Scheme of Processing of Returns (Section 143(1)

Where a return has been made under section 139, or inresponse to a notice under section 142(1), such return shall be processed in the following manner:

(A). the total income or loss shall be computed after makingthe following adjustments,

namely:-

(i). any arithmetical error in the return or

(ii). an incorrect claim, if such incorrect claim isapparent from any information in the return or

(iii). Disallowance of loss claimed, if return of theprevious year for which setoff is climed was furnished beyond the due date specified undersection 139(1) or

(iv). Disallowance of expenditure indicated in the auditreport but not taken into account in computing the total income in the return or

(v). Disallowance of deduction claimed under section 10AA,80-IA, 80-IB, 80-IC, 80-ID or section 80-IE, the return is furnished beyond thedue date specified under section 139(1) or

(vi). Addition of income appearing in Form 26AS or Form 16Aor Form 16 which has not been included in compiting the total income in thereturn .

Provided that no such adjustments shall be made unless anintimation is given to the assesse of such adjustment either in writing or inelectronic mode.

Provided further that the response received from theassesse, if any, shall be considered before making any adjustment , and in case whereno response is received within 30 days of the issue of such intimation , such adjustment shall be made.

(B). the tax and interest and fee under section 234F, ifany, shall be computed on the basis of the total income computed under clause (A).

(C). the sum payable by, or the amount of refund due to,assesse shall be determined after adjustment of the tax and interest and fee under section 234F, if any, computed under clause (B). by any tax deducted at source, any tax collectedat source, any advance tax paid, any relief allowable under sections 89/90/90A/91, any taxpaid on self-assessment and anyamount paid otherwise by way of tax or interestand fee under section 234F

(D). an intimation shall be prepared or generated and sentto the assesse specifying the sum  determined to be payable by, or the amount of refund due to,the assesse under clause © and 

€. The amount of refund due to the assesse in pursuance ofthe determination under clause © shall be granted to the assesse.

Provided that an intimation shall also be sent to theassesse in case where the loss declared in the return by the assesse is adjusted but no tax orinterest and fee under section 234Fis  payable by, or no refund is due to, him

Provided further that no intimation under this sub-sectionshall be sent after the expiry of  one year from the end of the financial year in which thereturn is made.

(i). of an item, which is inconsistent with another entry ofthe same or some other item in such return.

(ii). In respect of which the information required to befurnished under this act to substantiate such entry has not been so furnished or

(iii). In respect of a deduction, where such deductionexceeds specified statutory limit which may have been expressed as monetary amount orpercentage or ratio or fraction

(b). the acknowledgement of the return shall be deemed to beintimation in a case where no sum is payable by, or refundable to, the assesse underclause(c), and where no adjustment has been made under clause (a).

The adjustments under Section 143(1) will be made only inthe course of computerised processing without any human interface. In other words, thesoftware designed detects ithmetical inaccuracies and internal inconsistencies andmake appropriate adjustments in the computation of total income. For this purpose, the Department has established acomputerised system for processing of returns.

Adjustments to be made in the returned total income undersection 143(1)

1. Arithmetical error shall be adjusted. This is possible in case of manual returns.

2. (a). An incorrect claim apparent from any information inthe return shall mean a claim on the basis of an entry , in the return of an item , which is inconsistent with another entry of the same or some other item in such return.

(b). An incorrect claim apparent from any information in thereturn shall mean a claim on the basis of an entry , in the return in respect ofentry , has not been furnished under theis Act.

©. An incorrect claim apparent from any information in thereturn shall mean a claim  on the basis of an entry , in the return in respect ofa deducation where such deducation exceeds specified ststutory limit which may havebeen expressed as monetary amount or percentage as monetary amount or percentage or ratio or fraction.

This is the EXHAUSTIVE LIST of adjustments which can be madein the returned income under section 143(1). No other adjustment , is inthe returned income