The court emphasized the requirement for the Income Tax Officer to demand proof before making any disallowance under Section 143(1)(a) and highlighted the relevance of Circular No. 549 in making prima facie adjustments based on the information available in the return or accompanying documents.

( 1 ) THE Commissioner of Income Tax has filed this appeal under Section 260a of the Income Tax Act, 1961 (for short "the Act") against the order passed by the Income Tax Appellate Tribunal (for short "the ITAT") dated 15. 5. 2001.

( 2 ) BRIEF facts which are necessary to dispose of the appeal are recapitulated as under.

( 3 ) IN this appeal the revenue has challenged the order of the ITAT relating to the assessment year 1990-91 on the issue of disallowance of rs. 15,84,216/- made under Section 43b of the Act while processing the return under Section 143 (1) (a) of the Act.

( 4 ) MR. SANJIV Khanna, the learned senior counsel for the appellant submitted that the ITAT without giving any reason decided the appeal in favour of the asseesee.

( 5 ) IT is also submitted by Mr. Khanna that the ITAT has erroneously placed reliance on the decision of the Gauhati High Court reported in India Carbon ltd. vs. Inspecting Asstt. Commissioner of income Tax reported in 200 ITR 759. The case has no direct relevance on the facts of this case.

( 6 ) THE assessee filed its return of income on 31. 12. 1990 declaring net loss of Rs. 8,56,21,193/- for the assessment year 1990-91. The return filed by the assessee was examined under Section 143 (1) (a) of the Act and an addition of Rs. 15,84,216/- was made as the assessee had not filed and furnished any evidence in support of deduction claimed under Section 43b of the Act. The assessee aggrieved by that order filed an application on 21. 3. 1995 under Section 154 of the act for rectification which was also dismissed. Thereafter, the assessee preferred an appeal before the Commissioner of Income Tax. In the appeal the learned Commissioner of Income Tax after examining the facts in detail remanded the matter to the Assessing Officer to obtain proof of payment, examine it and allow deduction if permissible under the provision of law.

( 7 ) THE petitioner assessee filed further appeal before the ITAT. The ITAT allowed the assessee s appeal. The ITAT relied on the decision of the gauhati High Court reported in India Car bon 4td. vs. Inspecting Asstt. Commissioner of Income Tax (supra) wherein it was held that the amount as sales tax appearing on the liability side of the balance sheet was neither claimed as deduction nor charged to profit and loss account of the assessee and the same could not be added to the income of the assessee. It was also submitted that no disallowance on this account has been made by the assessing Officer while computing income under section 438 of the Income Tax Act. Consequently the adjustment ought to have been deleted from the intimation under Section 143 (1) (a) of the Act.

( 8 ) THE Commissioner of Income-tax aggrieved by the order of the ITAT has filed this appeal under section 260a of the Income Tax Act. It may be pertinent to mention that a similar issue came up for consideration before a Division Bench of the high Court of Delhi consisting of Hon ble mr. Justice B. N. Kirpal and Hon ble Mr. Justice arun Kumar in S. R. F. Charitable Trust vs. Union of India and Others (193 ITR 65 ). In somewhat similar circumstances this Court observed the adjustments were made for the reason that, in support of the claim, the petitioner assessee had not furnished the proof. The stage of furnishing of the proof is reached as and when proof is demanded by the Income-tax Officer on a notice under section 143 (2) being issued. If no proof in support of the claim was available with the income-tax Officer, he could have issued a notice under section 143 (2) but he could not have unilaterally made this disallowance by seeking to invoke the first proviso to section 143 (1) because the said proviso was not applicable in the present case.

( 9 ) WE deem it appropriate to extract Section 143 of the Act for the ready reference. Section 143 of the Act reads as under:-

"143 (1) (A) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142