Court Invalidates Jurisdiction of Assessing Officer in Tax Case

The court held that the Assessing Officer lacked jurisdiction to revise the intimation/assessment order under section 154 of the Income-tax Act. The disputed rectification notices were deemed invalid, and the writ petitions were granted without costs. The court emphasized that adjustments requiring investigation or adjudication cannot be made under section 143(1)(a) after the issuance of a regular assessment order under section 143(3).

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Issues Involved:
1. Rectification of apparent mistake u/s 154.
2. Allowance of 100% depreciation on bottles and crates.
3. Jurisdiction of the Assessing Officer to make adjustments u/s 143(1)(a) after issuing notice u/s 143(2).
4. Application of section 115J of the Income-tax Act.

Summary:

1. Rectification of apparent mistake u/s 154:
The dispute arises from the rectification of the so-called apparent mistake in the orders passed u/s 143(3) and u/s 143(1)(a) made in the purported exercise of power u/s 154 of the Act. The Assessing Officer issued notices for rectification, stating that there was a "mistake apparent from record regarding the calculation of book profit" due to the allowance of 100% depreciation on bottles and crates.

2. Allowance of 100% depreciation on bottles and crates:
The petitioner-company claimed 100% depreciation on glass bottles and wooden crates treating them as "plant" u/s 32(1)(ii) of the Act. The Assessing Officer initially disallowed this claim, but the Income-tax Appellate Tribunal upheld the company's contention, allowing 100% depreciation. The Assessing Officer later issued notices for rectification, reducing the depreciation to 15%.

3. Jurisdiction of the Assessing Officer to make adjustments u/s 143(1)(a) after issuing notice u/s 143(2):
Dr. Debi Pal, counsel for the petitioners, argued that after issuing notice u/s 143(2) and passing a regular assessment order u/s 143(3), the Assessing Officer cannot make adjustments or pass any order u/s 143(1)(a). The court agreed, stating that adjustments requiring investigation or adjudication cannot be made u/s 143(1)(a). The court held that the Assessing Officer had no jurisdiction to revise the intimation and recompute income u/s 154.

4. Application of section 115J of the Income-tax Act:
Section 115J obliges the Assessing Officer to compute the taxable income of a company in a particular manner. The court observed that if the taxable income was not computed correctly, the Assessing Officer should have issued notice u/s 143(2) and proceeded to assess the income accordingly. The court concluded that any mistake in the computation of taxable income under section 115J could not be corrected using the rectification power u/s 154.

Conclusion:
The court held that the Assessing Officer had no jurisdiction to revise the intimation/assessment order in the purported exercise of power u/s 154 of the Act. The impugned orders/notices were quashed. The writ petitions were allowed, and no order as to costs was made.

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