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

Sunrise Traders, a partnership firm, filed its return for the relevant tax year. While processing the return, the Centralised Processing Centre proposes to adjust the total income for an arithmetical error in the return. Under section 270 of the Income-tax Act, 2025, what must be done before the adjustment is made?

Before any adjustment is made while processing a return, a communication of the proposed adjustment must be given to the assessee in writing or electronically. Any response is considered. If none arrives within thirty days of issue, the adjustment is made and the intimation is sent.

  1. AA communication of the proposed adjustment must be given to the assessee, and if no response is received within thirty days of its issue, the adjustment is madeCorrect
  2. BThe adjustment can be made straight away, and the assessee is informed only through the final intimation
  3. CThe assessee must first be assessed after a personal hearing under the scrutiny provisions
  4. DThe adjustment can be made only after the approval of the Principal Commissioner

Explanation

Section 270(2) requires a communication of the proposed adjustments, in writing or electronic mode, before any adjustment under sub-section (1)(a). The response is considered, and if none is received within thirty days of issue, the adjustments are made and the intimation is sent. Making the adjustment straight away ignores this prior communication requirement.

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