Prima facie adjustment under section 143(1) cannot replace indexed capital gains computation where factual examination is required.

An adjustment under section 143(1) must be confined to a clear prima facie error and cannot be used to revise a disputed capital gains computation that requires factual examination. Where the assessee had claimed indexed cost and the summary processing substituted a non-indexed figure, the matter went beyond the limited scope of prima facie adjustment. The proper course for such a dispute was scrutiny assessment, so the CPC's enhancement of assessed income could not be sustained under section 143(1).

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Issues: Whether the adjustment made while processing the return under section 143(1) of the Income-tax Act, 1961 by denying indexation benefit and enhancing the assessed income could be made as a prima facie adjustment.

Analysis: The assessee had disclosed capital gains in the return and had computed the taxable capital gain after claiming indexed cost. The adjustment made by the CPC proceeded on a non-indexed figure and resulted in an excess assessment. The issue required factual clarification and detailed examination and therefore did not fall within the limited scope of a prima facie adjustment under section 143(1). If the Department had any dispute on the capital gains computation, the proper course was scrutiny assessment and not summary adjustment.

Conclusion: The adjustment was invalid and could not be sustained under section 143(1); the issue is decided in favour of the assessee.

Ratio Decidendi: An adjustment under section 143(1) must remain within the confines of a clear prima facie error and cannot be used to make a disputed factual or computational revision requiring examination of the merits.

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