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TMI Blog1982 (10) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... cember, 1969. The assessee came in appeal to the Tribunal against the regular assessments. The Tribunal vide order dt. 24th March 1973 in B.P.T.A. Nos. 1 to 13 (Alld) of 1971-72 relating to the above chargeable periods held as under: "In our opinion, it cannot be said that a period of twenty years for the completion of assessment in such cases can be regarded as a reasonable time. On this point also we record our finding in favour of the assessee. Therefore, whatever view is taken in this case, in our opinion, these assessments cannot be sustained and we quash them." As a result of the above order of the Tribunal, the final assessments made u/s 12 of the Act were quashed. The finding of the Tribunal was upheld by the High Court in CIT vs. British India Corporation (1979) 117 ITR 651 (All). 3. The ITO had also levied the following penalties u/s 19 of the Act for non-payment of tax: Rs. Chargeable accounting period ending 1946 20,000 Chargeable accounting period ending 1947 25,000 Chargeable accounting period ending 1948 12,000 Chargeable accounting period ending 31st March, 1949 8,000 These penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before the CIT(A) on behalf of the assessee that the IAC had exceeded his jurisdiction in reviving the demand of the provisional assessments, in reviving the orders levying the penalties and in further adjusting those penalties against the refunds due to the assessee. The submission of the ld. counsel for the assessee was that the provisional assessment u/s 13 of the Act could be made in a summary manner, whether the return had or had not been furnished and further it was also not appealable under sub-s. (5) of the above section and, therefore, it had to be followed by a regular assessment lest an arbitrary demands was fastened on the assessee. He submitted that under the scheme of the Act framing of regular assessment was on integral part of the process of assessment. He further submitted that in case provisional assessment was not followed by a regular assessment, it could not entitle the department to retain the tax relating thereto. The counsel also pointed out that the scheme of provisional assessment under the Act was different from such scheme under the IT Act inasmuch as while a provisional assessment under the latter Act could be made only after a return of income had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment by the assessee continues to be a valid payment. It was submitted on behalf of the department that the above principle equally applied to a provisional assessment made under the Act. Reliance on behalf of the department was also placed on another decision of the Calcutta High Court in Sriram Jhabarmull, In re (1954) 26 ITR 498 (Cal). This case related to EPT Act, 1940. It was held in this case that the setting aside of the final assessment (on appeal) did not affect the provisional assessment or recovery of tax found due by the provisional assessment and that it affected only the excess amount found by the "final" or "regular" assessment. Reference was also made to the instructions of the Board issued in a case where regular assessment could not be made as time limit for making that assessment had expired and the question related to the refund of taxes paid on the basis of provisional assessment and on the basis of self assessment. The Board on the basis of the opinion taken from the Ministry of Law had declined to refund the above taxes as there was no provision for any such refund. 8. The ld. counsel for the assessee in reply had submitted that the principle laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the counsel for the assessee that the case of Sriram Jhabarmull was distinguishable from the case of the assessee as in the cited case there existed a possibility of assessment, while in the case of assessee there was no such possibility of making any regular assessment. He was, however, of the view that the present case was fully covered by the principle laid down by the Allahabad High Court in the case reported in (1974) 93 ITR 16 (All). In the circumstances, he confirmed the orders of the lower authorities allowing refund of only additional amounts collected on the basis of regular assessments excluding the amounts collected on the basis of provisional assessments. He also dismissed the other contention of the assessee relating to penalties and adjustment of refund. Since the appeals filed against the levy of the penalties were restored to the file of the AAC and since he did not pass any order, the CIT(A) was of the view that they subsisted in law. As a consequence he was further of the opinion that the adjustment of those penalties against the refund due to the assessee was also in order. He did not, however, express any opinion about the penalties in principle as that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another distinction. Sub-s. (4) of s. 23B of IT Act merely provided that there was no right of appeal against provisional assessment. On the other hand, sub-s. (5) of s. 13 of the Act while providing that there was no right of appeal against a provisional assessment further stated that "it shall, until a regular assessment is made in due course, u/s 12, determine the amount of business profits tax due from the assessee". The ld. Member then pointed out certain anomalies which, in his opinion, were likely to arise if the provisional assessment was allowed to stand even after the regular assessment was quashed. In particular, he observed that in the case of the assessee an arbitrary figure had been taken for making a provisional assessment and further that only one provisional assessment had been made for two chargeable accounting periods. While dealing with s. 23B, the ld. Member also referred to s. 141, as it then stood, in the Act of 1961. However, nothing, much turns on the reference to this section. The ld. Member was, thus, of the view that there was a basic difference between a provisional assessment contemplated under the IT Act and the one contemplated under the Act. As a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He was, therefore, of the opinion that the appeals required to be dismissed. 13. Since there was a difference of opinion between the two members, the following point of difference has been referred to me by the President u/s 255(4) of the IT Act, 1961: "Whether on the quashing of a regular assessment made under the Business Profits Tax Act, 1947, the provisional assessment made under the said Act survives?" 14. The ld. counsel for the assessee made out three points. The first point was that the Tribunal vide its order dt. 24th March, 1973 had not revived the provisional assessments and that they were revived only by the ITO vide his order dt. 4th January, 1978, while giving effect to the order of the Tribunal, which, in his opinion, could not be done. His second point was that as soon as a regular assessment was made u/s 12 of the Act, the provisional assessment made u/s 13 of the Act ceased to exist and ceased to determine the amount of tax due and payable by the assessee. His third point was that a decision given under the IT Act was not automatically binding on the Tribunal. He attacked the findings of the ld. A.M. from several angles. He submitted that the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment or to accept the provisional assessment. He contended that there was no such choice with the assessee and the validity of both of them could be challenged by the assessee. He finally submitted that the ld. A.M. had given another misdirection in law by observing that even if the IT Act and the Business Profits Tax Act were not pari materia, the judgment of Allahabad High Court in (1974) 93 ITR 16 (All) was applicable to the case. 15. The ld. Deptl. Rep., on the other hand, submitted that the basic scheme of making a provisional assessment was the same both under the IT Act and under the Business Profits Tax Act as both of them laid down procedure in s. 23B and s, 13 respectively, for the collection of taxes expeditiously. He also submitted that in the present case, the assessments had been made on the basis of the returns, although the figures had been rounded up. He also submitted that all Acts had to be harmoniously construed and if that was done, there was no escape from the principle laid down by the Allahabad High Court in the above case reported in (1974) 93 ITR 16 (All), which was applicable to the case of the assessee. 16. I have given anxious thought to the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the ITO shall give notice to the assessee of his intention to do so and shall also with the notice forward a statement of the amount of the proposed assessment, and the assessee shall be entitled to deliver to the ITO a statement of his objections, if any, to the amount of the proposed assessment. It is only after considering such objections, if any, that the ITO is empowered to make a provisional assessment. It is further provided in the proviso to sub-s.(3) of s. 13 of the Act that the assent to the amount of the assessment, or failure to make objection to it, shall, in no way, prejudice the assessee in relation to the regular assessment. Then comes sub-s. (6), which provides that there shall be no right of appeal against a provisional assessment. It further provides that such provisional assessment shall, until a regular assessment is made in due course, determine the amount of business profits tax, due from the assessee. Although this provision does not appear in s. 23B of the IT Act, but then the effect of a provisional assessment under this Act is the same. In the IT Act also a provisional assessment has its effect till a regular assessment is made. After the regular asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment continues to bear that character and cannot be deemed to have been paid towards the regular assessment. If a regular assessment, which is without jurisdiction, is a nullity and does not exist in the eye of law, the provisions of sub-ss. (6) and (7) of the Act are not attracted as no regular assessment is made. However, the provisional assessment remains a valid order and the amount paid under that assessment continues to be a valid payment. 18. I will now refer to the decision of Calcutta High Court in the case of Sriram Jhabarmull (1954) 6 ITR 498(Cal). This decision is sought to be distinguished by the ld. J.M. mainly on the ground that here a direction was given for making the regular assessment. I have perused the above decision very carefully. The principle laid down by their Lordships of the Calcutta High Court was not arrived at on a consideration of the fact that a regular assessment had been directed to be made afresh. Before I proceed further, I must state that the language of s. 14A of the EPT Act, 1940 is analogous to the languages of s. 13 of the Act. Sub-s. (5) of s. 14A of the EPT Act is as under: "s. 14A(5). There shall be no right of appeal against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment vanished when the final assessment was made. In such a case, the setting aside of the final assessment does not affect the provisional assessment or its recovery. It affects only the excess amount found due by the "final" or "regular" assessment". In the above case, the Hon'ble Calcutta High Court had clearly held that the setting aside of the final assessment did not affect the provisional assessment or its recovery and that it affected only the extra amount found due by the final or regular assessment. The interpretation given by the Calcutta High Court equally applies to the Act whose provisions are now under my consideration. I will also, therefore, following the aforesaid decision, hold that the setting aside of the final or the regular assessments, did not affect the provisional assessments. It only affected the excess amount found due by the final or regular assessment which has already been made the subject of rectification by the IAC and has been adjusted against other demands. 19. My answer to the question proposed u/s 255(4) of the IT Act, 1961, therefore, is in the affirmative and I hold that on quashing of the regular assessments made under the Act, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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