CPC cannot continue to Rectify and Re-rectify intimation u/s 143(1)(a) of Income Tax Act Repeatedly: Delhi HC [Read Order]

The Delhi High Court has held that the Central Processing Centre ( CPC ) of the Income Tax Department cannot repeatedly rectify and re-rectify intimations issued under Section 143(1)(a) of the Income Tax Act, 1961.

The division bench of Justices Vibhu Bakhru and Tejas Karia was hearing a writ petition filed by Gautam Walia, challenging a notice dated 07.10.2024 and a subsequent rectification order dated 05.03.2025 issued under Section 154 of the Act.

The petitioner had originally filed his return of income for Assessment Year 2019-20, declaring a total income of ₹28,63,160 and claiming a refund of ₹6,21,244. This return was processed under Section 143(1)(a), and a refund of ₹6,42,982 was credited to his bank account on 29.04.2020.

Also read: Delhi High Court Sets Aside GST Demand Over “Hidden” SCN within Additional Notices Tab on Portal [Read Order]

However, on 05.07.2021, the CPC suo moto issued a rectification order under Section 154, disallowing certain deductions claimed under Section 36(1)(va) and enhancing the taxable income to ₹1,00,20,780, without giving the petitioner an opportunity of being heard. This prompted the petitioner to approach the Commissioner of Income Tax (Appeals), who set aside the rectification order on 30.07.2024 due to the lack of notice.

GST on Real Estate & Works Contracts – Your Ultimate Guide to GST in the Real Estate Sector!, Click Here

Despite this, the Department once again issued a rectification notice and passed a fresh order under Section 154, re-enhancing the income to ₹1,00,20,780 after providing hearing to the petitioner.

While the Department argued that the earlier defect had been cured by providing the petitioner a hearing this time, the petitioner raised a new concern: during the pendency of the appeal, he had also filed a rectification application before the CPC on 19.11.2022. This application succeeded, and the Deputy Director of Income Tax, CPC, restored the original returned income by passing a rectification order dated 18.05.2023.

Also read: GST Levy on House keeping Services to Govt. Educational Institutions: Delhi HC directs for Appellate Remedy, Says  Authority Must Decide  Pre-deposit [Read Order]

The Court observed that once the CPC had already rectified the intimation in favour of the assessee, the Department could not continue to rectify and re-rectify the same under Section 143(1)(a).

This repeated use of rectification powers, without due consideration of earlier corrective actions, was deemed improper. This aspect was not considered by the Assistant Commissioner of Income Tax (ACIT) while passing the impugned order. The Revenue admitted that this fact was not placed before the ACIT and requested that the matter be remanded.

The bench set aside the rectification order dated 05.03.2025 and remanded the matter to the ACIT to reconsider the issue afresh. The ACIT has been directed to examine whether a re-rectification is legally sustainable after the CPC had already issued a favourable rectification order.

Also read: Not All Expenses with Enduring Benefit Qualify as Capital Expenditure: Delhi HC in Genpact Services LLC [Read Order]

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates