2008 (1) TMI 360 - HC - Income Tax

Dismissal of Appeal Against Additional Tax Demand Due to Retrospective Amendment

M/s Pradeshik Cooperative Dairy Federation Limited Versus Deputy CIT, Special Range, III, Lucknow

The appeal under Section 260-A of the Income Tax Act against the ITAT Lucknow's order dismissing the appellant's appeal on additional tax demand was ... In view of amendment in Section 143 (1A) amended retrospectively, proceeding u/s 154 initiated to demand additional tax - Appellant submits that no additional tax can be levied where the assessed income is at loss and therefore, by subsequent amendment, the liability cannot be fixed - law has been clarified by the Parliament by making a retrospective amendment in the statute – held that appellant cannot take benefit of the ratio laid down by SC in Hindustan Electro Graphites Ltd. Issues Involved:- Appeal under Section 260-A of the Income Tax Act 1961 against the order of the Income Tax Appellate Tribunal Lucknow.- Rectification of additional tax demand due to retrospective amendment of Section 143 (1A) by Finance Act 1992.- Interpretation of the period of limitation under Section 154 of the Act for passing rectification orders.- Whether rectification can be made even if the previous order was given effect to.- Applicability of previous court decisions on the current case.- Whether additional tax can be levied when the assessed income results in a loss.- Benefit of retrospective amendment in the statute on the appellant's case.- Whether the present appeal raises any substantial question of law.Analysis:Issue 1: Appeal against ITAT OrderThe appellant filed an appeal under Section 260-A of the Income Tax Act against the order of the Income Tax Appellate Tribunal Lucknow, which dismissed the appellant's appeal regarding the additional tax demand.Issue 2: Rectification of Additional Tax DemandThe additional tax demand of Rs.3,12,655/- was initially rectified and cancelled due to a judgment holding that additional tax is not chargeable when the assessed income is a loss. However, a retrospective amendment nullified this judgment, leading to the reinstatement of the additional tax demand.Issue 3: Interpretation of Period of LimitationThe appellant argued that the period of limitation for passing rectification orders should be counted from the date of the original order and not from subsequent orders, citing relevant amendments in the Taxation Law Amendment Act 1984.Issue 4: Rectification Despite Previous OrderThe court clarified that rectification can be made even if the previous order was given effect to, emphasizing that rectification is permissible for orders suffering from manifest errors of law.Issue 5: Applicability of Previous Court DecisionsThe court distinguished a previous court decision related to income disclosure from the current case, focusing on the specific issue of levying additional tax when the assessed income results in a loss.Issue 6: Additional Tax on Assessed LossThe appellant's argument relied on a court decision regarding the levy of additional tax on specific income types, but the court held that the retrospective amendment by the Parliament clarified the law on additional tax in cases of assessed losses.Issue 7: Benefit of Retrospective AmendmentThe court concluded that the appellant could not benefit from previous court decisions due to the retrospective amendment in the statute, which addressed the specific issue of levying additional tax on assessed losses.Issue 8: Substantial Question of LawThe court found that the issues raised in the appeal were covered by previous court decisions and did not give rise to any substantial question of law, leading to the dismissal of the appeal.In summary, the judgment addressed various legal issues concerning the rectification of additional tax demand, interpretation of the period of limitation, applicability of previous court decisions, and the impact of retrospective amendments on the appellant's case. The court's analysis focused on clarifying the law in relation to levying additional tax on assessed losses and ultimately dismissed the appeal for not raising any substantial question of law.