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[2007] 295 ITR 270 (MAD.) HIGH COURT OF MADRAS Commissioner of Income-tax v. Smt. A.E. Sarojini P.D. DINAKARAN AND MRS. CHITRA VENKATARAMAN, JJ. T. C. (APPEAL) NO. 18 OF 2004 MARCH 5, 2007 Section 143 (1)(a) of the Income-tax Act, 1961 - Assessment - Prima facie adjustment A debatable issue can never be a subject-matter for consideration while passing an order under section 143(1)(a). Therefore, while making a prima facie adjustment in computing the claim on capital gains, the income-tax authority was not justified in rejecting the claim of exemption under section 54F. Pushya Sitaraman for the Appellant. R. Kumar and T.N. Seetharaman for the Respondent. JUDGMENT Mrs. Chitra Venkataraman, J.-The following are the questions of law raised in this case (i)Whether, on the facts and in the circumstances of the case, the Tribunal was right in dismissing the appeal without going to the merits of the case? (ii)Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is entitled for the capital gains exemption under section 54F? The appeal relates to the assessment year 1992-93 The assessee herein is an individual. The assessment was originally J completed under section 143(1)(a). While making a prima facie adjustment in computing the claim on capital gains, the income-tax authority rejected the claim on exemption under section 54F of the Income-tax Act on the ground that the assessee had a residential house at the time of sale of the vacant site and that the sale proceeds were utilised for the extension of the existing building. The assessee preferred an application under section 154 of the Income-tax Act, 1961, contending that the benefit of section 54F should have been considered and the question which is an arguable issue, ought not to have been a matter for consideration under section 143(1)(a). The assessing authority, however, rejected the petition under section 154. An appeal was preferred against this order before the Commissioner of Income-tax (Appeals). The assessee contended that the disallowance of the claim under section 54F could not be made under the prima facie adjustment under section 143(1)(a),…

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