Itta/330/2003 Of Commissioner Of Income Tax v. M/S.nagarjuna Fertilizers And

HON’BLE SRI JUSTICE L. NARASIMHA REDDYANDHON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A No. 330 OF 2003 12-11-2014 BETWEEN Commissioner of Income Tax, Central, Hyderabad …Appellant And M/s. Nagarjuna Fertilizers & Chemicals Ltd., Hyderabad …..Respondent HON’BLE SRI JUSTICE L. NARASIMHA REDDYANDHON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A No. 330 OF 2003 JUDGMENT:(per the Hon'ble Sri Justice L. Narasimha Reddy) The respondent is an assessee under the Income Tax Act,1961 (for short, ‘the Act’). In the returns filed by it for theassessment year 1995-96, it claimed deduction of a sumrepresenting the refund of customs duty. The assessing officermade a prima facie adjustment under Section 143 (1) (a) of the Actby treating it as revenue receipt and thereby disallowed thededuction. The matter was carried in appeal and theCommissioner of Income Tax (Appeals-IV), Hyderabad confirmed the steps taken by the assessing officer. Therefore, therespondent filed ITA No.148/Hyd/1998 before the HyderabadBench ‘A’ of the Income Tax Appellate Tribunal, Hyderabad (forshort, ‘the Tribunal’). The appeal was allowed by the Tribunalthrough order dated 30-08-2002 on the ground that thedetermination as to the character of the amount could not havebeen done at the stage of prima facie adjustment. The said orderis challenged in this appeal. Heard Sri S.R. Ashok, learned Senior Standing Counsel forthe appellant and Sri S. Ravi, learned Senior Counsel for therespondent. It is fairly well known that Section 143 of the Actcontemplates two methods of assessment being made vis-à-vis a return filed by an assessee. If the assessing officerdoes not find any serious discrepancy or does not disbelieve anyfacts and figures mentioned therein, he can simply issue anintimation under Section 143 (1) (a) of the Act by making primafacie adjustments. Unless it is followed by the proceedings underany other provision of law, the intimation virtually constitutes anorder of assessment. Where however the assessing officerdoubts the correctness or accuracy of the facts and figuresmentioned by the assessee, he is conferred with the power underSection 143(2) of the Act to issue a notice requiring the assesseeto present his version on the aspects mentioned therein. Onreceipt of such explanation or remarks, the assessing officerpasses order under Section 143(3) of the Act. From the above it becomes clear that wherever there existsa debatable issue, recourse must be had to Section 143 (2) and(3) of the Act and it is only when the facts are undisputed that theprocedure under Section 143 (1) (a) of the Act can be resorted to. In the instant case, the respondent claimed deduction ofsubstantial amount which was in the form of refund of customsduty. A return, wherein such a deduction is claimed, could havebeen the subject matter of a prima facie adjustment under Section143 (1) (a) of the Act, if only the assessing officer accepted theversion or the contention of the assessee. Once he has decidednot to accept that contention, there was no occasion or basis forhim to invoke Section 143 (1) (a) of the Act. Therefore, the viewtaken by the Tribunal is correct. It is also brought to our notice that an order under Section143 (3) of the Act has been passed in relation to that very claimand that became the subject matter of I.T.T.A No. 148 of 2002before this Court. The appeal is accordingly dismissed. There shall be noorder as to costs. ___________________________ L. NARASIMHA REDDY, J 12-11-2014ksNote:LR copy to be marked. ____________________________ CHALLA KODANDA RAM, J B/O ks