Faurecia Emissions Control Technologies India Pvt. Ltd. Vs ACIT (ITAT Chennai)
143(1) Adjustment Invalid: 139(9) Notice Cannot Replace Mandatory Show-Cause- 143(1) Adjustment for TDS Credit Invalid Without Prior Intimation; Entire Demand Deleted
Chennai ITAT examined legality of an adjustment u/s 143(1)(a) whereby CPC denied TDS credit of Rs.5,05,37,430 & raised a consequential demand of Rs.5,73,47,460. Revenue justified denial on the basis of mismatch between receipts disclosed in ROI (Rs.930 crore) & receipts in Form 26AS (Rs.1567 crore), applying Rule 37BA.
Assessee argued that no intimation or show-cause notice u/s 143(1) was issued before making the adjustment, violating the first proviso to section 143(1), & therefore the entire adjustment was void.
Tribunal admitted an additional legal ground on violation of natural justice. After examining statutory scheme, Tribunal held that opportunity of being heard is mandatory before any adjustment u/s 143(1)(a), especially under clause (vi) relating to income/TDS mismatch. Revenue’s argument that defect notice issued earlier u/s 139(9) could be treated as opportunity was rejected-b, & a 139(9) defect notice cannot substitute mandatory 143(1) intimation. Further, Revenue, instead of declaring the return “defective” or “invalid” under 139(9), directly made a 143(1) adjustment without due process, which is impermissible.
Tribunal therefore set aside CIT(A)’s order & directed AO to delete the entire 143(1) demand, including the TDS disallowance. All other grounds were rendered academic. Appeal allowed in full.
