 2022-23. 2. Brief facts of the case is that the assessee is an individual and salaried person filed his Return of Income for the Asst. Year 2022-23 on 23-11-2022 declaring total income of Rs. 60,91,530/-. The return was processed u/s. 143(1) on 31-01-2023 by disallowing the Leave Encashment u/s. 10(10AA)(ii) of Rs. 12,46,902/- as against the claim of Rs. 30,00,000/- by the assessee. Thus the assessee was issued with a demand of Rs. 17,320/-. 3. Aggrieved against the intimation, assessee filed an appeal before Ld.CIT(A). The Ld. CIT(A) dismissed the appeal on the ground that the return was filed beyond the due date and Form No. 10E filed one day prior to the Return of Inco....

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....ee. In this regard, the Ld. D.R. was directed to get a factual report from CPC, Revenue vide letter dated 29-01-2026 F. No. VAD/Cir.2(1)(1)/KPD/2025-26 wherein CPC Bengaluru submitted the following report: "Upon verification, it is noted that in the given case, while processing return u/s.143(1) Sec. 10(10ΛΑ) - Earned Leave Encashment was correctly restricted to the extent of Exemption limit specified u/s.10(10AA). However, due to technical issues prima facie adjustment notice was not triggered in this case before processing the return u/s.143(1)." 6. It is fairly admitted by CPC due to technical issue assessee was not given notice before making disallowance u/s. 143(1). This issue is no more res integra. Co-ordinat....

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....ove intimation made under section 143(1), CPC has not followed the above provisos by giving proper opportunity to the assessee to defend its case as per the first proviso to section 143(1)(a). Further, the NFAC order is also silent about the intimation to the assessee. Therefore, we find that intimation issued under section 143(1) dated 19.10.2019 is against first proviso to section 143(1)(a), and therefore, the entire 143(1) proceedings is invalid in law. 9. We also observe that the ld.NAFC has not looked into this fundamental principle of "audi alterm partem", which has not been provided to the assessee as per the 1st proviso of section 143(1) of the Act, but proceeded with the case on merits and also confirmed the addition made ....