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May 2026

Assessment — Adjustment — ICDS adjustment — Issue of show cause notice before making adjustment — Show cause notice issued proposing to make adjustment on three issues — No prior show cause notice issued for making huge ICDS adjustment — No opportunity of being heard provided to the assessee — Breach of principles of natural justice — Impugned adjustment to be quashed and set-aside.

By Keshav Bhujle | Ritu Punjabi, Advocates
Reading Time 5 mins

6. Rallis India Ltd. vs. CPC:

(2026) 183 taxmann.com 176 (Bom.):

A. Y. 2022-23: Date of order 19/01/2026:

Ss. 143(1) and 145 of ITA 1961

Assessment — Adjustment — ICDS adjustment — Issue of show cause notice before making adjustment — Show cause notice issued proposing to make adjustment on three issues — No prior show cause notice issued for making huge ICDS adjustment — No opportunity of being heard provided to the assessee — Breach of principles of natural justice — Impugned adjustment to be quashed and set-aside.

The Assessee filed its return of income wherein the assessee made a suo moto adjustment of Rs.1.15 crores u/s. 145(2) of the Income-tax Act, 1961 (the Act) in respect of the Income Computation and Disclosure Standards (ICDS). Subsequently, in December 2022, a notice u/s. 143(1)(a) of the Act was issued proposing to make adjustments u/s. 36(1)(va), 145A and 35(1)(iv) of the Act. The Assessee’s case was selected for scrutiny u/s. 143(2) of the Act.

Thereafter, the Assessee received intimation u/s. 143(1) of the Act wherein an adjustment of Rs.1284 crores was made in respect of ICDS as against suo moto adjustment of

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