DCIT Vs Adidas India Marketing P. Ltd. (ITAT Delhi)
The appeal before the Income Tax Appellate Tribunal (ITAT), Delhi, arose from the order of the Commissioner of Income Tax (Appeals) [CIT(A)] dated 09.01.2023 for Assessment Year 2020–21. The Revenue challenged the deletion of adjustments made by the Centralized Processing Centre (CPC), Bengaluru, while processing the return under Section 143(1) of the Income Tax Act.
The CPC had processed the assessee’s return filed on 14.02.2021, declaring an income of Rs. 271.84 crore, and determined the total income at Rs. 282.53 crore after making three adjustments: disallowance under Section 37 (Rs. 8.89 crore), Section 36(1)(va) (Rs. 35.59 lakh), and Section 43B (Rs. 1.25 crore). These adjustments were made without issuing any prior notice or intimation to the assessee regarding the proposed changes.
The assessee contended that such adjustments were invalid as they violated the mandatory requirement under the proviso to Section 143(1)(a), which requires prior intimation to the assessee before making any adjustment. It was argued that failure to provide such an opportunity renders the adjustments legally unsustainable. Reliance was placed on several Tribunal decisions supporting the proposition that adjustments made without prior notice are a nullity.
The Revenue, on the other hand, argued that the CPC was within its powers under Section 143(1)(a)(iv) to make such adjustments based on discrepancies noted in the audit report. It further contended that non-issuance of notice was merely a technical defect that could be cured.
