Itr/1/2004 Of Commissioner Of Income Tax Rohtak v. M/S Cebon India Ltd Gurgaon

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITR No.1 of 2004Date of decision: 13.1.2016 Commissioner of Income Tax, Rohtak Vs, ......-Applicant-re M/s Cebon India Limited, Gurgaon ....mesponden CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTALHON’ BLE MRS. JUSTICE RAJ RAHUL GARG Present: Mr. Tejinder K.Joshi, Advocate for the applicant-revenue. Mr. S.K.Mukhi, Advocate for the assessee. | Ajay Kumar Mittal, J. inAt the instance of the revenue, the following question of lawhas been referred for the opinion of this Court by the Income Tax AppellateTribunal, Delhi Bench, Delhi (in short, “the Tribunal’) for the assessmentyear 1995-96 arising out of its order dated 22.5.1998, Annexure 'C' passedin [TA No.5370(Del) of 1987:- “Whether on the facts and in the circumstances of the case,the Hon'ble ITAT was right in law in disallowing theadjustments of interest payable to IFCI and sales tax penaltymade by the Assessing Officer under section 43B of theIncome Tax Act, 1961 while processing the case undersection 143(1)(a) as not being prima facie adjustments?’ |A few facts relevant for the decision of the controversyinvolved as available on the record of the case may be noticed. Theassessee company filed its return of income for the assessment year 1n ITR No.1 of 2004 question on 30.11.1995 declaring nil income. The total income of theassessee before setting off the unabsorbed depreciation wasLT1,16,48,477/-.The unabsorbed deprecation wasv1,43,96,287/-. The total income was setoff against the unabsorbed depreciation and accordingly the total incomewas reduced to nil. The return was processed by the Assessing Officer underSection 143(1)(a) of the Act. The Assessing Officer was of the view that theinterest amount and the sales tax recoverable was not allowable asdeduction and accordingly, he made prima facie adjustment as under:- Taxable income before set offof unabsorbed depreciation Add:On account of interest to [FCI in theabsence of proof under section 43B On account of sales tax and penaltyrecoverable under section 43B Less:Unabsorbed depreciation claimedin the return adjusted The above adjustments were made in the intimation dated 4.11.1996. Theassessee filed appeal against this intimation before the Commissioner ofIncome Tax (Appeals) [CIT(A)|which was dismissed vide order dated17.9.1997. On further appeal before the Tribunal by the assessee, 1t was heldthat such adjustments were beyond the scope of Section 143(1)(a) of he Act.Accordingly, the adjustments made by the Assessing Officer were deletedand the appeal of the assessee was allowed vide order dated 22.5.1998.The application filed by the revenue for reference under section 256(1) ofthe Act for the opinion of this Court on the aforesaid question of law arisingout of order dated 22.5.1998, was rejected by the Tribunal vide order dated ITR No.1 of 2004 19.3.1999. Subsequently, this court under section 256(2) of the Act haddirected the Tribunal to refer the question of law to it for its opinion. Hencethe instant reference at the instance of the revenue. 3]We have heard learned counsel for the parties.4 It has been categorically recorded by the Tribunal thatadjustments could be made only on the basis of the details available onrecord. For making such disallowances, it was open for the AssessingOfficer to follow the procedure laid down in the Act by issuance of noticeunder Section 143(2) of the Act. There was nothing wrong in issuing thenotice under section 143(2) of the Act and the intimation under section 143(1)(a) of the Act on the same date. Thus, notice under section 143(2) of theAct could not be termed as invalid. As the adjustments made by theAssessing Officer could not be said to be prima facie adjustments, therefore,the additions made in the intimation issued under Section 143(1)(a) of theAct were not sustainable. The relevant finding recorded by the Tribunalreads thus:- “10. The provision of section 143(1)(a) was introduced with aview to enable the administration to speed up the work ofassessment in making summary adjustments assessing Officer 1swithin his power, inter alia to disallow any deduction, allowingor relief claimed in the return but which on the basis of theinformation available in such return could be said to be primafacie inadmissible. A debatable issue does not fall within theken of prima facie adjustments. Such adjustments could be madeonly on the basis of the details available on record. It was notthe intention of the Act to permit roving enquiries before makingsuch adjustments. For making such disallowances, it was openfor the Assessing Officer to follow the procedure laid down in the Act by the issuance of notice under section 143(2). 11.In the present case, we find that the notice under section143(2) was issued in pursuant to that notice assessment wascomputed. Learned counsel for the assessee raised objectionbefore us that the notice under section 143(2) was not valid asbecause intimation under section 143(1)(a) and notice undersection 143(2) were issued on the same date. The date ofintimation was given to us. But the date of notice issued undersection 143(2) was not provided at the time of hearing.Assuming for a moment that both the notices are issued on thesame date, in our opinion, no error crept. There 1s absolutelynothing on record to suggest that notice under section 143(2)was issued prior to the issuance of intimation under section 143(1)(a). As such, notice under section 143(2) cannot be termed asinvalid. Since the aspect connected with the merits of the case 1snot relevant in the present appeal. We do not express anyopinion on the same. 12. Taking into consideration the entire conspectus of the case,we are of the opinion that the adjustment made by the AssessingOfficer cannot be termed as prima facie adjustment. Suchadjustments are beyond the scope of section 143(1)(a). Wetherefore quash the additions so made. However, the validity ofthe claim may be examined in the appeal pending against 144order.’ 5. The view taken by the Tribunal is in accordance with law which has not been shown to be illegal or perverse in any manner. Thus, thequestion of law referred 1s answered against the revenue and in favour of the aSSe@SSECEThe reference stands disposed of accordingly, (Ajay Kumar Mittal)Judge January 13, 2016