Exemption claims in processing adjustments require full factual review and binding precedent, not rejection for missing return documents.

An appellate authority dealing with an intimation under section 143(1) must examine the relevant material and decide an exemption claim on the merits, rather than rejecting it merely because supporting documents were not attached to the return. The dispute concerned taxability of enhanced compensation and interest on compulsory acquisition, with exemption claimed under section 10(37). Binding Supreme Court precedent could not be ignored by relying only on the charging provisions or by omitting any discussion of those decisions. The matter was therefore remanded for fresh adjudication after the relevant facts and documents were brought on record and the claim was reconsidered in accordance with law.

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Issues: Whether the addition made while processing the return under section 143(1) of the Income-tax Act on account of enhanced compensation and interest received on compulsory acquisition was sustainable, and whether the matter required fresh adjudication by the appellate authority after considering the relevant facts, documents and binding Supreme Court decisions.

Analysis: The dispute concerned the taxability of enhanced compensation and interest received under section 28 of the Land Acquisition Act, with the assessee claiming exemption under section 10(37) of the Income-tax Act. The appellate authority had upheld the adjustment mainly on the ground that the supporting material was not part of the return, without adequately examining the factual basis of the claim or the judicial precedents cited. It was held that in an appeal against an intimation under section 143(1), the appellate authority must call for and examine the necessary material and decide the claim according to law. It was also observed that binding law declared by the Supreme Court cannot be ignored merely by referring to the charging provisions or by remaining silent on the applicability of those decisions.

Conclusion: The matter was required to be remanded to the appellate authority for fresh decision after bringing relevant facts on record and considering the claim in accordance with law.

Ratio Decidendi: In an appeal against an intimation under section 143(1), the appellate authority must adjudicate an exemption claim on the basis of relevant material and binding precedent, and cannot reject it solely because supporting documents were not originally attached with the return.

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