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TMI Blog1984 (2) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... was converted by the position prior to insertion of that section and that position was that if an existing assessee was not served with a notice under s. 210 to pay advance tax, he was not under any legal obligation to file an estimate of advance tax payable and to pay the same as envisaged under s. 212(3A) of the Act. The assessee's counsel then put forward his legal objection that the advance tax notice under s. 210 dt. 6th June, 1974 was not a valid notice as in accordance with the decision of the AAC dt. 27th May, 1974, the assessee will be having a loss of Rs. 7,253 instead of the income of Rs. 66,420. It was pointed out by Shri Gandhi that the order of the AAC was to have effect on the income of the three asst. yrs. 1969-70 to 1971-72 and in support of his submission that after giving effect to the order of the AAC, the income of the asst. yr. 1971-72 will get converted to a loss, he relied on the appeal effect orders subsequently passed by the ITO himself and these orders are dt. 2nd July, 1975. Copies of these orders were included in the assessee's paper book and it is found that in consequence of the AAC's orders dt. 27th May, 1974, as per the ITO's own working for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court has held that once a notice under s. 210 was issued by the ITO demanding advance tax from an assessee on the basis of income assessed of a particular year, the same cannot be amended if the income of that year underwent any change subsequently. It was also stated that amended notice in that case was held to be invalid and not the first notice. Second authority was cited as it was contended that wrong taking of the figure of quantum of income on which advance tax demand was made was a mere case of irregularity. This authority was a decision of the Tribunal Amritsar Bench dt. 6th Feb., 1982 in the case of IAC vs. Ganesh Das Bhoj Raj (IT Appeal No. 705 (Asr.) of 1980). 3. On a careful consideration of the rival submissions, we find that the arguments of the assessee's Counsel have force on the facts and in the circumstances of the case. It is an undisputed position that the order of the ITO merges into the order of the AAC. The AAC papers to have decided the appeals of the assessee for the asst. yrs. 1969-70 and 1970-71 by his order dt. 27th May, 1974. This had the effect of increasing the assessee loss of the asst. yr. 1969-70 to Rs. 19,425 as against the previous figur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P H) 132 : (1981) 128 ITR 270 (P H) has emphasised that an order passed by the ITO under s. 210(3), which was contrary to law, had to be struck down. The Madras High Court in Rajlakshmi Mills Ltd, (1980) 18 CTR (Mad) 48 : (1980) 125 ITR 141 (Mad) has clearly laid down that the rectification of the assessment order under s. 154 of the Act had the effect of making the original assessment order passed on 29th Jan., 1970 the regular assessment order or the correct assessment order. It was further held that in other words, the original assessment was made regular in truth and in fact as a result of the rectification. These observations will perhaps have the effect of taking the rectification even back to the date of original assessment and in the instant case whereas the ITO has given appeal effect to the order of the AAC for the first two assessment years acting under s. 250/143(3) of the Act, for the asst. yr. 1971-72, he has referred to s. 154/155 of the Act. For the purpose of deciding the question in hand, even this will be sufficient that the assessment order was modified on the date the order of the AAC was passed for the earlier two assessment years. We may point out that the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 974-75 benefit of carry forward loss of Rs. 50,000 only. It was submitted that the appeals were pending for the earlier years and the position was not clear about the ultimate figure of loss and the assessee having paid advance tax already of certain amount estimated the loss at Rs. 50,000 without any particular basis but keeping in mind the fact that it may not be called upon to pay any further advance tax. The second circumstance to which Shri Gandhi invited attention with the help of a chart was that goods booking receipts for the asst. yr. 1975-76 became unduly high in the last two months of the accounting year, viz., November 1974 and December, 1974. The figures for those two months were Rs. 4.77 lakhs and Rs. 10.34 lakhs. It was pointed out with the help of comparative figures of earlier year that goods booking per month averaged between Rs. 2 to 3 lakhs. It was submitted that increases in the months of November and December could not be visualised and further the figures were received from 36 booking offices after passage of much time after the due date for filing of the estimate which was 15th Dec., 1974. It was emphasised that in December alone the final figure of goods bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es on 27th Sept., 1974, one cannot appreciate how he could derive any support from a consideration of previous year's losses for which appeals were pending. The plea was raised no doubt before the CIT(A) and he had recorded a finding in para 4 of his order, which is stated as under: "From the records I find that for the asst. yr. 1974-75, a return of income was submitted on 27th July, 1974 declaring an income of Rs. 1,47,350. The income was arrived at by adjusting a sum of Rs. 50,000 estimated to be brought forward losses of earlier years. This fact is clear from the Note No. 2 which is at the bottom of the statement of the assessable income filed along with return. Thus, on the date on which this return was submitted, i.e., towards the end of September, 1974 the benefit of carried forward losses that the assessee anticipated in respect of the earlier years was Rs. 50,000 and this amount was taken into account in arriving at the returned income of Rs. 1,47,350." 10. Therefore, I am unable to appreciate how a consideration of the losses could stand in the way of the assessee making an estimate of income when he had already filed a return for the asst. yr. 1974-75 showing an in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee on these facts proceed to make a rough estimate for the month of December and file an estimate by the date of last instalment which fell on 15th Dec., 1977? That the assessee had 35 branches cannot be a reason for not making an estimate. In years to come he may have more branches. Accepting his plea would mean that the provisions contained in s. 212 which obliges a taxpayer to file an estimate would not be made applicable to the assessee not only in this year but also in subsequent years when he may be having the same number of branches or more. It has not been realised by the ld. Accountant Member that the management of big organisations always kept themselves regularly posted with the day to day affairs by obtaining, if not daily statements but weekly and fortnightly statements of receipts and expenditure. They always know the receipt and expenses position. They have to know it in order to keep a close watch on the running of their business. Therefore, it is not possible for me to accept the plea that the assessee could not make an estimate of his income because he had to collect particulars from 35 branches. He had to. There was no escape possible from this statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the advance tax assessment of the year in issue. The result was a loss of Rs. 7,253. According to the assessee, this made the basis adopted by the ITO for advance tax assessment an erroneous basis. According to his submission, adoption of this income invalidated the notice so that the assessee was not obliged to file an estimated even when he was served with a notice under s. 210. No doubt he was obliged to file an estimate but that was only when the notice issued under s. 210 was valid. To the objection of the Departmental representative that the appellate orders for the asst. yrs. 1969-70 and 1970-71 were received on 2nd July, 1974 only when the advance tax assessment had been made on 6th June, 1974, was, in his view, to be considered as of no consequence. According to him, as soon as the order was passed by the AAC on 27th May, 1974, the assessments made by the ITO for 1969-70 and 1970-71 had got merged in his appellate order and had ceased to exist so that the advance tax assessment having been made on an erroneous basis caused the notice issued under s. 210 to be suffering with invalidity. The ld. A.M. as indicated in para 3 made the following finding: "It may be that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be take by the AAC or the CIT(A), according to the procedure laid down to dispose the appeal. No, effect, therefore, can be attributed to any order which is not communicated to the parties and remains the secret preserve of the AAC's record. Therefore, an appeal is not disposed of when the AAC or the CIT(A) conceives of the order in his mind nor when he pronounces the order before the parties in course of hearing nor when he dictates the order and signs it. He has to communicate the order in writing to the assessee and the ITO has to dispose of the appeal. Only then the appellate order can be claimed to take effect. I may refer to the disposal of the appeal by the Tribunal. Sub-s. (3) of s. 254 of the Act provides that the Tribunal shall send a copy of any orders passed under this section to the assessee and to the CIT. Similarly the provision is laid out for the High Court and also for the Supreme Court in s. 260, sub-s. (1) of the Act where it is enjoined upon that a copy of the judgment shall be sent under the seal of the Court and the signature of the Registrar to the Tribunal which shall pass such orders as are necessary to dispose of the case conformably to such judgement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 210 almost impossible as was correctly pointed out by the ld. Departmental Representative. He correctly emphasised the difficulties an ITO would be facing when he would be called upon to issue a notice under s. 210. In order to issue a notice under s. 210 in respect of a taxpayer, he must not only check his assessment orders but also make an enquiry from all appellate and revisional authorities and also the Courts, if any order has been passed by them in respect of the proceeding not only for the year on which advance tax assessment is going to be based but also in respect of the earlier years. A construction of a provision which makes a provision unworkable has to be avoided in order to understand the true import of the provision. 18. To save the assessee from possible hardship and erroneous assessment made under ss. 209 and 210, the assessee has been provided unlimited opportunities to file an estimate. Having filed an estimate, he may revise the estimate as many times as he likes. If he could not make an estimate by the date of the last instalment, he can take further extension from the CIT as indicated earlier. 19. Looked at in this background, I cannot appreciate the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the total income of the last assessee was made, the ITO could not amend it except when the assessment of a subsequent year was made. To apply the rule to the facts of the case, the ITO could not, even after the communication of the appellate orders for the asst. yrs. 1969-70 and 1970-71, amend the notice already issued by him. In my view, the plea of the assessee that the notice under s. 210 was invalid and, accordingly, the assessee was not obliged to make any estimate has to be rejected as of no substance. 22. As the assessee had failed in respect of both his pleas, there is no justification in interfering with the finding of the CIT(A). His finding is to be upheld and the penalty maintained. I direct accordingly. The appeal filed by the assessee against the penalty fails and is dismissed. V. Balasubramanian, Vice-Prewsident (as a Third member)—23. The assessee is a private limited company. Based on the income assessed for the asst. yr. 1971-72 of Rs. 66,420 with a tax liability of Rs. 45,340, the ITO issued a notice under s. 210 on 6th June, 1974 on the assessee for payment of advance tax. The above income of Rs. 66,420 was arrived at after setting off certain brought forw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided, the assessee's total income for the year 1971-72 would have been negative. Referring to the business receipts of the assessee, it is pointed out that whereas the average receipts per month came to about Rs. 2 lakhs and odd, there were receipts in the last two months of neraly Rs. 15 lakhs. The income, therefore, even for the year under appeal was to a very large extent contributed by the receipts towards the end of the year. Having regard to the fact that the full information about these receipts could be received only after a month and more, which left the assessee with no information regarding the receipts on the day he had to file the estimate, it is claimed, the assessee could not have made any estimate. It is also pointed out that a sum of Rs. 2,30,696 was claimed as bad debts of the year which would have reduced this income. In the earlier year, there was a receipt of Rs. 2,88,745 on account of sale of vehicles, which was not available for the current year. on the basis of the above analysis and the monthly details of sales, etc., the learned counsel has pointed out that factually it would not have been possible for the assessee to make an estimate. It is pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without getting involved into legal technicalities as regards merger, the clear facts as to this matter renders the notice under s. 210 invalid. The ITO issued the notice on 6th June, 1974. On 27th May, 1974, there was an order of the AAC reducing the income for 1971-72 which formed the basis of the issue of notice to figure of loss. reference was made be the ld. counsel for the assessee to certain decisions stating that when the High Court or the Supreme Court delivered a judgment, they could be regarded as immediately modifying the effected order appealed against. This analogy may not apply to the case of any IT authority or even the Tribunal. In the case of these persons, a specific order has to be passed and signed before it becomes effective unlike in the case of a Court judgment where mere pronouncement would be sufficient. Even so in the present case on 27th May, 1974, the AAC passed his order and that has become effective on that date. He could not have altered the same unless according to some process well-known to law. In the records of the ITO, therefore, it was correct to note that the income of the assessee on 27th May 1974 for the asst. yr. 1971-72 was negative. While ..... X X X X Extracts X X X X X X X X Extracts X X X X
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