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2023 (9) TMI 254 - AT - Income TaxValidity of Adjustment u/s 143(1) - returns of income already taken up for scrutiny by the AO - whether adjustment is beyond the scope of section 143(1)? - HELD THAT:- As decided in GUJARAT POLY-AVX ELECTRONICS LIMITED [1996 (7) TMI 128 - GUJARAT HIGH COURT] after issuing notice u/s 143(2) of the Act it is not open for the AO to make adjustment or to pass the order u/s 143(1) of the Act but has to make the assessment in accordance with provisions of section 143(3) - Therefore, once the proceedings u/s 143(3) are initiated by the AO by issuing notice u/s 143(2) then the AO has no jurisdictional to initiate parallel proceedings of processing the return u/s 143(1) of the Act. As decided in VODAFONE IDEA LTD [2020 (5) TMI 27 - SUPREME COURT] once the scrutiny is undertaken and proceedings are initiated by issuance of notice u/s 143(2) it would be anomalous and incongruent that while such proceedings so initiated are pending, the return be processed u/s 143(1). As decided in CESC. LTD [2003 (4) TMI 83 - CALCUTTA HIGH COURT] once the assessment u/s 143(3) has been completed then the order passed u/s 143(1)(a) merges with the order passed u/s 143(3) of the Act. Therefore, the order passed u/s 143(1) ceased to be operative. Accordingly we hold that the order passed u/s 143(1) by CPC after the scrutiny assessment proceedings were initiated by the AO for A.Ys. 2016-17 & 2016-18 are not valid and liable to be set aside. Appeal of assessee allowed.
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