CPC’s Mechanical Adjustments Under Section 143(1): When Form 29B Is Not Even Applicable

 

In recent weeks, a worrying trend has emerged from the Centralized Processing Centre (CPC) that deserves urgent attention from both taxpayers and the tax administration. Intimations proposing adjustments under section 143(1)(a) are being issued mechanically, even in cases where such adjustments have no legal basis. One such recurring issue relates to Form 29B and MAT provisions, leading to avoidable hardship and harassment.

Understanding the Legal Position

Under the Income-tax Act, Form 29B is required to be furnished only where tax is payable under the Minimum Alternate Tax (MAT) provisions. The form, duly certified by a Chartered Accountant, is a statutory requirement exclusively linked to MAT computation. Where the assessee’s tax liability is computed and discharged under normal provisions, MAT provisions do not get triggered, and consequently, Form 29B has no applicability.

This position is unambiguous and well settled in law.

What Is the CPC Doing?

Despite the clarity in law, the Centralized Processing Centre has been issuing intimations of proposed adjustment / incorrect claim under section 143(1)(a) on the ground of non-filing of Form 29B, even in cases where:

Tax is payable entirely under normal provisions, and

MAT provisions are not applicable at all.

Such adjustments are not only legally unsustainable but also demonstrate a clear case of mechanical processing without application of mind.

Why This Is a Serious Concern

This approach raises multiple concerns:

First, it results in unwarranted harassment of taxpayers, who are compelled to respond to frivolous intimations, file rectification requests, or submit explanations for something that the law itself does not require.

Second, it puts tax professionals in an awkward position, as clients naturally question why such “defects” are being flagged despite correct compliance. Over time, this erodes trust in professional advice and tarnishes the image of Chartered Accountants and tax practitioners.

Third, it defeats the very objective of automation, which is meant to simplify compliance, not multiply avoidable disputes.

Section 143(1) Is Not a Tool for Guesswork

The scope of adjustments under section 143(1)(a) is limited. It permits only prima facie adjustments that are apparent from the return itself. Treating non-filing of Form 29B as an “incorrect claim” without first examining whether MAT provisions are applicable is a classic example of overreach.

Automation cannot replace legal reasoning. Algorithms must mirror the statute, not override it.

What Needs to Be Done

The solution is straightforward and urgent:

The CPC’s processing logic must be aligned strictly with the provisions of law.

The system should first determine whether MAT is applicable before triggering any check for Form 29B.

Mechanical, template-driven intimations must give way to context-sensitive processing.

A small correction in logic can prevent thousands of unnecessary notices, replies, rectifications, and grievances.

The Larger Takeaway

Technology is a powerful enabler, but only when it works in harmony with the law. Blind automation, without legal nuance, risks converting compliance into conflict. The present issue of unwarranted Form 29B adjustments is a reminder that tax administration must balance speed with sense.

If the CPC corrects this approach, it will not only reduce taxpayer hardship but also reinforce confidence in a fair, responsive, and intelligent tax system.