TMI Blog1991 (10) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... an explanation slip whereby the petitioner was informed that certain additions were made as a result of which the total income computed came to Rs. 2,81,500. The additions which were made were of five items. They were corpus donation of Rs. 1,62,500 ; retainership fee of Rs. 76,950 ; medicine expenses of Rs. 23,550 ; rent of Rs. 9,600 and maintenance expenses of Rs. 8,910. The sum of Rs. 1,62,500 was regarded by the petitioner as not taxable because it was a receipt towards corpus of the charitable trust. The other four items were claimed as expenses and it is in this manner that the petitioner had declared a loss of Rs. 53,850. The additions were made by the Income-tax Officer only for one reason, viz., that no proof in respect of the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, a judicial pronouncement on correct interpretation of the said provision is called for. In our opinion, the contention of learned counsel for the petitioner is right. There is no reason given in the impugned order dated October 29, 1990, as to why the additions are being made. The order passed under section 154 contains no reason. The reason for making the additions, in the first instance, was that no proof had been furnished along with the return. The question which arises for our consideration is whether an adjustment can be made in the event of non-filing of proof for claim of deduction or for claim of a receipt being non-taxable. In order to appreciate the contention of learned counsel for the petitioner, it is necessary to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rima facie inadmissible, shall be disallowed. " In the instant case, it is clause (iii) of the proviso which was sought to be applied by the Income-tax Officer. The said clause clearly provides that the Income-tax Officer can make an adjustment to the income or loss declared in the return if, on the basis of the information available in such return, accounts or documents, the deduction allowance or relief claimed is prima facie inadmissible. The conclusion that the claim of the assessee is inadmissible must, in other words, flow from the return as filed. No power is given to the Income-tax Officer to disallow a claim for the reason that there is no proof in support of the claim made by the assessee. In a way, the said clause (iii) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular No. 549 issued by the Central Board of Direct Taxes wherein examples have been given of adjustments which can be carried out. The relevant part of the said circular is as under : "The prima facie adjustments mentioned at (ii) above can be made only on the basis of information available in the return or the accompanying accounts or documents and not on the basis of the past records of the assessee. Some examples of such prima facie admissibles or inadmissibles in respect of which adjustments can be made to the returned income or loss are : (i) While computing income under the head 'Salaries', standard deduction under section 16(1) is not claimed, or claimed at a figure which is less than or in excess of the permissible limit. (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed or claimed at a figure which is less than or is in excess of the permissible amount. (xi) Deduction under section 80G not claimed, although allowable on the basis of the information available in the return or the accompanying documents or claimed at a figure which is less than or is in excess of the permissible limit. (xii) Deduction under section 80M claimed at sixty per cent. of gross dividend income instead of on net dividend income in violation of the provisions of section 80AA. It may be mentioned that the above is not an exhaustive but only an illustrative list of prima facie admissibles or inadmissibles for which adjustments can be made to the returned income or loss." The aforesaid examples contained in the circular ..... X X X X Extracts X X X X X X X X Extracts X X X X
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