2005 (10) TMI 223 - AT - Income Tax

Summary

Issues Involved:
1. Validity of order under section 154
2. Power of Assessing Officer to levy additional tax
3. Legality of intimation and rectification under section 154

Issue 1: Validity of order under section 154
The assessee filed its return for the assessment year 1997-98, showing a loss of Rs. 7,44,36,381. The Assessing Officer proposed to rectify the intimation under section 154 due to a mistake in the computation of the net loss. The Assessing Officer subsequently revised the loss amount twice, leading to the levying of additional tax. The assessee contended before the CIT (Appeals) that the order under section 154 was invalid as the intimation was non est since no adjustments were made to the income or loss declared. The Tribunal held that the Assessing Officer had no statutory power to issue the intimation if no adjustments were made. Therefore, the intimation was deemed non est, and the order under section 154 was declared illegal. Consequently, the additional tax levied was deleted.

Issue 2: Power of Assessing Officer to levy additional tax
The assessee argued that the Assessing Officer could not levy additional tax on 15-1-2001 under section 154, as section 143(1A) was deleted from 1-6-1999. The Tribunal noted that the Assessing Officer's power to issue intimation under section 143(1)(a) was subject to adjustments made to the income or loss declared by the assessee. As no adjustments were made in this case, the intimation was considered non est. Therefore, the Tribunal concluded that the Assessing Officer lacked the authority to levy additional tax in the absence of valid adjustments, and the additional tax levied was deleted.

Issue 3: Legality of intimation and rectification under section 154
The Tribunal analyzed the provisions of section 143(1)(a) of the Income-tax Act applicable up to the assessment year 1997-98 and subsequent amendments. It noted that the Assessing Officer was obligated to send an intimation only if adjustments were made to the income or loss declared by the assessee. In this case, as per the intimation filed by the assessee's CA, no adjustments were made, rendering the intimation non est. Consequently, the Tribunal held that the Assessing Officer could not rectify or amend a non est intimation under section 154. Therefore, the Tribunal canceled the order under section 154 and deleted the additional tax levied, ultimately allowing the assessee's appeal.