Commissioner Of Income Tax, Chandigarh v. M/S Punjab Agro Industries Corporation Ltd

ITR No. 192 of 1999 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No. 192 of 1999Date of Decision: 10.9.2010 Commissioner of Income Tax, Chandigarh ....Petitioner. Versus M/s Punjab Agro Industries Corporation Ltd. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Urvashi Dhugga, Advocate for the petitioner. ADARSH KUMAR GOEL, J. 1.The Income Tax Appellate Tribunal, Chandigarh Bench,Chandigarh (hereinafter referred to as “the Tribunal”) has referred foropinion of this Court following question of law under Section 256(1) ofthe Income Tax Act, 1961 (in short “the Act”) arising out of its orderdated 24.9.1998 in ITA No. 1883/Chandi/91 in respect of assessmentyear 1990-91:- “Whether on the facts and in the circumstances ofthe case, the Tribunal was right in law in deleting thedisallowance /adjustment of Rs.1,86,444/- made bythe AO in respect of expenditure relating to earlieryears by holding that such disallowance was outsidethe scope of Section 143(1)(a)?” 2.While processing the return of the assessee under Section143(1)(a), the Assessing Officer made various adjustments whichincluded expenditure incurred for the earlier years. The amount ofadjustment was later reduced on an application of the assessee underSection 154 of the Act which was upheld by the CIT (A). On furtherappeal, the Tribunal upheld the plea of the assessee that adjustmentswere beyond the scope of Section 143(1)(a) which was limited toarithmetical calculation or incorrect claim which may be apparent fromthe income mentioned in the return. The Tribunal held as under:- “After considering the rival submissions we held thatthere is substantial merit in the arguments advancedby the ld. counsel on behalf of the appellant. TheirLordships of the Hon'ble Bombay High Court havediscussed each and every aspect of the matter atlength viz-a-viz provisions of section 143(1)(a) and indoing so have followed the judgment of the Hon'bleDelhi High Court reported in S.R.F. Charitable TrustVs. Union of India and others, 193 ITR 95 and thejudgment of the Hon'ble Madhya Pradesh High Courtreported in Kamal Textiles and others Vs. ITO andothers, 189 ITR 339. It has been held that varioustypes of adjustments, as outlined in the order beforetheir Lordships, are outside the scope of section 143(1)(a) and these items also include the amountdebited to profit and loss account pertaining to earlieryears. According to their Lordships an adjustment can not be made by an unilateral act where the issueis of such a nature that it requires some verificationsand a view can not be taken without giving a hearingto the assessee. It has also been held that the ITOcan not go beyond the return and the documentsannexed to it. In our opinion the decision of theHon'ble Bombay High Court squarely applies andrespectfully following the same, we delete theaddition of Rs.1,86,444/-.” 3. We have heard learned counsel for the revenue. 4.Learned counsel for the revenue submits that the claim ofthe assessee was patently incorrect and, therefore, adjustment underSection 143(1)(a) was justified. Reliance has been placed on the orderof the Assessing Officer to the following effect:- “The assessee company has filed its writtensubmission regarding this prima-facie adjustment.The assessee has admitted that the net result ofearlier year's adjustments comes to Rs.1,86,444/-.The submissions of the assessee co. have beencarefully considered and found that in fact the prima-facie adjustment works out to Rs.1,86,444/- insteadof Rs.4,49,169/-.” 5.In view of the fact that the assessee itself admitted thatclaim of the assessee for deduction was incorrect which was apparentfrom the information in the return, it could not be held that theadjustment was beyond the scope of Section 143(1)(a). “The assessee company has filed its writtensubmission regarding this prima-facie adjustment.The assessee has admitted that the net result ofearlier year's adjustments comes to Rs.1,86,444/-.The submissions of the assessee co. have beencarefully considered and found that in fact the prima-facie adjustment works out to Rs.1,86,444/- insteadof Rs.4,49,169/-.” 5.In view of the fact that the assessee itself admitted thatclaim of the assessee for deduction was incorrect which was apparentfrom the information in the return, it could not be held that theadjustment was beyond the scope of Section 143(1)(a). 6.In this view of the matter, observation in the order of theTribunal quoted above that the adjustment was an unilateral act isfactually incorrect. The judgments relied upon in the order of theTribunal to the effect that unilateral adjustments could not be madeunder Section 143(1)(a) are distinguishable on facts. 7.In view of the above, the question referred is answered in favour of the revenue. (ADARSH KUMAR GOEL) JUDGE September 10, 2010gbs (AJAY KUMAR MITTAL)JUDGE