Income Tax Appellate Tribunal - Mumbai
Hindustan Lever Limited vs Deputy Commissioner Of Income Tax on 30 April, 1998
Equivalent citations: [1999]68ITD85(MUM)
ORDER
Vimal Gandhi, Vice President
1. This appeal by the assessee for the asst. yr. 1989-90 is directed against the order of the CIT(A) upholding rectification carried by the AO under s. 154 of the IT Act withdrawing deduction of additional tax of Rs. 29,84,136 raised in intimation under s. 143(1)(a) but allowed in ITNS 150 issued on making assessment under s. 143(3) of the Act.
2. The facts of the case, briefly stated, are that the assessee filed return on 29th December, 1989. The AO sent intimation to the assessee under s. 143(1)(a) dt. 30th November, 1990, wherein additional tax of Rs. 30,29,075 was raised in respect of certain additions made for prima facie inadmissible items. Subsequently, this additional tax was reduced to Rs. 29,84,136 under s. 154 vide order dt. 18th June, 1991. The AO completed assessment under s. 143(3) of the IT Act vide order dt.30th October, 1991, on total income of Rs. 64,69,37,100. By that time, the assessee had cleared the demand raised through intimation referred to above. So, the AO raised demand of Rs. 2,08,39,642 after adjusting tax paid in pursuance to intimation sent to the assessee inclusive of additional tax of Rs. 29,84,136. Subsequently, the AO realised that additional tax of Rs. 29,84,136 "was left out to be levied" at the time of regular assessment when "all other adjustments made at the stage of s. 143(1)(a) have been retained". The AO accordingly issued notice under s. 154 to rectify above mistake. The assessee objected to above rectification. However, the AO rejected all the objections of the assessee and passed an order under s. 154 of the IT Act restoring demand of Rs. 29,84,136 and issued challan for the above amount.
3. The assessee impugned above assessment in appeal, but remained unsuccessful. The concluding portion of order of the learned CIT(A) is as under:
"In view of the above discussion the appellant's appeal fails on all grounds and the action on the part of AO is upheld in clarifying the appellant through his order under s. 154 that the appellant's tax liability amounting to Rs. 2,08,39,643 is besides the demand of additional tax at Rs.29,84,136 (revised under s. 154) credited under s. 143(A) as per the provisions of s. 143(1A)."
The assessee has come up in appeal.
4. We have heard the submissions of both the parties. The learned counsel for the assessee F. V. Irani principally raised the following propositions :
(i) In order to apply provisions of s. 154 of the IT Act, there should be a mistake apparent from record. A debatable point on which more than one reasonable view are possible cannot be treated as a mistake for the purposes of s. 154 of the IT Act;
(ii) That above "apparent mistake" for purposes of s. 154 of the IT Act must be a mistake in an order whereas the AO here was seeking to rectify ITNS 150 which is not assessment order, as held by the Hon'ble Allahabad High Court in the case of CIT vs. Himalaya Drug Co. (1982) 135 ITR 368 (All). He also relied upon decision of the Tribunal, Jaipur Bench in the case of Surendra Kumar Kankaria vs. ITO (1982) 14 TTJ (JP) 320. Irani also referred to Circular of CBDT No. 549 dt. 31st October, 1989, which supported the view that provision of s. 154 were applicable only to an assessment order. Irani also referred to the decision of the Hon'ble Supreme Court in the case of T. S. Balram, ITO vs. Volkart Bros. & Ors. (1971) 82 ITR 50 (SC). He read out notice issued by the AO under s. 154 of the IT Act to show that the AO wanted to include Rs.29,84,136 in the total tax payable by the assessee on regular assessment in ITNS 150 whereas the learned CIT(A) upheld demand of additional tax of Rs. 29,84,184. Thus, order passed by the learned CIT(A) was contrary to the notice issued by the AO.
5. During the course of hearing of appeal, attention of Irani was drawn to the decision of the Hon'ble Supreme Court in the case of Kalyan Kumar Ray vs. CIT (1991) 191 ITR 634 (SC). Irani then submitted that the above decision was given in a different context and should not be applied to the facts of the case, in the light of notice issued by the AO. He drew our attention to the following observations of the Hon'ble Supreme Court in the case of CIT vs. Sun Engineering Works (P) Ltd. (1992) 198 ITR 297 (SC):
"It is neither desirable nor permissible to pick out a word or a sentence from the judgment of the Supreme Court divorced from the context of the question under consideration and treat it to be the complete law declared by the Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before the Court. A decision of the Supreme Court takes its colour from the questions involved in the case in which it is rendered and, while applying the decision to a later case, Courts must carefully try to ascertain the true principle laid down by the decision."
5.1 Irani also submitted that in view of provision of sub-s. (4) of s. 143, the adjustments made by the AO were fully justified. At any rate, a highly debatable and controversial issue was involved relating to interpretation of above sub-section and, therefore, the rectification sought was beyond the scope of s. 154 of the IT Act. Irani, therefore, submitted that the order of the Revenue authorities should be quashed.
6. The learned Departmental Representative, on the other hand, supported the impugned order of the learned CIT(A).
7. We have given careful thought to the rival submissions of the parties. In order to appreciate contention raised on behalf of the assessee, it is necessary to keep in mind statutory provision relating to summary assessment as provided under s. 143 of the IT Act. Under s. 143(1)(a) and as per first proviso to that sub-section, prima facie adjustments as authorised can be made and a demand can be raised and notice of demand issued as per cl. (i) which provides as under:
"(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-s. (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 s. 156 and all the provisions of this Act shall apply accordingly"
(The other provisions are not being reproduced as they are not relevant).
7.1 Then under sub-s. (1A), the AO is to levy additional income-tax in the following circumstances provided in cl. (a) to above sub-section which is reproduced below:
"(A) in a case where the increase in income under sub-cl. (i) of this clause has increased the total income of such person, further increase the amount of tax payable under sub-s. (1) by an additional income-tax calculated at the rate of twenty per cent on the difference between the tax on the total income so increased and the tax that would have been chargeable had such total income been reduced by the amount of adjustments and specify the additional income-tax in the intimation to be sent under sub-cl. (i) of cl. (a) of sub-s. (1);"
(The other provisions are not being reproduced as they are not relevant).
7.2 The demand of additional income-tax is to be increased or reduced as a result of order under ss. 154, 250, 254, 260, 262, 263 or 264 of the IT Act, as provided by cl. (b) of sub-s. (1A) of s. 143 of the IT Act. Sub-s. (4) of s. 143 is also relevant for purposes of disposal of this appeal and the said sub-section is to the following effect :
"(4) Where a regular assessment under sub-s. (3) of this section or s. 144 is made, -
(a) any tax or interest paid by the assessee under sub-s. (1) shall be deemed to have been paid towards such regular assessment;
(b) if no refund is due on regular assessment or the amount refunded under sub-s. (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly."
8. The short question to be determined in this appeal is whether demand of Rs. 29,84,136 raised in intimation under s. 143(1)(a) was rightly adjusted against the demand created on regular assessment under s. 143(3) of the IT Act. In case above demand could not be adjusted, then whether in making above adjustment, the AO committed a mistake apparent from record which could be rectified under s. 154 of the IT Act?
9. Before proceeding to consider other objections, we may straightway start with the assessee's objection that the AO was seeking to rectify ITNS 150 by increasing demand of Rs. 2,08,39,640 by Rs. 29,84,136. The above document was not an order which could be rectified. Therefore, the whole exercise was unauthorised by law. In order to dispose of this objection, we deem it convenient to refer to the following observations of the Hon'ble Supreme Court in the case of Kalyan Kumar Ray vs. CIT (supra) about ITNS 150:
"ITNS 150 is also a form for determination of tax payable and when it is signed or initialled by the ITO, it is certainly an order in writing by the ITO determining the tax payable within the meaning of s. 143(3). It may be only a tax calculation form for Departmental purposes as it also contains columns and code numbers to facilitate computerisation of the particulars contained therein for statistical purposes, but this does not detract from its being considered as an order in writing determining the tax payable by the assessee. There is no reason why this document, which is also in writing and which has received the imprimatur of the ITO, should not be treated as part of the assessment order in the wider sense in which the expression has to be understood in the context of s. 143(3). All that is needed is that there must be some writing initialled or signed by the ITO before the period of limitation prescribed for completion of the assessment has expired in which the tax payable is determined. The form usually styled as the "assessment form" need not itself contain the computation of tax as well."
9.1 In the above case, their Lordships also referred to the decision of the Hon'ble Allahabad High Court in the case of Himalaya Drug Co. (supra) relied upon by the assessee, but observed that they were unable to see why this document (ITNS 150) should not be treated as part of the assessment order. Therefore, there is no force in the first objection of the assessee. In the light of the decision of the Supreme Court, it is now more than clear that the AO has to determine not only total income of the assessee but also sum payable by it in an order in writing. The above assessment order may be on more than one sheets and includes ITNS 150. Sub-s. (4) of s. 143 further requires adjustment of tax and interest paid under sub-s. (1) which are deemed to have been paid towards regular assessment. Therefore, whether in a given case, proper and correct adjustment, as envisaged by the statutory provision, has been made or not could be examined under s. 154 of the IT Act and if, on examination, it is found that a mistake has been committed in the adjustment and in the calculation of tax, the same can be rectified under s. 154 of the IT Act. ITNS 150 containing adjustments/calculations of tax is part of the assessment order and can be rectified under s. 154.
10. The other objections raised on behalf of the assessee are also devoid of substance. A distinction has been made in s. 143 between "tax", "interest" and "additional income-tax". The tax and interest are paid and recovered under sub-s. (1) of s. 143 of the IT Act. The additional income-tax is levied and recovered under sub-s. (1A) of s. 143. The learned counsel for the assessee referred to the following words in sub-s. (1A)(a) of s. 143 of the Act:
"Further increase the amount of tax payable under sub-s. (1) by an additional income-tax calculated at the rate of 20 per cent on the difference"
to buttress his argument that additional income-tax was also part of the tax paid or recovered under sub-s. (1). We are unable to agree with the above proposition. The additional income-tax is levied and recovered under sub-s. (1A) and not under sub-s. (1) and above words do not change the situation. The distinction between the two levies is maintained throughout the provision. Clause (b) of sub-s. (1) provides for increase or reduction of tax and interest consequent to an appellate and revisional order, but a separate provision is made in sub-s. (1A) for increase or reduction of additional income-tax. The above conclusion is further supported by the fact that additional income-tax has been held to be penal in nature levied to discourage disclosure of wrong income which needs to be enhanced through "intimation" as per s. 143(1)(a) of the Act. We are, therefore, of the view that additional income-tax is not a "tax" levied under sub-s. (1) but is a levy distinct from the tax.
11. We may now take up contention of the assessee that additional income-tax was rightly adjusted in the demand created on regular assessment under sub-s. (4) of the Act. We have already reproduced provision of aforesaid sub-s. (4). As per cl. (a), any tax or interest paid under sub-s. (1) is deemed to be paid towards a regular assessment, but what is deemed to be paid is "tax or interest" and not "additional income-tax". Again, what has to be adjusted is the payment made under sub-s. (1) and not under sub-s. (1A). Therefore, to appreciate the assessee's contention, we have to add words "additional income-tax" besides tax and interest, as also sub-s. (1A) besides sub-s. (1) in cl. (a) of sub-s. (4) of s. 143. There is no justification for making above additions while interpreting sub-s. (4) of the IT Act. Clause (b) of sub-s. (1A) separately providing for reduction and increase of additional income-tax with reference to appellate and revisional order also supports the conclusion that additional income-tax is a separate levy and does not merge with the tax raised on a regular assessment under s. 143(3). If it had merged, there was no need to make separate provision for its reduction or enhancement, as stated above. There is, therefore, no justification for making adjustment of additional income-tax with the demand created under s. 143(3) of the IT Act. The adjustment of Rs. 29,84,136 in the demand created on regular assessment was a mistake apparent from record, liable to be rejected.
12. The assessee then contended that even if additional income-tax could be adjusted, sub-s. (4) of s. 143 was entitled to more than one reasonable interpretations. Therefore, for the purposes of s. 154, adjustment of additional income-tax in view of the language employed, could not be stated to be a mistake apparent from record. We do not find any force in this submission. We have already elaborated that provisions of sub-s. (4) are more than clear and talk of tax and interest paid under sub-s. (1) and not "additional income-tax" levied and recovered under sub-s. (1A) of s. 143 of the IT Act. There is no justification on the part of the assessee to contend that additional income-tax is to be adjusted in the demand created on regular assessment under s. 143(3). There is no provision to make such adjustment under the scheme of the Act. Therefore, such an argument could not be raised on the plain language of the statutory provision. There is no legal debate debarring application of provision of s. 154 of the IT Act to the facts of the case. If a slightly long order is required to be passed to meet arguments of the assessee and to satisfy him, it does not mean that a debatable point is involved. No decision supporting assessee's claim has been cited before us. Therefore, we hold that on a plain language of statutory provision the deduction for additional tax could not be allowed and was a mistake apparent from record which was rightly directed to be rectified.
13. The assessee also found fault with the notice issued by the AO under s. 154 of the IT Act. We concede that the AO should have been a little more careful while issuing notice under s. 154 of the IT Act, but on reading of the notice and the order under s. 154 as a whole, we do not see any illegality or jurisdictional defect in the action of the AO. From p. 2 of reply of the assessee dt. 22nd February, 1993, to the show-cause notice as also from para 3 of order under s. 154 it is clear that both the parties were fully alive to the real controversy between the parties and, therefore, no prejudice has been caused to the assessee. This is what the assessee had stated in its reply:
"In your order under s. 143(1)(a) (as rectified under s. 154), you had levied certain tax and increased the amount of this tax determined under s. 143(1)(a) by a further amount of Rs. 29,84,136 being additional tax computed in the manner laid down in s. 143(1A). However, when the assessment order under s. 143(3) was passed in determining the tax payable thereunder, as laid down in s. 143(4), you have correctly granted credit for the amount of tax recovered under s. 143(1) (including the amount of additional tax determined under s. 143(1A)."
13.1 The question whether above claim was right or not, was the issue which was decided against the assessee by the Revenue authorities and we uphold their action.
14. For the aforesaid reasons, we confirm the action of the learned CIT(A) and dismiss this appeal of the assessee.