2012 (6) TMI 36 - HC - Income Tax

Addition made on account of dis-allowance u/s 40(A)(3) charity & donation dis-allowance towards entertainment and dis-allowance on depreciation - addition made on account for want of proof - AY 89-90 - Held that - Said adjustments are impermissible and not mandated u/s 143(1)(a)(iii). Aforesaid additions relate to debatable issues or aspects which required examination of explanation or production of documents which were not required to be filed with the return - petition allowed. Dis-allowance u/s 43B - entry tax welfare cess Provident fund Interest to public institutions - expenditure dis-allowed for want of proof that taxes have been paid before filing the return - Held that - In the present case there was lapse and failure on the part of the assessee to file the requisite document as per Section 43B to show evidence for payment of tax etc. on or before the due date of filing of the return. Thus the AO had rightly made and was justified in making prima facie adjustment for want of mandatory documents. Even in the writ petition filed before this Court it is not pleaded or averred that the amounts in question were paid on or before the due date of filing of the return. Petition dismissed

Summary

Issues:
Challenge to intimation under Section 143(1)(a) of the Income Tax Act, 1961 creating a demand. Adjustments made by Assessing Officer including disallowances under different sections. Interpretation of Section 143(1)(a) and its application. Disallowance under Section 43B of the Act and its justification.

Analysis:

1. The writ petition challenged the intimation issued by the Assessing Officer under Section 143(1)(a) of the Income Tax Act, 1961, creating a demand of Rs.4,36,108. The amount was revised by an order under Section 154 of the Act. The petitioner had claimed a loss for the assessment year 1989-90, and adjustments were made by the Assessing Officer, leading to the demand.

2. The adjustments included disallowances for cash payments, charity & donation, disallowance towards entertainment, and disallowance on depreciation. The court found these adjustments impermissible and not mandated under Clause (iii) to Section 143(1)(a) of the Act. The court referred to the case of S.R.F. Charitable Trust for interpretation and concluded that adjustments should only be made if a claim is prima facie inadmissible based on the return filed.

3. The main contentious addition was the disallowance under Section 43B of the Act. The tax audit report provided details of sums not paid during the previous year. The Assessing Officer made adjustments under Section 143(1)(a) based on this report. The petitioner argued that disallowance under Section 43B was impermissible if the sums were paid before the due date of filing the return.

4. The court analyzed the proviso to Section 43B, which allows payment before the due date of filing the return with evidence to be furnished along with the return. The court held that the petitioner failed to provide evidence of payment with the return, justifying the Assessing Officer's adjustment under Section 143(1)(a). The court found no reason to interfere with the adjustments made under Section 43B of the Act.

5. The writ petition was partly allowed concerning certain adjustments but upheld the adjustments made under Section 43B. The court disposed of the petition with no orders as to costs, based on the facts of the case.