2008 (2) TMI 566 - HC - Income Tax

Assessment - Assessee contended that while making the assessment under section 143(1) (a), it was not open to the Assessing Officer to make additions with respect to the deductions claimed by the assessee under sections 80HH and 8O-I in the return, as the question as to whether the assessee was entitled to claim the deduction or not was a debatable/controversial issue and, therefore, if at all the Assessing Officer wanted to make additions, recourse was required to be had to the procedure provided under section 143(3) and 143(2) The authorities below have negatived this contention mainly on the ground that the controversy had already been settled by this court (Rajasthan High Court) in the case of CIT v. Loonkar Tools Pvt. Ltd. - Assessee does not have right ot claim that uniformed about judgement judgment operative form date it is pronounced - it cannot be said that as on the date of filing of the return, the issue was at all a debatable issue, so as to disentitle the Assessing Officer to make any addition on that count, while making assessment under section 143(1) (a).

Summary

Issues:
1. Disallowance of deduction under sections 80HH and 80-I by Assessing Officer under section 143(1)(a).
2. Whether the Assessing Officer can make additions with respect to deductions claimed by the assessee under sections 80HH and 80-I in the return.
3. Whether the issue of deduction under sections 80HH and 80-I was a debatable question at the time of filing the return.
4. Effect of judgment by Rajasthan High Court in Loonkar Tools Pvt. Ltd.'s case on the debatability of the issue.
5. Whether the judgment being published in journals after the return filing affects the debatability of the issue.
6. Concession of right to the assessee to claim the issue as debatable despite a court judgment.

Analysis:
1. The appeal challenged the order of the Income-tax Appellate Tribunal dismissing the assessee's appeal and upholding the rejection of the application for rectification of mistake. The substantial questions of law framed included the disallowance of deductions under sections 80HH and 80-I by the Assessing Officer under section 143(1)(a).
2. The contention was made that additions with respect to deductions claimed by the assessee under sections 80HH and 80-I in the return should not have been made by the Assessing Officer under section 143(1)(a) without following the procedures under section 143(3) and 143(2). However, the authorities negated this contention citing settled law by the Rajasthan High Court in a previous case.
3. The judgment in the previous case was rendered before the filing of the return, making the issue non-debatable at the time. The argument that the judgment was published in journals after the return filing was dismissed, stating that the efficacy of a judgment is not dependent on its publication or public awareness.
4. The court held that the issue was not debatable at the time of filing the return, rejecting the assessee's claim that the issue remained debatable due to lack of awareness of the judgment. The right to claim an issue as debatable despite a court judgment was not conceded, to prevent chaos and misuse of such claims.
5. The judgment concluded that the issue was not debatable at the time of filing the return, allowing the Assessing Officer to make additions under section 143(1)(a). Consequently, both appeals were dismissed in favor of the Revenue and against the assessee.