Income Tax: CPC cannot do tax adjustment beyond purview of provisions of section 143(1):

Income Tax: CPC cannot do tax adjustment beyond purview of provisions of section 143(1) The appeal was filed by the Institute of Hotel Management, Catering Technology and Applied Nutrition against an order passed by the CIT(A) dated March 29, 2025, for the Assessment year 2023-24. While no one appeared on behalf of the assessee during the hearing, DR represented on behalf of the revenue.

Also Read

ITAT: Co-operative Society Eligible for Section 80P Deduction Despite Nominal Members; Interest Income Partly Taxable as “Other Sources”

Background

The dispute arose after CPC denied the institute’s claim for tax exemption and treated its entire receipts as taxable income. The Tribunal said that such an action was not legally permissible under Section 143(1) because it only allows limited adjustments at the time of processing returns. If the CPC intended to deny the exemption, it would have required a detailed examination and computation of income as business income, including the preparation of a Profit and Loss Account.

Tribunal's Decision

The Tribunal further stated, "The disallowance of the entire application of income in an intimation u/s 143(1) is not an adjustment which is provided for in the provisions of section 143(1)."

Also Read

ITAT Deletes Additions: Cash Deposits Upheld with Proper Records, No Income Estimation Without Rejecting Books

As a result, the tribunal quashed the CPC adjustment and allowed the appeal filed by the assessee.