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TMI Blog2003 (12) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the decision of Delhi High Court in case of Modi Cement Ltd. is 15th March, 1993. The date of passing order under s. 143(3) is 26th March, 1993. The AO on 22nd Feb., 1995 issued notice under s. 154 of the Act seeking to rectify intimation under s. 143(1A) [sic-143(1)(a)] dt. 15th March, 1993 wherein a sum of Rs. 90,45,364 was disallowed on account of sales promotion. No additional tax was charged in view of the decision of the Delhi High Court in the case of Modi Cement Ltd. The AO issued rectification notice under s. 154 in order to charge additional tax as a result of the amendment in 1993 in s. 143(1A) with retrospective effect from 1st April, 1989 by the Finance Act, 1993. After considering the submissions of the assessee and rejecting the same, additional tax at the rate of 20 per cent on account of addition of Rs. 90,45,364 in revised intimation was calculated. 4. Against this action of charging additional tax to the tune of Rs. 9,76,899, various submissions were made on behalf of the assessee in appeal before the first appellate authority. Firstly, it was contended that the intimation dt. 15th March, 1993 was not valid since it was issued after a notice under s. 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued even after the finalisation of the assessment under s. 143(3) of the Act. With regard to the submissions that the amendment will not be applicable retrospectively, he was of the view that it was against the expressed intention of the legislature and, as such, rejected. The contention that the intimation was not signed and served upon the assessee was rejected as he was of the view that alongwith 154 notice, the true copy of the intimation was sent and served upon the assessee. With regard to the last contention of the assessee that the issue was debatable and, as such, cannot be rectified, he was of the view that whether the adjustment made by way of addition of Rs. 90,45,364 in the second intimation was debatable or not could be decided only in appeal. Since the assessee has not appealed against the same, the issue cannot be raised in the appellate proceedings against the 154 order at a different point altogether. Thus, being of the view that since the AO in 154 order has merely amended the second intimation on account of the retrospective amendment in the Act which intimation has not been challenged by the assessee, the appeal of the assessee was rejected. Still aggrieved, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hati High Court have had an occasion to consider and explain the decision of the apex Court rendered in the case of Asstt. CIT vs. J.K. Synthetics Ltd. (2001) 166 CTR (SC) 498 : (2001) 251 ITR 200 (SC) and Hindustan Electro Graphites. Inviting attention to p. 677, it was contended that their Lordships have held therein if additional tax could be levied in such circumstances, it will be punishing the assessee for no fault of his which cannot be ever the intention of the legislature. 13. In this background, it was argued that if in the revised intimation dt. 15th March, 1993 any demand had been created, then in such an eventuality, the assessee would definitely have challenged the same. However, in view of the fact that no tax was demanded, the assessee did not chose to challenge the same but simply because the assessee did not challenge it would not be correct to hold that now when the assessee is faced with a situation that additional tax is being demanded that he cannot challenge the same in collateral proceedings. Ultimately, reliance was placed upon the decision of the Delhi High Court in the case of CIT vs. Punjab National Bank (2001) 166 CTR (Del) 340 : (2001) 249 ITR 763 (D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to decide the validity of issuance of 143(1)(a) notice under s. 143(2), then it is a settled issue that the decisions of the Calcutta and Gujarat High Courts would have decided the issue in favour of the assessee. However, the facts in the case at hand are a little different. Here, the first intimation has been issued prior to the issuance of 143(2) and before the issue of 143(2) notice in fact the assessee has filed revised return on 30th Dec., 1991 to revise the written down value on account of revised orders for earlier years under s. 143(3). After the issue of 143(2) notice, the AO has issued revised intimation on 15th March, 1993. When this action of the AO is viewed in the light of the pronouncement of law as discussed above, there is no dispute as far as we are concerned that the said revised intimation had it been challenged by the assessee would have been struck down for want of jurisdiction. This would have been so on account of the fact that the AO after having exercised his jurisdiction to issue 143(2) notice cannot make prima facie adjustments under s. 143(1)(a). 18. Having thus observed in the facts before us, we are faced with a peculiar situation where the revis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified under s. 154 on 13th Sept., 1995, then on account of the decisions of the Gujarat High Court and Calcutta High Court in the cases of Gujarat Poly AVX Electronics and Modern Fibotex, the assessee in 154 proceedings could challenge the same since today, the assessee is aggrieved by that intimation. The case of the Revenue, on the other hand, has been that the assessee having chosen not to challenge the revised intimation is debarred from challenging the same in 154 proceedings when the AO is levying additional tax as per law. 20. Before dealing with the decisions relied upon by the assessee in order to justify the maintainability of the challenge to revised intimation in 154 proceedings, we would like to digress for a moment and pause here to examine the fact that after having issued notice under s. 143(2) on 5th Aug., 1992, the AO issued revised intimation dt. 15th March, 1993 and passed the assessment order under s. 143(3) on 26th March, 1993. We have already observed earlier that the conscious decision of the AO to issue notice under s. 143(2) is a statement to the effect that the issue requires verification, examination and participation on behalf of the assessee to justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire amount as advertisement and publicity expenses during the year and, therefore, carried it over to the current liabilities will not mean that only Rs. 90,45,364 which has been utilised during the year will be taxable. Since the financial assistance received in this year is of revenue nature, the entire amount has to be treated so." 22. Thus, it is seen that this amount of Rs. 90,45,364 which the AO after issue of notice under s. 143(2) has added in the revised intimation by way of a prima facie adjustment which we are of the view was not maintainable on account of the fact that apart from the fact that this addition by virtue of its very nature could not have been prima facie added was also not capable of being added even on account of the fact that it was attempted after 143(2) notice and, in fact, a perusal of the assessment order under s. 143(3) bears out that after a discussion of various case law and examining the nature of the amount, an addition of this amount has been made in 143(3) proceedings. We have also taken note of the arguments on behalf of the assessee which are supported by documentary evidence as in fact recorded in 154 order that as a result of this addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court in the case of Asstt. CIT vs. J.K. Synthetics Ltd. has been explained and CIT vs. Hindustan Electro Graphites Ltd. and Pannalal Binjraj vs. Union of India Ors. (1957) 31 ITR 565 (SC) had been relied upon. Their Lordships therein have observed that when additional tax has the imprint of penalty, the Revenue cannot be heard to say that the levy of additional tax is automatic under s. 143(1A) of the Act. They were of the view that if additional tax can be levied in such circumstances, it will be punishing the assessee for no default of his which cannot be ever the intention of the legislature. In fact, we are moved to quote the following observation of the Constitution Bench of the Supreme Court in the case of Pannalal Binjraj vs. Union of India at p. 597 which has been quoted by their Lordships of the Gauhati High Court in the case of Dy. CIT vs. Ashok Paper Mills Ltd. at p. 677: "A humane and considerate administration of the relevant provisions of the IT Act would go a long way in allaying the apprehensions of the assessees and if that is done in the true spirit, no assessee will be in a position to charge the Revenue with administering the provisions of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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