1996 (4) TMI 149 - AT - Income Tax

Summary

Issues:
1. Validity of the intimation under section 143(1)(a) of the Income-tax Act.
2. Non-allowance of claim under section 80HHC in full and the charging of additional tax.

Issue 1: Validity of the intimation under section 143(1)(a) of the Income-tax Act:

The appeal pertained to the assessment year 1992-93, where the Assessing Officer passed an order under section 143(1)(a) of the Act after issuing a notice under section 143(2) but before the filing of a revised return. The main contention was whether the intimation under section 143(1)(a) was valid after the issuance of a notice under section 143(2). The appellant argued that the intimation was invalid based on a Calcutta High Court decision. The Tribunal agreed with the appellant, citing the High Court's judgment that once a notice under section 143(2) is issued, there is no scope for an intimation under section 143(1)(a). The Tribunal held the intimation invalid as the Assessing Officer had already issued a notice under section 143(2) and heard the assessee. Therefore, ground No. 1 was decided in favor of the assessee.

Issue 2: Non-allowance of claim under section 80HHC in full and the charging of additional tax:

The second substantive ground of the appeal was against the non-allowance of the claim under section 80HHC in full and the charging of additional tax. The appellant argued that the Assessing Officer had exceeded his jurisdiction by reducing the claim under section 80HHC, which was a debatable issue and fell beyond the scope of section 143(1)(a). The appellant contended that the income from non-trade investments should have been considered as business income for the purpose of claiming deduction under section 80HHC. The Tribunal agreed with the appellant, emphasizing that only apparent, self-evident, and glaring mistakes could be adjusted under section 143(1)(a). The Tribunal held that the Assessing Officer was not justified in making the adjustment and restricting the claim under section 80HHC. The Tribunal also found the charging of additional tax unwarranted. Therefore, the appeal was allowed in favor of the assessee on this ground as well.

In conclusion, the Tribunal ruled in favor of the assessee on both issues. The intimation under section 143(1)(a) was deemed invalid due to the issuance of a notice under section 143(2) beforehand. Additionally, the Assessing Officer was found to have exceeded his jurisdiction by making adjustments that were not apparent, self-evident, or glaring, especially regarding the claim under section 80HHC.