1993 (3) TMI 150 - AT - Income Tax

Summary

Issues Involved:
1. Prima facie additions made by the Assessing Officer u/s 143(1)(a).
2. Rejection of the assessee's application for rectification u/s 154.
3. Interpretation and application of CBDT circulars in relation to section 43B.
4. Requirement of proof of payment for deductions under section 43B.

Summary:

Issue 1: Prima facie additions made by the Assessing Officer u/s 143(1)(a)

The Assessing Officer processed the assessee's return for the assessment year 1990-91 and made prima facie additions for Bonus payable, EPF payable, ESI payable, and Sales-tax payable due to the absence of proof of payments before the due date for submission of return u/s 139(1). The assessee contended that these amounts had been paid within the due dates specified by law.

Issue 2: Rejection of the assessee's application for rectification u/s 154

The assessee filed an application u/s 154 requesting rectification of the intimation u/s 143(1)(a), arguing that the amounts had been paid within the due dates. The Assessing Officer, following CBDT circular No. 581, rejected the application. The CIT (Appeals) upheld this action. The Tribunal noted that the absence of proof of payment in the return did not justify a prima facie disallowance and that the Assessing Officer should have sought clarification from the assessee.

Issue 3: Interpretation and application of CBDT circulars in relation to section 43B

The assessee's counsel argued that CBDT circulars No. 581 and No. 601 were against the assessee but did not lay down the law. The Tribunal referred to the Delhi High Court decision in S.R.F. Charitable Trust v. Union of India, which stated that the stage of furnishing proof is reached when demanded by the Assessing Officer u/s 143(2). The Tribunal emphasized that the Assessing Officer should have called for information from the assessee rather than making unilateral disallowances.

Issue 4: Requirement of proof of payment for deductions under section 43B

The Tribunal held that the absence of proof of payment in the return did not automatically justify a prima facie disallowance. The Tribunal noted that the proper course for the Assessing Officer was to seek clarification from the assessee. The Tribunal concluded that the prima facie disallowance was not justified as there was no evidence on record to show that the payments were made after the due date of furnishing the return u/s 139(1).

Conclusion:

The Tribunal allowed the appeal, holding that the Assessing Officer should have allowed the claim of the assessee u/s 154 and deleted the disallowance of Rs. 33,82,442. The Tribunal emphasized a pragmatic approach and not getting enmeshed in technicalities, thereby granting relief to the assessee.