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CA Final · Direct Tax Laws & International Taxation · Assessment of Various Entities

Sundaram Traders Ltd filed its return for a tax year on 10 August of the following year, and the return was processed under section 270(1) of the Income-tax Act, 2025. The company has an adjustment proposed to its return. Before the adjustment is made, what must the department do?

Before making any adjustment while processing a return under section 270(1), the department must communicate the proposed adjustment to the assessee in writing or electronically, consider the response, and proceed with the adjustment if no response comes within thirty days of the communication.

  1. AGive the assessee a communication of the proposed adjustment in writing or electronic mode, consider any response, and make the adjustment if no response is received within thirty daysCorrect
  2. BMake the adjustment immediately and communicate it only through the final intimation
  3. CObtain prior approval of the Principal Commissioner in every case
  4. DIssue a notice requiring the assessee to attend the office of the Assessing Officer with evidence

Explanation

Section 270(2) requires a communication of the proposed adjustments, in writing or electronic mode, before they are made. The assessee's response is considered. If no response arrives within thirty days of the communication, the adjustment is made and the intimation follows. Making the adjustment without prior communication is not allowed.

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