1994 (11) TMI 183 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance under Section 43B of the Income Tax Act.
2. Levy of additional tax under Section 143(1A) of the Income Tax Act.
3. Prima facie adjustments under Section 143(1)(a) of the Income Tax Act.

Detailed Analysis:

1. Disallowance under Section 43B:
The primary issue in this appeal is the disallowance of Rs. 11,99,76,761 under Section 43B, which pertains to the outstanding amount payable to the Coal Mines Provident Fund (CMPF) Account. The assessee contended that there was no specific due date for the remittance of provident fund recovery under the Coal Mines Provident Fund and Bonus Scheme Acts, although the A.P. Coal Mines Provident Fund Scheme required remittance before the end of the month following the month to which the recoveries related. The assessee argued that the sum had been paid before the due date for filing the income tax return, thus satisfying the conditions of Section 43B. The Tribunal, however, held that the provisions of the CMPF Act and the Scheme clearly prescribed a due date for remittances, which is the last day of the month following the month to which the contributions relate. Since the remittance was not made before this due date, the disallowance under Section 43B was justified.

2. Levy of Additional Tax under Section 143(1A):
The assessee argued that additional tax under Section 143(1A) was not leviable because the disallowance under Section 43B only reduced the unabsorbed depreciation and did not affect the loss returned. The Tribunal rejected this contention, stating that the "loss declared in the return" refers to the net loss, which includes depreciation not fully adjusted against the profit. The Tribunal cited the Supreme Court decision in Garden Silk Weaving Factory v. CIT (189 ITR 512) to support this view. Furthermore, the retrospective amendment to Section 143(1A) by the Finance Act, 1993, clarified that additional income tax can be levied even when the loss declared by the assessee is reduced. Therefore, the levy of additional tax was upheld.

3. Prima Facie Adjustments under Section 143(1)(a):
The assessee contended that the disallowance under Section 43B was not a prima facie adjustment and should have been decided under regular assessment in terms of Section 143(3). The Tribunal referred to the explanatory notes and circulars issued by the Board, which clarified the scope of prima facie adjustments. It was noted that the list of prima facie adjustments is not exhaustive but illustrative. The Tribunal held that the claim for remittance of provident fund contributions was patently inadmissible in law, making it a valid prima facie adjustment under Section 143(1)(a). The Tribunal also noted that the explanatory note filed with the return indicated that the contributions were to be remitted within one month, further supporting the disallowance.

Conclusion:
The Tribunal upheld the disallowance under Section 43B, the levy of additional tax under Section 143(1A), and the prima facie adjustments under Section 143(1)(a), dismissing the appeal of the assessee. The judgment emphasized the clear due dates for remittances under the CMPF Act and Scheme, the applicability of additional tax even when the loss is reduced, and the validity of prima facie adjustments for patently inadmissible claims.