2002 (8) TMI 253 - AT - Income Tax

Summary

Issues:
Appeal against CIT(A) order regarding adjustments made by Assessing Officer under section 143(1)(a) for carry forward losses of assessment years 1991-92 and 1992-93.

Analysis:

Issue 1: Adjustment of carry forward losses by Assessing Officer
The Assessing Officer made adjustments to the carry forward losses claimed by the assessee for the assessment year 1994-95. The AO allowed a deduction for carry forward loss at a lower amount than claimed by the assessee, resulting in an adjustment and a demand for additional tax. The CIT(A) upheld the intimation under section 143(1)(a) of the Income-tax Act. The assessee argued that the adjustments made were outside the permissible scope of prima facie adjustments under the law. The Board's Circular No. 549 dated 31st October, 1989, was cited to support the contention that adjustments can only be made based on information available in the return or accompanying documents, not past records. The AO's actions were deemed impermissible as they went beyond the return of income filed by the assessee and delved into the past records of the assessment years 1991-92 and 1992-93. The Tribunal held that prima facie adjustments must be based on information in the return of income, and since the adjustments were made using past records, they were not justified. Therefore, the AO was directed to allow the deduction claimed by the assessee, and the additional tax charged was deemed unwarranted. The orders of the CIT(A) and the Assessing Officer regarding the adjustments were declared unsustainable in law.

Conclusion:
The Tribunal allowed the appeal of the assessee, ruling in favor of the assessee against the adjustments made by the Assessing Officer for carry forward losses of assessment years 1991-92 and 1992-93. The judgment emphasized the importance of adhering to the provisions of law and circulars issued by the Central Board of Direct Taxes while making adjustments under section 143(1)(a) of the Income-tax Act.