Tax Loss Cannot Be Reduced by Unserved Section 143(1) Intimation: ITAT Ahmedabad

Lesso Buildtech Private Limited Vs DCIT (ITAT Ahmedabad)

Ahmedabad: In a ruling favouring the assessee, the Income Tax Appellate Tribunal (ITAT) Ahmedabad bench has held that the tax department cannot reduce a declared loss based on an intimation under Section 143(1) of the Income Tax Act, 1961, if that intimation was never properly served on the taxpayer. The tribunal directed the restoration of the loss figure as originally declared by the assessee company.

The case involved Lesso Buildtech Private Limited, engaged in the trading of various building materials and related products, for the assessment year 2020-21. The company had filed its return of income declaring a loss of ₹30,65,00,117 under the normal provisions of the Act.

Subsequently, an intimation under Section 143(1) was generated by the Central Processing Centre (CPC) on August 10, 2021, which determined a slightly lower loss of ₹28,91,48,057 after making certain adjustments. However, a crucial fact in the case was that this intimation was never communicated or served upon the assessee company.

Despite the unserved intimation, the assessee’s case was selected for complete scrutiny assessment, and a notice under Section 143(2) was issued. As part of the scrutiny, a reference was also made to the Transfer Pricing Officer (TPO), who proposed an upward adjustment related to international transactions.