9911796707
TMI Blog2007 (11) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal. In D. B. Writ Petition No. 1503 of 1995, the assessee challenged the constitutional validity of section 143(1A) of the Income-tax Act, 1961 (for short "the I. T. Act"). 2. The writ petitioner-assessee had returned a net loss. After adjustments had been made by the taxing authorities under the provisions of section 143(1)(a) the assessment of loss stood reduced. The taxing authorities under the provisions of section 143(1A) sought to levy additional tax upon the assessee in this behalf and this was challenged in the writ petition. 3. Section 143(1) (a), (1A) of the Income-tax Act (retrospectively amended in 1993) reads as under "143(1) (a) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142,— (i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which any such order was passed. (c) Where the assessee is a partner of a firm or a member of an association of persons or body of individuals and as a result of the adjustments made under the first proviso to clause (a) of sub-section (1) in the income or loss declared in the return made by the firm, association or body, as the case may be, or as a result of an order made under sub-section (3) of this section or section 144 or section 147 or section 154 or section 155 or sub-section (1) or sub-section (2) or sub-section (3) or sub-section (5) of section 185 or sub-section (1) or sub-section (2) of section 186 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264, or any order of settlement made under sub-section (4) of section 245D, passed sub sequent to the filing of the return referred to in clause (a), there is any variation in his share in the income or loss of the firm, association or body, as the case may be, or in the manner of inclusion of his share in the returned income, then,— (1) if any tax or interest is found due, an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educed by reason of adjustments made under sub-section (1) (a) the provisions of sub-section (1A) would apply. Preliminary objection 5. The assessee raised a preliminary objection in regard to the maintainability of appeal. It was canvassed that the assessee is a public undertaking of which 100 per cent. shareholding is with the State of Rajasthan. Since clearance of the High Powered Committee set up by the Central Government was not taken by the Revenue the appeal is incompetent and not maintainable. Reliance is placed on Mahanagar Telephone Nigam Ltd. v. Chairman , CBDT [2004] 267 ITR 647 (SC) ; State of Rajasthan v. ITAT [2003] 259 ITR 686 (Raj); Union of India v. State of Rajasthan [ 2002]127 STC 142 (Raj) ; CIT v. Delhi Tourism and Transportation Development Corporation Ltd . [2005] 274 ITR 35 (Delhi); Union of India through Central Organisation Railway v. Union of India Through Secretary, Ministry of Finance [2006] 285 ITR 362 (All) ; Etah Gramin Bank v. CIT [2007] 290 ITR 636 (All) and CIT v. Neyveli Lignite Corporation Ltd . [2007] 293 ITR 362 (Mad). 6. Since this appeal is pending for adjudication for the last 14 years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de the following submission: (1) The provision has been made retrospective with effect from .April 1, 1989, and such penal clause cannot be inserted with retrospective effect. (ii) To hold the assessee guilty and to subject him to the additional tax on account of fiscal statute, being given retrospective effect will be unfair and unjust (vide CIT v. Hindustan Electrographite Ltd. [ 1998] 229 ITR 16 (MP). (iii) Reliance is also placed on Star India P. Ltd. v. CCE [2006] 280 ITR 321 (SC) ; National Agricultural Co-operative Marketing Federation of India Ltd. v. Union of India [2003] 260 ITR 548 (SC) ; Rai Ramkrishna v. State of Bihar [1963] 50 ITR 171 (SC) ; AIR 1963 SC 1667 ; Supreme Court Employees Welfare Association v. Union of India , AIR 1990 SC 334. 9. Having analysed the submissions we find that the learned single judge in the impugned judgment drew conclusions after placing reliance on the ratio indicated in Modi Cement Ltd. v. Union of India [1992] 193 ITR 91 (Delhi). This judgment was considered by the Supreme court in Asst. CIT v. J. K. Synthetics Ltd . [2001] 251 ITR 200 and it was observed as under (page 203 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck evasion of tax by clever taxpayers. Hence, it is of compensatory nature. Thus, there is no unconstitutionality in section 143(1A)(a)(B) of the Income-tax Act. 12. Their Lordships of the Supreme Court in Rai Ramkrishna v. State of Bihar [1963] 50 ITR 171 (SC); AIR 1963 SC 1667, indicate as under (page 179): " …..the Legislative power conferred on the appropriate Legislatures to enact law in respect of topics covered by the several entries in the three Lists can be exercised both prospectively and retrospectively. Where the Legislature can make a valid law, it may provide not only for the prospective operation of the material provisions of the said law, but it can also provide for the retrospective operation of the said provisions." 13. A close look at the statutory provision under challenge, demonstrates that it is not penal in nature. It is the device to check evasion of tax. It is no doubt true that a power under a taxing statute can be assailed if it is found to be arbitrary or lays down unreasonable restriction upon the freedom of trade but in the instant matter the restriction has been made for justifiable reason in order to check the evasion of tax. We ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
