Prima facie adjustments made under section 143(01)(a)--Scope of section 154--Clarification regarding - Income Tax - 581/1990

Prima facie adjustments made under section 143(01)(a)--Scope of section 154--Clarification regarding Circular No. 581 Dated 28/9/1990 Instances have come to the notice of the Board where deduction claimed under section 43B of the Income-tax Act was disallowed as prima facie inadmissible, under section 143(1)(a), as the assessees had not furnished evidence of payment of tax, duty, etc. along with the return. However, later on, the deduction claimed was allowed under section 154 as the assessees subsequently furnished such evidence. 2. The aforesaid action of allowing the deduction subsequently under section 154 is not in accordance with law. Furnishing of evidence of payment of any sum by way of tax, duty, etc., along with the return is a necessary requirement for allowance of deduction of that sum under section 43B. The sums disallowed as prima facie inadmissible under section 143(1)(a), in the absence of requisite evidence of the payment, cannot be subsequently allowed under section 154. This is because the scope of the powers to make prima facie adjustments under section 143(1)(a) is somewhat coterminous with the power to rectify a mistake apparent from the record under section 154. 3. Similarly, filing of evidence in support of an exemption/ deduction at the time of furnishing the return of income has been prescribed as a necessary condition in certain other sections of the Income-tax Act, such as sections 32AB(5), 33AB(2), 54(2), 54B(2), 54D(2), 54F(4), 54G(2), 80HH(5), 80HHA(4), 35D(4), 35E(6), 80HHB(3), 80HHC(4), 80HHD(6), 80-I(7), etc. In such cases also, where the exemption/ deduction claimed is disallowed as prima facie inadmissible for want of evidence in support thereof under section 143(1)(a), it cannot be subsequently allowed by a rectification order under section 154 if the assessee later on furnishes evidence in support thereof. 4. Such a view is also necessary from the administrative angle as, if the department condones such lapses in the initial stages, a tendency may develop amongst the taxpayers not to file relevant evidence at the time of filing the return and then make a claim by putting in an application under section 154. This tendency would unnecessarily increase infructuous work for the department. Hence, a strict view which is in accordance with the legal provisions is necessary in such cases. 5. Hindi version will follow. (Sd.) Nishi Nair, Under Secretary, Central Board of Direct Taxes.