CPC 143(1) Adjustment – What You Can Do When Income Is Increased

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CPC 143(1) adjustment is a common issue faced by taxpayers when the Centralised Processing Centre increases returned income or reduces a refund. Most such adjustments are mechanical in nature and can be corrected if responded to properly within time.

What the law says (in simple words)

Section 143(1) allows CPC to make prima facie adjustments only. It cannot decide disputed issues or make additions requiring investigation.

For reference, taxpayers may also refer to the Income-tax Department’s e-filing portal for CPC intimations.

Common adjustments made by CPC

  • Mismatch with Form 26AS / AIS
  • Disallowance of deductions
  • Arithmetical errors
  • Late filing fee

CPC 143(1) Adjustment – What to Do Step by Step

  1. Read the intimation carefully
  2. Identify the adjustment made
  3. Verify supporting data
  4. File rectification under section 154, where applicable
  5. Escalate through appeal if rectification fails

When CPC adjustment is invalid

  • Issue requires explanation or evidence
  • No opportunity of hearing given
  • Adjustment beyond scope of 143(1)

When a CPC 143(1) Adjustment Is Invalid

A CPC adjustment under section 143(1) is limited to prima facie errors. CPC cannot:

  • Make debatable additions
  • Disallow claims requiring investigation
  • Ignore explanations already on record

If CPC exceeds this scope, the adjustment is legally unsustainable.

Remedies Available Against CPC 143(1) Adjustment

If income is wrongly increased, the taxpayer can:

  1. File an online rectification under section 154
  2. Respond through the e-proceeding portal
  3. File an appeal before CIT(A), if required

Timely action is critical.

Common Errors Leading to CPC Adjustments

CPC 143(1) adjustment issues are usually mechanical and rectifiable. Most CPC adjustments arise due to:

  • Mismatch with Form 26AS / AIS
  • Non-consideration of deductions
  • Incorrect ITR selection
  • Clerical or arithmetical mistakes

Many of these are easily rectifiable.

When CPC 143(1) Adjustment Can Be Challenged

A CPC 143(1) adjustment is legally restricted to prima facie errors apparent from the return and accompanying records. CPC does not have the jurisdiction to adjudicate disputed issues or make additions requiring examination of facts.

If CPC makes an adjustment on a debatable issue, such adjustment is beyond the scope of section 143(1) and is liable to be deleted.

If the adjustment is due to an apparent mistake, the correct remedy is Section 154 rectification. Where rectification fails, filing an appeal may be necessary.

Difference Between CPC 143(1) Adjustment and Scrutiny Assessment

A CPC adjustment is an automated processing step, whereas scrutiny assessment involves application of mind by the Assessing Officer after issuing notice under section 143(2).

CPC cannot:

  • Reject claims requiring explanation
  • Disallow deductions without enquiry
  • Substitute scrutiny proceedings

Any such action must be undertaken only through regular assessment.

Remedies Available Against CPC 143(1) Adjustment

If income is wrongly increased by CPC, the taxpayer has the following remedies:

  1. Rectification under section 154 for apparent mistakes
  2. Online response through the e-filing portal
  3. Appeal before CIT(A) where rectification fails

Delay in taking action may result in the demand becoming final.

Time Limit and Consequences of Ignoring CPC 143(1) Adjustment

An intimation under section 143(1) is deemed to be an order for limited purposes. If a taxpayer does not respond to a CPC 143(1) adjustment within the prescribed time, the demand may become final and recovery proceedings can be initiated.

Many taxpayers wrongly assume that CPC adjustments will automatically get corrected later. This assumption is risky. Once the time for rectification or appeal lapses, the scope for relief becomes limited.

Therefore, every CPC 143(1) adjustment must be examined and responded to promptly.

Practical Takeaway

A CPC 143(1) adjustment is not final determination of tax liability.
However, ignoring it can trigger recovery proceedings.

Understanding what CPC can and cannot do is essential to protect your rights.

Ignoring it, however, can lead to:

  • Demand becoming final
  • Recovery proceedings
  • Avoidable litigation

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