1992 (6) TMI 73

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....or tax purposes 51,87,048 (b) Rum Business (IMF) Loss as per computation 6,20,092 ---------------- 45,66,956 (c) Profit in IMF business 4,38,236 ---------------- 50,05,192 Say 50,05,190 3. By his intimation dated 24-6-1991 the DC (Asst.) intimated the assessee AOP that its income had been determined at Rs. 1,55,44,250 by making an addition of Rs. 1,05,39,059 by way of adjustment under section 143(1)(a) of the Act. Brief reasons for making adjustment were given as under :--- " Rs. 1,05,39,059 on account of profit has been shown less than 40% of receipts. " Though in the body of the intimation slip it had been mentioned that an explanatory adjustment sheet was being enclosed with the intimation slip yet no such sheet was allegedly received by the assessee. Therefore, by its letter dated 22-7-1991 the assessee objected to the adjustment made in its returned income and also requested the DC (Asst.) to supply the explanatory adjustment sheet to it. The objection and prayer were repeated by yet other letters dated 3-8-1991 and 2-9-1991. By his letter dated 4-9-1991 the DC (Asst.) explained the position to the assessee in para 2 as under :--- " In the said letter you have stat....

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.... to Excise duty, Nirgam Mulya, issue price, Octroi etc. for the determination of purchase price. As such, the assessee committed an arithmetical error within the meaning of section 143(1)(a)(i) while not taking the amount of Excise duty, Octroi for moving out the purchase price under section 44AC. In view of this position, the amount of Excise and Octroi was rightly taken for the purchase and application under section 154 does not find any merit, hence the same is hereby rejected. " 5. After rejection of its application in the above manner the assessee adopted two courses. One, he challenged DC (Asst.'s) order dated 7-10-1991 in appeal to CIT (Appeals). Two, he again moved an application under section 154 objecting to the inclusion of Nirgam Mulya, Octroi and purchase price of Rum in determining the " purchase price " for the purposes of section 44AC of the Act. 6. By his order dated 2-1-1992 the DC (Asst.) partly accepted assessee's application under section 154 to the extent that cost price of Rum was excluded from the " purchase price " taken by him for purposes of 44AC of the Act. But in appeal against DC (Asst)'s order the CIT (Appeals) made no interference. Hence this appe....

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....e of the assessee or the declaration by him of any evidence in support of the return. In determining the tax payable in that way the Assessing Officer has the authority to make certain adjustments to the income or loss declared in the return. But these adjustments shall have necessarily to be restricted to the following fields viz. (i) rectification of any arithmetical errors in the return and the accounts and documents accompanying it ; (ii) allowance of any deduction or relief which, on the basis of information available in such return, accounts and documents is, prima facie, admissible though not claimed in the return, (iii) disallowance of any carried forward loss, deduction, allowance or relief claimed in the return but which, on the basis of information available in such return, account and document is, prima facie, inadmissible. 11. But whereas it is permissible for the Assessing Officer to allow certain deductions, allowances or reliefs like those under section 32(2), 33(2)(ii), 33A, 35(2)(i), 35A(1) of the Act while determining the tax or interest under section 143(1)(a)(i) on the basis of computation made in a regular assessment, if any, for an earlier assessment year....

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....nner viz. Purchase Price taken by the assessee : (1) Purchase price of country liquor Rs. 43,63,871 (2) Filling expenses Rs. 69,72,326 (3) Sales-tax Rs. 33,544 --------------------- Rs. 1,13,70,742 Purchase Price taken by the Assessing Authority by taking following three more items : (1) Nirgam Mulya Rs. 2,57,46,889 (2) Octroi Rs. 21,05,920 (3) Purchase price of Rum Rs. 91,721 -------------------------- Rs. 2,79,44,525 ------------------------- Rs. 3,93,15,268 ------------------------- 14. The calculation made by the assessee seems to be based on the meaning and scope of Section 44AC as explained by the CBDT in their letter dated 30-11-1988 to the Excise Authorities in the State of Uttar Pradesh in para 2 whereof it was mentioned that " 2. The issue has been examined and it has been decided that Nirgam Mulya or issue price will not form part of purchase price and consequently it will not be taken into consideration for determining the profits under section 44AC for collection of tax at source under section 206C of the Income-tax Act. The Excise Commissioner, Uttar Pradesh is also being informed of this decision. " 15. To the same effect was Board's D. O. No. 133/....