1990 (7) TMI 158 - AT - Income Tax

Summary

Issues Involved:
1. Validity of assessment orders under section 143(3) of the Income-tax Act, 1961.
2. Disallowance of motor car expenses.
3. Non-granting of interest under section 214 of the Income-tax Act, 1961.

Detailed Analysis:

1. Validity of Assessment Orders under Section 143(3):
The primary contention was that the assessment orders for the years 1981-82 and 1982-83 were invalid because they did not contain the calculation or working of the tax liability as required under section 143(3). The assessee argued that the orders only computed the total income but did not determine the sums payable or taxes payable by the assessee. Reliance was placed on several judicial precedents, including CIT v. Smt. Krishwanti Punjabi and Mahendra J. Thacker & Co. v. CIT, which held that an assessment must determine both the total income and the tax payable.

The Tribunal examined the records and found that the ITO had indeed determined the tax payable in Form No. ITNS 150, which was on record. The gross demand of tax was shown in the notice of demand sent to the assessee. The Tribunal concluded that the requirements of section 143(3)(a) had been met and that the omission of the tax calculation in the assessment orders served on the assessee was curable under section 292B. Therefore, the assessment orders were held to be valid.

2. Disallowance of Motor Car Expenses:
The ITO had disallowed a portion of the motor car expenses claimed by the assessee, attributing it to personal use. The CIT(A) had reduced the disallowance to 1/4th of the expenses claimed. The assessee contended that the car was used exclusively for professional purposes and that the disallowance was without basis.

The Tribunal noted that the assessee did not maintain a log-book or any other record to substantiate the exclusive professional use of the car. Given that the assessee was an individual without any family members, the Tribunal found it reasonable to reduce the disallowance to 1/10th of the total motor car expenses.

3. Non-Granting of Interest under Section 214:
The assessee argued that the CIT(A) erred in holding that the issue of non-granting of interest under section 214 was not appealable. The CIT(A) had directed the ITO to look into the matter but did not make a definitive ruling.

The Tribunal referred to the decisions of the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. CIT and the Calcutta High Court in Reliance Jute Industries Ltd. v. CIT, which held that the issue of interest under section 214 was appealable. Consequently, the Tribunal directed the ITO to address the assessee's grievance regarding the non-granting of interest under section 214 for the assessment year 1981-82 and to dispose of the matter as per law after providing the assessee with a reasonable opportunity to be heard.

Conclusion:
The appeals were partly allowed. The Tribunal upheld the validity of the assessment orders, reduced the disallowance of motor car expenses to 1/10th, and directed the ITO to address the issue of non-granting of interest under section 214.