Summary adjustment cannot disallow leave encashment exemption where substantive examination is needed under return processing rules.

A summary adjustment under section 143(1)(a)(ii) is limited to apparent incorrect claims, arithmetical mistakes, or clear mismatches disclosed in the return or accompanying material. Where the issue concerns the substantive applicability of leave encashment exemption under section 10(10AA), it cannot be resolved through processing under section 143(1). The note states that restricting the exemption to Rs. 3 lakhs through such an adjustment exceeded the permissible scope of summary processing and was therefore unsustainable.

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Issues: Whether the adjustment made while processing the return under section 143(1)(a)(ii) to restrict the assessee's leave encashment exemption under section 10(10AA) was legally sustainable.

Analysis: The adjustment under section 143(1)(a)(ii) is confined to cases of an apparent incorrect claim from the return or accompanying material. The dispute here did not involve a patent arithmetical error or a clear mismatch disclosed in the return, but turned on the applicability of the exemption claim itself. Such a controversy could not be resolved by summary adjustment in processing under section 143(1). The lower authorities therefore exceeded the permissible scope of processing while limiting the exemption to Rs. 3 lakhs.

Conclusion: The restriction of the leave encashment exemption under section 143(1)(a)(ii) was unsustainable and the assessee succeeded on this issue.

Ratio Decidendi: A summary adjustment under section 143(1)(a)(ii) cannot be used to disallow an exemption claim where the issue requires substantive examination rather than correction of an apparent error from the return.

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