An adjustment under Section 143(1) of the Income Tax Act can be made only if there is information available in the return, accounts, or documents that prima facie the deduction, allowance, or relief claimed is inadmissible.

( 1 ) THE challenge in this W. P. is to an order passed u/s. 143 (1) of the Income-tax Act whereby certain adjustments have been carried out by the Income Tax Officer. which have resulted in taxable-income being computed.

( 2 ) THE petitioner filed a return for the assessment year 1989-90 and disclosed a loss of Rs. 53,850. 00. The Income Tax Officer. then issued an intimation dated 29. 10. 90 u/s. 143 (l) (a) alongwith explanation slip whereby petitioner was informed that certain additions were made as a result of which the total income computed came to Rs. 2,81,500. 00. The additions made were of five items. They were Corpus Donation of Rs. 1,62,500. 00; Retainership fee ofrs. 76,950. 00; Medicine expenses of Rs. 23,500. 00; Rent of Rs. 9,600. 00 and Maintenance expenses of Rs. 8,910. 00. The sum of Rs. 1,62,500. 00 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. 00. The additions were made by the I. T. O. only for one reason viz. , that no proof in respect of the claim of the petitioner had been filed with the Income Tax Officer.

( 3 ) IT is contended by the learned counsel for the petitioner that on a correct interpretation of Sec. 143 (1) no such additions for the reasons stated by the Income Tax Officer. could have been made. We shall revert to that presently. Mr. Gupta has vehemently contended that after the aforesaid intimation had been sent an order u/s. 154 has been passed by the Income Tax Officer. on 12. 8. 91 whereby the adjustments which have been conveyed u/s. 143 (1) (a) have been rectified and the income was put at a figure of nil and the W. P. has become infructuous. The learned counsel for the petitioner states that the grievance still subsists. As far as the petitioner was concerned it had disclosed a return of loss of Rs. 53,840. 00 but as a result of an order u/s. 154 the loss now stands converted to a figure of nil . In other words there is no taxable income nor is there any loss. It is further submitted by the learned counsel that no reason has been given by the Income Tax Officer. while passing an order u/s. 154 as to why the said order has been passed. The order u/s. 154 merely states that "after considering the facts the income is rectified to nil income . " The learned counsel submits that in future also there is no guarantee that on account of lack of proof, the Income Tax Officer. may make disallowance u/s. 143 (1) and, therefore, a judicial pronouncement on a correct interpretation of the said provision is called for.

( 4 ) IN our opinion the contention of the learned counsel for the petitioner is right. There is no reason given in the impugned order dated 29. 10. 90 as to why the additions are being made. The order passed u/s. 154 contains no reason. The reason for making the additions, in the first instance was that no proof, had been furnished alongwith the filing of return. The question which arises for our consideration is whether an adjustment can be made in the event of non-filing of proof in claim of deduction or in claim of a receipt being non-taxable. In order to appreciate the contention of the learned counsel for the petitioner it is necessary to refer to S. 143 (1) and the first proviso thereto. The said proviso is as under :

"143 (L) (A ). Where a return has been made u/s. 139, or in response to a notice under subsection (1) of S. 142,- (i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued u/s. 156 and all the provisions of this Act shall