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TMI Blog1996 (3) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. 5-5-1992 Revised return filed showing total loss at Rs. 123,81,80,860. 5. 25-5-1992 Notice under section 142(1) issued for hearing on 1-6-1992. 6. 27-8-1992 Application given by the assessee under section 154 of the Act seeking deletion of additional tax under section 143(1A) amounting to Rs. 9,48,189. Reliance placed on decision of the Allahabad High Court in the case of Indo-Gulf Fertilisers, 195 ITR 485 (All.). 7. 31-8-1992 Order under section 154 passed accepting the assessee's contention and cancelling additional tax under section 143(1A). 8. 24-1-1994 Regular assessment completed under section 143(3) of the Act computing a loss of Rs. 19,10,39,880 including unabsorbed depreciation allowance. Disallowances included, inter alia, provision for doubtful advances Rs. 2,59,76,755 under section 36(1)(vii) of the Act and interest payable to financial institutions Rs. 16,85,833 under section 43B of the Act. 9. 22-4-1994 Notice issued by the Assessing Officer under section 154 of the Act seeking to revise intimation under section 143(1)(a) dated 17-3-1992 and order under section 154 dated 31-8-1992 for the following : (a) charging additional tax in view of the retr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord and is liable to be rectified under section 154 of the Act." 6. Thereafter, the additional tax was restored by him by an order under section 154 dated 31-5-1994. 7. Regarding unpaid interest to financial institutions of Rs. 16,85,833 and provision for doubtful debts/advances of Rs. 2,59,76,755, the assessee submitted before the Assessing Officer that revised computation of income as per letter dated 16-1-1994, already accepted the above disallowances, which was before the finalisation of the assessment. The Assessing Officer did not accept this contention either. He observed that there was no dispute about the disallowability of these two items and the assessee had itself offered these disallowances in the revised computation dated 16-1-1994. As such, omission to make adjustments of the two sums while processing the return under section 143(1)(a) on 17-3-1992 constituted a glaring mistake of law apparent from the record. Accordingly, he made adjustments of these two amounts also in the order under section 154 dated 11-5-1994. 8. A preliminary objection was raised before the CIT(Appeals) saying that once the regular, assessment was completed under section 143(3) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice under section 143(2) had been issued, the provisions of section 143(1)(a) could no longer be invoked to make prima facie adjustments. It followed that there could be no rectification under section 154 either. For these propositions, he relied on the following decisions : 1. Kerala State Coir Corpn. Ltd. v. Dy. CIT [1994] 50 ITD 1 (Coch.) at pages 11 and 12. 2. Modern Fibotex India Ltd. v. Dy. CIT [1995] 212 ITR 496 (Cal.). 3. Monarch Foods (P.) Ltd. v. Asstt. CIT [1995] 214 ITR 64 (Ahd.) (A.T.). 13. The learned Departmental Representative, on the other hand, relied on the order of the CIT(Appeals) and submitted that there was no merger of the processing under section 143(1)(a) with the order under section 143(3). 14. We have considered the rival submissions carefully. In order to arrive at a proper decision, we will first take up the three cases relied upon by the learned counsel for the assessee. In the case of Kerala State Coir Corpn. Ltd., it was held, inter alia, that validly initiated assessment proceedings under section 143(2) should prevail and supersede provisions of section 143(1)(a). The relevant facts were that the assessee filed its return showing lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 143(1)(a), which is to be treated as valid as far as this case is concerned. Thus, the above case also does not help the assessee. 17. In the case of Monarch Foods (P.) Ltd., reliance was placed, on the decision of the Bombay High Court in CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589, where it was observed that an authority like the Tribunal, acting anywhere in the country, has to respect the law laid down by the High Court in the country, though of a different State, so long as there is no contrary decision of any other High Court on that question. This decision was relied upon by the learned counsel for the assessee before us in support of his contention that the decision of the Calcutta High Court in the case of Modern Fibotex India Ltd. should be applied here also. However, as we have noted above, the facts in the present case are distinguishable. The decision, therefore, does not help the assessee here either. 18. We will now take up the question whether processing under section 143(1)(a) gets merged with an assessment order under section 143(3) of the Act. For this purpose, it will be first be examined whether processing under section 143(1)(a) is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prima facie adjustments being losses. This direction has been given in view of the retrospective amendment of section 143(1A) brought about by the Finance Act, 1993 with effect from 1-4-1989. The CIT(Appeals) has held that such additional tax can be charged in view of the decision of the Supreme Court in Bombay Dyeing Mfg. Co. Ltd.'s case, relevant extract from which is given below :---- "... If a mistake of fact apparent from the record of the assessment order can be rectified under section 35, we see no reason why a mistake of law which is glaring and obvious cannot be similarly rectified. Prima facie, it may appear somewhat strange that an order which was good and valid when it was made should be treated as patently invalid and wrong by virtue of the retrospective operation of the Amendment Act. But such a result is necessarily involved in the legal fiction about the retrospective operation of the Amendment Act...." 24. Both sides reiterated before us arguments given at earlier stages. 25. We find that the above decision is squarely applicable to the facts of the present case. We, therefore, uphold the decision of the CIT(Appeals) that additional tax can be charged un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute ended only on account of the enquiry at the time of regular assessment and the facts which emerged at that time were not available at the stage of processing under section 143(1)(a) of the Act. The learned Departmental Representative opposed the contention. 30. The facts are that the assessee debited a sum of Rs. 2,59,76,755 as a provision for doubtful debts. According to section 36(1)(vii) of the Act, the assessee was entitled to deduction of an amount of " any bad debt or part thereof, which is written off as irrecoverable in the accounts of the assessee for the previous year ". It was not patently clear from the return and accompanying accounts whether the bad debts had been written off as irrecoverable or otherwise and it was only when an enquiry was made during assessment proceedings that further facts came to light. We, therefore, hold that prima facie adjustment in regard to this amount was not justified and direct that the disallowance made should be deleted. The assessee's ground of appeal succeeds to this extent. 31. The additional tax under section 143(1A) will be recomputed in accordance with our directions above. 32. In the result, the assessee's appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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