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TMI Blog2001 (7) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... nd fact in holding, (i) the "intimation" dated January 24, 1991, sent by the Assessing Officer is no "intimation" at all and has no legal sanction in terms of section 143(1)(a) read with the proviso thereto; 'it is non est in the eye of law'? (ii) the officer 'has acted in excess of jurisdiction' ? 4. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding, (i) once notice under section 143(2) is issued, the regular assessment proceedings get started and thereafter the Assessing Officer is not empowered to have or continue to have the preliminary proceedings under section 143(1)(a) of the Income-tax Act? (ii) a validly initiated assessment proceeding under section 143(2) will prevail over and supersede the provisions of section 143(1)(a) ? 5. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding, (i) there is no valid intimation existing in terms of section 143(1)(a) of the Income-tax Act ? (ii) the order under section 154 dated March 10, 1993, purporting to rectify certain mistakes in the non-existing intimation dated October 24, 1991, with a view to levy additional tax under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and in any case, there was no scope for levy of additional tax on the amount of loss disallowed treating such amount as the income of the assessee. The substituted section 143(1A) providing for levy of additional tax even in a case of disallowance of loss, treating the amount disallowed as income of the assessee, was given retrospective effect from April 1, 1989, by the Finance Act, 1993, which received the assent of the President of India, only on May 13, 1993. The amended provision would, no doubt, give rise to a mistake deemed to have occurred in the original intimation and continued right up to the time of rectification, but such mistake was not apparent from the record as the amended provision which was given assent on May 13, 1993, was not in existence at the time when the Assessing Officer rectified the order on March 10, 1993. Apart from the above reasoning, the Tribunal took support from the decision of the Calcutta High Court in CIT v. General Electric Co. of India Ltd. [1978] 112 ITR 246, to show that the retrospective amendment does not apply. Further, it held that the rectification proceeding itself was illegal as there was no valid intimation under section 143(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that sub-section. Thus, going by the provisions of section 143(1)(a)(i) and 154(1)(b), it is not possible to rectify annexure E acknowledgment which is styled as intimation. There is no dispute that it is annexure E that is sought to be rectified under section 154 of the Act. But, what has now happened is that treating the acknowledgment dated October 24, 1991, as an intimation, notice under section 154 was issued. That notice was notice calling for objection dated March 3, 1993. Two grounds were stated in that notice. (1) The claim for depreciation at Rs.54,72,243 is not correct. Actually this should be only at Rs.10,79,912 as per the depreciation statement enclosed along with the return of income, and (2) There is an excessive claim under rule 6D at Rs.12,920 as per section 44AB report enclosed along with the return of income. The above two discrepancies are to be corrected and the assessee was called to file objections, if any, to the pro posed rectification. As already stated, the notice for rectification was issued on March 3, 1993. There was an amendment to section 143 of the Act, by substituting sub-section (1A)(a). Section 143(1A)(a) of the Act reads as follows: "(1A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t intimation is directed only where any tax or refund is due. It was only subsequently that a proviso was added stating that an acknowledgement will be deemed to be an intimation. No doubt, after the amendment in 1993, by introduction of section 143(1A), even in a case where no tax or refund is due, additional tax is leviable in the form of penalty in cases where the loss declared is reduced. Learned counsel for the assessee submitted that in a proceeding tinder section 154, section 143(1A) cannot be applied, because, according to him on the day on which notice was issued, section 143(1A) does not apply. Learned counsel for the assessee brought to our notice the decisions in CIT v. Hindustan Electra Graphites Ltd. [2000] 243 ITR 48 (SC); CIT v. General Electric Co. of India Ltd. [1978] 112 ITR 246 (Cal), while learned counsel for the Revenue relied on the decisions in M. K. Venkatachalam, ITO v. Bombay Dyeing and Manufacturing Co. Ltd. [1958] 34 ITR 143 (SC) and ('IT (Asst.) v. J. K. Synthetics Ltd. [2001] 251 ITR 200 (SC). In CIT v. Hindustan Electra Graphites Ltd. [2000] 243 ITR 48 (SC), the Supreme Court considered the matter. In that case, the assessee a public limited com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... force. Levy of additional tax bears all the characteristics of penalty. Additional tax was levied as the assessee did not in his return show the income by way of cash compensatory support. After the assessee had filed its return of income, which was correct as per law on the date of filing of the return, the cash compensatory support also came within the sway of section 28. When additional tax has the imprint of penalty, the Revenue cannot say that levy of additional tax is automatic under section 143(1A) of the Act. If additional tax could be levied in such circumstances, it will be punishing the assessee for no fault of his. That cannot ever be the legislative intent. In the circumstances of the present case, levy of additional tax taking into account the income by way of cash compensatory support was not warranted. In Asst. CIT v. J. K. Synthetics Ltd. [2001] 251 ITR 200 (SC), the facts are as follows: The assessee had returned a net loss. After adjustments had been made by the taxing authorities under the provisions of section 143(1A) (sic-section 143(1)(a)), the amount of loss stood reduced. The taxing authorities under the provisions of section 143(1A) sought to levy addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer had given a credit for Rs.50,063 being interest at two per cent. on the tax paid in advance under section 18A(5) of the Income-tax Act. Subsequently, the Indian Income-tax (Amendment) Act, 1953, was passed. In this amending Act, a proviso to section 18A(5) was added providing that an assessee was entitled to interest not on the whole of the tax paid in advance, but only on the difference between the tax so paid and the tax as determined on regular assessment. This amending section was deemed to have come into force on April 1, 1952, i.e., prior to the date of the assessment order in the instant case. Under this amended Act, the assessee was entitled to a lesser sum than what was allowed to him originally on account of interest. After the amendment Act was passed, the Income-tax Officer exercised his power under section 35 of the Indian Income-tax Act, 1922, and rectified the mistake in the order of assessment and demanded repayment of the sum which was allowed to the assessee in excess. It was held by the Supreme Court as follows: "It is in the light of this position that the extent of the Income-tax Officer's power under section 35 to rectify mistakes app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 35 of the Indian Income-tax Act, 1922, and passed an order charging interest on the ground that the failure to charge interest under section 18A(6) was a mistake apparent from the record and could be rectified. This order was confirmed by the Commissioner of Income-tax under section 33A of the Act. Thereafter, proceedings were held under article 226 of the Constitution at the instance Of the assessee who prayed for quashing of the order of the Commissioner under a writ of certiorari. A Full Court of the High Court of Bombay quashed the orders passed by the Income-tax Officer and the Commissioner. An appeal was preferred by the judgment of the Bombay High Court to the Supreme Court. The Supreme Court held that, the High Court was right in setting aside the orders passed by the Income-tax Officer and the Commissioner of Income-tax. The Supreme Court found that section 18A(6) had been amended retrospectively by an Amendment Act of 1953 and the retrospective operation commenced from April 1, 1952. Under this amendment, a proviso was added to section 18A(6) providing that in cases falling under the said section and under the circumstances that may be prescribed the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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