Where regular assessment proceedings have been commenced U/s 143(2), there is no need for summary proceedings under Section 143(1)(a)

 

An issue of whether, once proceedings under Section 143(3) had commenced via the notice issued under Section 143(2), the AO was justified in processing the return and issuing an intimation under Section 143(1)(a) was there before ITAT Delhi.

It was in the case of The India Thermit Corporation Ltd. vs. DCIT, Circle 25(1), New Delhi,ITA No. 4435/DEL/2024,Date of Order: March 12, 2025 wherein the legality of simultaneous initiation of proceedings under Sections 143(1) and 143(2) of the Income Tax Act, 1961, for Assessment Year 2018-19 was there.

Let us have a Short Overview of the case:

The assessee filed its return of income on 29.11.2018.
The Assessing Officer (AO) issued a notice under Section 143(2) dated 22.09.2019, thereby commencing scrutiny assessment proceedings. Subsequently, the DCIT, CPC-Bangalore processed the return under Section 143(1) and issued an intimation dated 25.12.2019, making adjustments to the returned income.

Tribunal’s Observations and Reasoning:

1.  Sequential Operation of Sections 143(1) and 143(2)
Section 143(1) embodies a summary assessment mechanism, aimed at quick processing and issue of refunds or raising simple demands based on arithmetical or apparent errors.
Section 143(2) leads to regular scrutiny assessment, which involves a deeper inquiry into the return and its claims.

2.  Impact of Initiation of Scrutiny Proceedings
Once a notice under Section 143(2) has been issued, it indicates that the AO has decided to scrutinize the return in detail.
In such cases, further action under Section 143(1), which is merely summary in nature, becomes redundant and unnecessary.

3.  Reliance on Supreme Court Judgment
The ITAT relied on the decision of the Hon’ble Supreme Court in Gujarat Electricity Board v. CIT (2003) 260 ITR 84 (SC).

Key Excerpt from SC Judgment:
a regular assessment proceeding having been commenced under Section 143(2), there is no need for a summary proceeding under Section 143(1)(a).”
The Hon’ble Apex Court clarified that although Section 143(1) intimation is without prejudice to Section 143(2), once scrutiny has been initiated, the necessity and scope for processing under Section 143(1)(a) cease to exist.

ITAT Ruling
Respectfully following the ratio laid down by the Hon’ble Supreme Court in Gujarat Electricity Board v. CIT (2003) 260 ITR 84 (SC), the ITAT Delhi held:
“Where regular assessment proceedings, having been commenced under Section 143(2) of the Act, there is no need for summary proceedings under Section 143(1) of the Act.”
Consequently, the adjustments made in the intimation issued under Section 143(1) were deleted.

The statutory scheme implies that the summary procedure under Section 143(1) is intended for cases where no detailed scrutiny is warranted.
Once scrutiny proceedings are initiated, the Revenue cannot conduct parallel summary proceedings on the same return.

The Copy Of the order is as under:

1741768384-bpp8Jw-1-TO