2007 (11) TMI 69 - HC - Income Tax

Assessing officer can impose additional tax when the loss is reduced after adjustment but if he has already issued notice u/s 143(2) then imposition of additional tax issuing an intimation u/s 143(1)(a) is not possible matter remanded to Comm(A) for fresh consideration.

Summary

Issues:
1. Whether the Assessing Officer can impose additional tax when the loss is reduced after adjustment.
2. Jurisdiction of the Assessing Officer in sending the intimation under section 143(1)(a) of the Income-tax Act when a notice under section 143(2) of the Act was already issued.

Issue 1:
The appeal by the Revenue questions the imposition of additional tax by the Assessing Officer after reducing the loss declared by the assessee through adjustments. The assessee initially filed a return showing a loss, which was later adjusted by the Assessing Officer under section 143(1)(a) of the Income-tax Act. The Commissioner of Income-tax (Appeals) subsequently held that the assessee was not liable to pay additional tax, a decision upheld by the Tribunal. However, the High Court referred to a Supreme Court judgment stating that additional tax could be imposed in such cases. Despite this, the High Court noted that the assessee had raised a jurisdictional issue regarding the issuance of the intimation under section 143(1)(a) in light of a prior notice under section 143(2) of the Act.

Issue 2:
The assessee contended that the intimation under section 143(1)(a) was not valid due to a notice issued under section 143(2) prior to the intimation. The Commissioner of Income-tax (Appeals) did not consider this contention as they had already ruled out the imposition of additional tax by the Assessing Officer. The High Court, recognizing the jurisdictional challenge raised by the assessee, decided to remand the matter back to the Commissioner of Income-tax (Appeals) for a fresh consideration regarding the Assessing Officer's jurisdiction in issuing the intimation under section 143(1)(a) after a notice under section 143(2) had been served.

In conclusion, the High Court allowed the appeal by the Revenue and remanded the matter to the Commissioner of Income-tax (Appeals) for a reevaluation of the jurisdictional aspect concerning the issuance of the intimation under section 143(1)(a) in light of the prior notice under section 143(2) of the Income-tax Act.