Rajasthan High Court - Jaipur
Udaipur Distillery Co. Ltd. vs Dy. Cit on 5 June, 2003
Equivalent citations: (2004)90TTJ(NULL)457
ORDER
S.R. Chauhan, J.M.:
The appeal by assessee for assessment year 1990-91 is directed against the order of Commissioner (Appeals), Udaipur, dated 6-3-1996.
2. We have heard the arguments of both the sides and also perused the records including the written submissions of the assessee.
3. Ground No. 1 disputes the levy of additional tax under section 143(1A) as even after making prima facie adjustment, the resultant income was a loss. The learned authorised representative of assessee has contended that this issue is covered in assessee's favour by the decision reported in 28 T.W 144 (Pr. 5). As against this, the learned Departmental Representative of revenue has relied on the order of assessing officer and Commissioner (Appeals).
4. We have considered the rival contentions, the relevant material on record as also the cited decisions. In our considered opinion when the provisions of section 143(1A) stands amended by the Finance Act, 1993 with retrospective effect from 1-4-1989 and the assessment year under consideration being 1990-91, the amended provision of law will apply in the matter in hand as has rightly been held by the learned Commissioner (Appeals). As per the amended provision of section 143(lA), additional tax is leviable even when after the prima facie adjustment, the resultant income remains loss (or reduced loss). In our view, the Tribunal's decision reported in 28 T.W. 144 (supra) will not help assessee in the instant case in as much as the issue involved in this case stands settled by the judgment of Hon'ble Supreme Court in Assistant Commissioner v. JK Synthetics Ltd. (2001) 251 ITR 200 (SC) wherein it has been held that the retrospectively substituted sub-section (1A) made it clear that even where the loss declared by assessee has been reduced by reason of adjustments made under sub-section (1)(a), the provisions of sub-section (1A) applied and the additional tax could be imposed. Accordingly the facts being identical, and the issue being covered, we find the impugned order of learned Commissioner (Appeals) in sustaining the levy of additional tax under section 143(1A) to be quite proper and not faulty, and so we decline to interfere with the same.
5. Ground No. 2 disputes the validity of intimation issued under section 143(1)(a) on 7-8-1991, for the reason of notice under section 143(2) having been issued. The learned authorised representative of assessee has contended that in this case notice under section 143(2) dated 18-4-1991, was served on the assessee on 26-4-1991, whereas the intimation was served on 7-8-1991. It has been contended that the learned Commissioner (Appeals)'s view that the intimation under section 143(1) was processed on 25-3-1991, which being prior to the service of notice under section 143(2) on 26-4-1991, the intimation under section 143(1)(a) was valid is not correct in view of the judgment of Hon'ble Calcutta High Court in Modern Fibotex India Ltd. & Anr. v. Dy. CIT (1995) 212 ITR 496 (Cal) wherein the Hon'ble High Court has held that once a notice under section 143(2) has been issued, the assessing officer can neither make prima facie adjustment, nor can issue intimation under section 143(1)(a). It has been contended that the same view has been taken in Gujarat Poly Avx Electronics Ltd. v. Dy. CIT (1996) 222 ITR 140 (Guj), CIT v. H.E.G. Ltd. (2001) 171 CTR (MP) 318, CIT v. Regional Soyahean Products Co-operative Union Ltd. (1999) 239 ITR 217 (MP), Peico Electronics & Electricals Ltd. & Anr. v. Dy. CIT (1999) 236 ITR 702 (Cal) and Trustees of H.E.H. The Nizam's Supplemental Family Trust v. CIT (2000) 242 ITR 381 (SC). It has also been contended that SLP filed by department against an unreported judgment in the case of Premier Industries Ltd. by M.P. High Court on a similar issue has been dismissed by Hon'ble Apex Court (2001) 250 ITR 4 (St)). It has been contended that the dismissal of SLP by Supreme Court becomes the law of the land as held in V.H. Salgaocar & Bros. (P) Ltd., etc. v. CIT (2000) 243 ITR 383 (SC). It has been contended that even CBDT has issued Circular No. 549, dated 30-10-1989, reported in (1990) 182 ITR (St) 19 providing that no intimation under section 143(1)(a) can be issued after issuance of notice under section 143(2). It has therefore, been contended that the impugned intimation under section 143(l)(a) dt: 25-3-1991, is invalid/void ad initio and need be quashed.
6. As against the above, the learned Departmental Representative of revenue has contended that the date of processing of intimation under section 143(1)(a) is more relevant than the service of intimation. He has contended that if the processing has been done earlier, then the subsequent issuance of notice under section 143(2) does not invalidate the prima facie adjustment.
7. We have considered the rival contentions, the relevant material on record as also the cited decisions. In (1996) 222 ITR 140 (Guj) (supra) the Hon'ble Gujarat High Court has held that the CBDT has, vide Circular No. 549, dated 31-10-1989 advised the assessing officers to issue intimation under section 143(1) before issuance of notice under section 143(2) of the Act. It has also been held that after issuance of notice under section 143(2), it is not open for assessing officer to make adjustment or to pass order under section 143(1), but he has to make adjustment (assessment) under section 143(3) of the Act. In Modern Fibotex India Ltd. & Anr. v. Dy. CIT & Ors. (supra), the Hon'ble Calcutta High Court has held that once notice under section 143(2) has been issued, there is no scope for assessing officer either to make prima facie adjustment or to issue an intimation under section 143(1)(a). Thus, after issuance of notice under section 143(2) intimation under section 143(1)(a) cannot be issued. In (2000) 242 ITR 381 (SC) (supra) the Hon'ble Supreme Court has held that when the return of income was filed under section 139 along with the refund application, and no order for refund was passed and only inconclusive note with respect thereto to the effect that the question of giving credit for TDS can be considered in the hands of beneficiaries, and hence, no credit for TDS is to be allowed here, was made and that note too was not communicated to the assessee, it was also held that in any case if it was an order, it would be appealable under section 249, and since the period of limitation starts from the date of intimation of such order it was imperative that such an order be communicated to the assessee within a reasonable period. It was held that the said note was merely an internal endorsement on the file without there being an indication and the refund application had been finally rejected. By recording the said note, the Income Tax Officer could not be said to have closed the proceedings (of assessment) finally and that during the pendency of return filed under section 139 along with refund application, action under section 147/148 could not be taken. In that view of the matter considering all the facts and circumstances of the case and taking a circumspect view of the entire fact-situation and respectfully following the ratio of the aforesaid judicial pronouncements, we are of the view that the sending of intimation under section 143(1)(a)(i), as the provision stood at the relevant time (assessment year 1990-91), being imperative, due ,to the word "shall" having been used in this context, and the intimation having not been sent to the assessee by 26-4-1991, on which date of notice under section 143(2) dated 18-4-1991, was served on assessee, no intimation under section 143(1)(a) could, therefore, have legally been sent to the assessee and the intimation under section 143(l)(a) having been served on assessee on 7-8-1991, may reasonably be presumed to have been issued/sent from the office of assessing officer a few days prior to 7-8-1991, or in any case, in reasonable probability within a month prior to 7-8-1991, in the absence of there being any specific material/evidence on record to indicate the same. Accordingly, we also hold that the intimation under section 143(1)(a), having been served on assessee on 7-8-1991, the process of making of prima facie adjustment and of sending of intimation thereof under section 143(1)(a) could not be said to have been completed, and the same shall be treated to have been pending till 7-8-1991, in view of the decision of Hon'ble Supreme Court in (2000) 242 ITR 381 (SC) (supra). In such a situation, the notice under section 143(2) dated 18-4-1991, having been served on assessee on 26-4-1991, that is prior to the service of intimation under section 143(1)(a) on 7-8-1991, the said intimation served on assessee on 7-8-1991, being subsequent to the issuance and service of notice under section 143(2), must be held to be invalid in view of decisions of Hon'ble Gujarat High Court in (1996) 222 ITR 140 (Guj) (supra) and of Hon'ble Calcutta Hiah court in Modern Fibotex India Ltd. & Anr. v. Dy. CIT & Ors. (supra). The factual and legal position being as above, we find the prima facie adjustment together with the intimation dated 18-4-1991, served on assessee on 26-4-1991, to be not valid/tenable and in turn liable to be quashed. We order accordingly.
8. In view of our decision as rendered above on ground No. 2, we hardly need to enter upon a discussion on the merits of other grounds, nor do we need to decide them.
9. We may also observe that our decision rendered above on ground No. 1 also stands rendered infructuous in view of our above decision on ground No. 2.
10. In the result, this appeal of assessee is allowed as indicated above.