1994 (1) TMI 123 - AT - Income Tax

Additional Tax, Assessing Officer, Assessment Year, Mistake Apparent From Record, Retrospective Amendment, Written Down Value

Issues Involved:
1. Rectification of mistake under Section 154 of the Income-tax Act, 1961.
2. Levy of additional tax under Section 143(1A) of the Income-tax Act, 1961.
3. Validity of intimation under Section 143(1)(a) of the Income-tax Act, 1961.
4. Jurisdiction of the Assessing Officer to rectify intimation under Section 154.

Issue-wise Detailed Analysis:

1. Rectification of Mistake under Section 154 of the Income-tax Act, 1961:
The appellant, The Kerala State Coir Corporation Ltd., filed its return of income declaring a total loss of Rs. 2,79,43,720. The return erroneously included depreciation of Rs. 54,72,243 instead of the correct figure of Rs. 10,79,912. This mistake went unnoticed, and the Assessing Officer accepted the return as filed. Subsequently, the Assessing Officer issued a notice under Section 154 to rectify the mistake. The rectification order dated 10-3-1993 corrected the depreciation figure and levied additional tax on the difference, resulting in a demand of Rs. 4,75,767. The appellant contended that the rectification order could only be considered as an "intimation" and that the provisions of Section 143(1A) did not envisage the levy of additional tax in cases where the loss was reduced but not converted into income.

2. Levy of Additional Tax under Section 143(1A) of the Income-tax Act, 1961:
The appellant argued that at the time of the original intimation and the rectification, the provisions of Section 143(1A) did not allow for the levy of additional tax on the reduction of loss unless it resulted in a positive income. The retrospective amendment to Section 143(1A) by the Finance Act, 1993, which allowed for such a levy, was not in existence at the time of the rectification. The CIT (Appeals) upheld the rectification, stating that the retrospective amendment applied from 1st April 1989 and thus the provisions as amended were deemed to be in force at the time of the rectification.

3. Validity of Intimation under Section 143(1)(a) of the Income-tax Act, 1961:
The Tribunal noted that the Act did not provide for sending an intimation where the return was accepted without modification and no tax or refund was due. The intimation dated 24-10-1991 sent by the Assessing Officer was not valid as no adjustments were made. Since the intimation was not legally sanctioned, it was considered non-existent in the eye of the law. Therefore, any rectification of this non-existent intimation under Section 154 was beyond the jurisdiction of the Assessing Officer.

4. Jurisdiction of the Assessing Officer to Rectify Intimation under Section 154:
The Tribunal held that once a notice under Section 143(2) was issued, the regular assessment proceedings commenced, superseding the preliminary proceedings under Section 143(1)(a). The Assessing Officer had issued a notice under Section 143(2) on 28-10-1991, and the regular assessment was completed on 6-3-1993. Therefore, the rectification order dated 10-3-1993, which sought to rectify the non-existent intimation, was without legal basis. The Tribunal concluded that the Assessing Officer acted in excess of his jurisdiction, and the rectification order was invalid.

Conclusion:
The Tribunal allowed the appeal, setting aside the order of the CIT (Appeals) and cancelling the levy of additional tax. The Tribunal emphasized that the rectification of a non-existent intimation was beyond the jurisdiction of the Assessing Officer, and the retrospective amendment to Section 143(1A) could not be applied to justify the rectification order.

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