TaxTMI 
TaxTMI 
2026 (5) TMI 842
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....each of which are without prejudice to one another: 1. Whether on the facts and circumstances of the case and in law, the learned JCIT(A) ought to have appreciated that the Intimation dated 21 May 2024 u/s. 143(1) of the Act suffered from a mistake apparent on record and that the Deputy Director of Income Tax, CPC, Bengaluru ('AO') ought to have rectified it. 2. Whether on the facts and circumstances of the case and in law, the learned CIT(A) ought to have appreciated that the Appellant is eligible to avail the concessional tax rate of 22% under section 115BAA of the Act and that the learned AO was incorrect in not allowing the same. 3. Whether on the facts and circumstances of the case and in law, the learned JCIT(A) ought to have appreciated that the Appellant satisfied the criteria to avail the 25% tax rate, as set out in Para E of Part I of First Schedule to Finance Act 2023, for the impugned assessment year and that the learned AO was incorrect in not allowing the same. 4. Whether on the facts and circumstances of the case and in law, the learned JCIT(A) erred in confirming the learned AO's computation of interest under section 2....
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....C, the assessee filed an application for rectification under section 154 of the Act on 20.06.2024 before the CPC. The CPC passed an order under section 154 of the Act dated 27.08.2024, again denying the benefit of concessional tax rate under section 115BAB of the Act and sustaining the tax at the rate of 30%. 5. Against the said rectification order of the CPC, the assessee preferred an appeal before the Ld. First Appellate Authority. The Ld. First Appellate Authority upheld the action of the CPC and dismissed the appeal of the assessee. 6. Aggrieved by the order of the Ld. First Appellate Authority the assessee is now in appeal before this Tribunal. The Learned Authorized Representative ("Ld. AR") submitted that the CPC, while processing the return of the assessee under section 143(1) of the Act, has denied the concessional tax rate under section 115BAB of the Act without following the mandatory procedure prescribed under the first proviso to section 143(1)(a) of the Act. The Ld. AR invited our attention to the intimation issued under section 143(1) of the Act for the immediately preceding Assessment Year 2022-23 and submitted that the assessee had already exercised the optio....
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....n 143(1) of the Act without issuing prior intimation to the assessee as required under the first proviso to section 143(1)(a) of the Act. It is an undisputed fact that the CPC, while processing the return of income under section 143(1) of the Act, made an adjustment by denying the concessional rate of tax claimed by the assessee under section 115BAB of the Act and levied tax at the rate of 30%, without issuing any prior intimation to the assessee. In this regard, we have gone through the provisions of section 143(1) of the Act, which is to the following effect: "143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:- (a) the total income or loss shall be computed after making the following adjustments, namely:- (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-sectio....
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....ted but no tax, interest or fee is payable by, or no refund is due to, him: Provided further that no intimation under this sub- section shall be sent after the expiry of 99[nine months] from the end of the financial year in which the return is made. Explanation.-For the purposes of this sub-section,- (a) "an incorrect claim apparent from any information in the return" shall mean a claim, on the basis of an entry, in the return,- (i) of an item, which is inconsistent with another entry of the same or some other item in such return; (ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction; (b) the acknowledgement of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a). 9. On perusal of the above, we find that the first proviso to sectio....
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....a return and belatedly filing Form 10-IC, and before the intimation order is passed under Section 143(1)(a), the Petitioner could have obtained an order seeking condonation of delay in filing form 10-IC under Section 119(2)(b) of the IT Act. This could possibly be the response that the assessee may give to the CPC in respect of the notice issued under the first proviso to Section 143(1)(a) and contend that the proposed adjustment ought not to be made. It is therefore incorrect to suggest that the intimation proposing an adjustment, as contemplated under the first proviso to Section 143(1)(a), would be an exercise in futility. Once we find that the said provision is mandatory in nature, the same has to be complied with by the Revenue. The Revenue cannot decide in which case it would be futile and in which case it would not. 11. In the conclusion we have reached, we find support from our Judgement in Rallis India Limited Vs. Central Processing Centre [Writ Petition (L) No. 37314 of 2025]. Paragraph 11 of the said Judgement is relevant and reads as under : "11. It is apparent from a perusal of the above reproduction that the first and second proviso to Section 143(1)....
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....as categorically held that the requirement of issuing prior intimation to the assessee, as contemplated under the first proviso to section 143(1)(a) of the Act, before making any adjustment, is mandatory in nature. The Hon'ble Court has further held that in the absence of such prior intimation and opportunity to the assessee to respond, any adjustment carried out in the intimation under section 143(1) of the Act is vitiated and liable to be quashed. In the present case, it is an admitted position that while processing the return under section 143(1) of the Act, the CPC denied the concessional rate of tax claimed by the assessee under section 115BAB of the Act and levied tax at the rate of 30% without issuing any prior intimation to the assessee as required under the first proviso to section 143(1)(a) of the Act. Therefore, respectfully following the ratio laid down by the Hon'ble Bombay High Court in the case of Bax India Ventures Pvt. Ltd. Vs. CPC (supra), we hold that the adjustment made by the CPC in the intimation under section 143(1) of the Act is not sustainable in the eyes of law and is liable to be set aside. 11. The Hon'ble High Court has also granted liberty to the Rev....