Section 143(1) adjustments cannot rest on tax audit report entries alone where no deduction was claimed in the return.

Section 143(1)(a) permits only adjustments for arithmetical errors or incorrect claims apparent from the return. A liability mentioned merely in the tax audit report, without being debited to the profit and loss account or claimed as a deduction in the return, cannot form the basis of a summary processing addition. On that reasoning, the first appellate authority's deletion was upheld and the Revenue's challenge failed.

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Issues: Whether an amount reflected only in the tax audit report as a contingent liability, but not debited to the profit and loss account or claimed as a deduction in the return, could be added while processing the return under section 143(1) of the Income-tax Act, 1961.

Analysis: The scope of adjustment under section 143(1)(a) is confined to arithmetical errors and incorrect claims apparent from the return. The amount in question was not claimed as an expense by the assessee in the return of income and was merely mentioned in the audit report. An entry in Form 3CD, without a corresponding claim in the return or profit and loss account, does not furnish a valid basis for making an adjustment in summary processing.

Conclusion: The addition was not sustainable and the deletion directed by the first appellate authority was correctly upheld, in favour of the assessee.

Final Conclusion: The revenue's challenge failed and the assessment adjustment based on the audit report alone was sustained as deleted.

Ratio Decidendi: An adjustment under section 143(1)(a) can be made only for an incorrect claim or arithmetical error apparent from the return, and not on the basis of a liability shown merely in the audit report when no deduction was claimed in the return.

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