Sunil Synchem Ltd v. Commissioner Of Income Tax

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 172 / 2004 Sunil Synchem Ltd. ----Appellant Versus Commissioner Of Income Tax ----Respondent _____________________________________________________ For Appellant(s) : Mr. Sanjay JhanwarFor Respondent(s) : Mrs. Parinitoo Jain _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VINIT KUMAR MATHURJudgment 24/01/2017 1. By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby Tribunal hasdismissed the appeal preferred by the assessee and confirmed theorder of CIT(A) as well as AO. 2.This court while admitting the appeal on 10.12.2004 hadframed following substantial question of law:- “Whether in the facts and circumstances of the case,the Tribunal is justified in charging tax of Rs.91,310/-when the assessed income is nil, though loss hasbeen reduced on account of adjustment u/s 143(1A)of the Act of 1961?” 3.Counsel for the appellant has contended that both theauthorities have committed serious error in not accepting thecontention raised by the appellant with regard to CBDTCircular dated 4.4.1989 wherein para no.8 & 9 reads asunder:- “8. The adjustment required to be made under clause (ii) and clause (iii) of the said proviso hinge on themeaning of the expressions “prima facie admissible”and “prime facie inadmissible”. The word “Prima facie”means “on the face of it”. Hence an adjustmentreferred to in clause (ii) of the said proviso relates toany error in not claiming any loss carried forward,deduction, allowance or relief which, on the face isadmissible and an adjustment referred to in clause(iii) of the proviso relates to an error in claiming anyloss carried forward, deduction, allowance or reliefwhich on the face of it, is not admissible. In otherwords; the error, in either case, should be patent,obvious or apparent. In fact, for determining whetherthere is a prima facie error for purposes of making anadjustment under the aforesaid proviso, it will becorrect and proper to apply the same test as has beenlaid down by the Supreme Court for purpose ofrectification of mistakes under section 154 of the Act.According to the Supreme Court, a mistake can berectified under section 154 of the Act only it is “anobvious and patent mistake and not and notsomething which can be established by a long drawnprocess of reasoning on points on which there may,conceivably be two opinions” vide T.S. Balaram ITOvs. M/s Volkart Brothers 80 ITR 50 (SC). 9. In the context of the legal position as outlinedabove, it follows that it will not be permissible for theAssessing Officer to disallow a claim for deduction,allowance or relief in cases where the claim is madeon the basis of the decision of any High Court,Appellate Tribunal or other appellate authority, eventhough a contrary view in the matter have beenexpressed by another High Court or another Bench ofthe Tribunal or any other appellate authority. The factthat the claim is based on a decision which has notbeen accepted by the Board will also not make anydifference to this position.” 4.It is contended that before CIT(A), presentassessee has relied upon the decision of Andhra Pradeshreported in (1988) 173 ITR 708 (A.P.) in Srikakollu Subba Rao& Co. and ors. vs. Union of India & ors. and same was notaccepted by both the authorities. 5.He further contended that even otherwise in viewof the decision of Supreme Court in Kvaverner John BrownEngg. (India) (P) Ltd. vs. Assistant Commissioner of IncomeTax reported in (2008) 170 Taxman 304 wherein it has beenheld as under:- 4.It is contended that before CIT(A), presentassessee has relied upon the decision of Andhra Pradeshreported in (1988) 173 ITR 708 (A.P.) in Srikakollu Subba Rao& Co. and ors. vs. Union of India & ors. and same was notaccepted by both the authorities. 5.He further contended that even otherwise in viewof the decision of Supreme Court in Kvaverner John BrownEngg. (India) (P) Ltd. vs. Assistant Commissioner of IncomeTax reported in (2008) 170 Taxman 304 wherein it has beenheld as under:- “We find merit in this civil appeal. As stated above,we are concerned with the assessment years 1996-97and 1997-98. One of the main conditions stipulatedby way of the first proviso to Section 143(1)(a), as itstood during the relevant time, referred to prima facieadjustments. The first proviso permitted theDepartment to make adjustments in the income orloss declared in the return in cases of arithmeticalerrors or in cases where any loss carried forward ordeduction or disallowance which on the basis ofinformation available in such return was prima facieadmissible but which was not claimed in the return orin cases where any loss carried forward, or deductionor allowance claimed in the return which on the basisof information available in such return was prima facieinadmissible. In the present case, therefore, whenthere were conflicting judgments on interpretation ofSection 80-O, in our view, prima facie adjustmentscontemplated under Section 143(1)(a) was notapplicable and, therefore, consequently appellant wasnot liable to pay additional tax under Section 143(1A)of the 1961 Act.” 6.In that view of the matter, the issue is required to beanswered in favour of the assessee and against thedepartment. 7.Counsel for the respondent has contended that this wasnot case of scrutiny but it was case of additional tax where onadmitted documents, opportunity was afforded therefore, theauthorities have committed no error specially when theincome was nil even after considering the same on estimate. 8.In that view of the matter, counsel for the respondentcontended that tribunal has rightly decided the issue in viewof amended provision which came into force on 4.4.1989 andthe same benefit could not have been granted to the assesseefor which he relied upon the Supreme Court Judgment in CITvs J.K. Synthetics Ltd. (2001) 251 ITR 200 (SC)]. 9.In that view of the matter, he contended that view takenby the tribunal is required to be upheld confirming the orderof the authorities and the appeal deserves to be dismissed. 10.We have heard counsel for the parties. 11.Taking into consideration the fact that the departmenthas relied upon the judgment of Supreme Court in para no.8 & 9, we are of the opinion that view taken by both theauthorities is contrary to law and the same is liable to bereversed and the issue is required to be decided in favour ofthe assessee. 12.The appeal is accordingly allowed. (VINIT KUMAR MATHUR)J. (K.S. JHAVERI)J. Brijesh 16.