TaxTMI 
TaxTMI 
2003 (12) TMI 318
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....nbsp; Rs. 7,055 (c) Interest accrued but not paid: (i) IDBI Rs. 3,59,51,611 (ii) SIDBI Rs. 2,09,83,719 Rs. 5,69,35,330 --------------- --------------- Total: Rs. 5,70,12,385" 3. The AR points out that the amo....
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....; Rs. 8,534 (ii) Interest claimed in respect of loan from SIDBI Rs. 2,09,83,719 The assessee vide its cross-objection has supported the order of the CIT(A). Accordingly, the orders of the lower authorities are modified. 5. In the result, both the departmental appeal and the cross objection are partly allowed. Per Dr. R.K. Yadav, Judicial Member. - The assessee filed its return for the assessment year 1994-95 on 25th November, 1994, claiming total loss of Rs.7,88,35,460. The return was processed under section 143(1)(a) of the Income-tax Act, 1961 (in short the Act) and disallowance to the tune of Rs. 70,000 towards bonus, Rs. 7,055 towards EPL, DIT insurance and employer's contribution to Provident Fund Rs. 3,59,51,611 towards interest accrued to IDBI and to the tune of Rs. 2,09,83,719 towards interest accrued to CIDBI, were made and an addi....
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....e. It is not open to him to disallow such a claim under section 143(1)(a) of the Act. Law to this effect was laid in the judgments in SRF Charitable Trust v. Union of India [1992] 193 ITR 95 (Delhi), Khatau Junkar Ltd. v. K.S. Pathania, Dy. CIT [1992] 196 ITR 55 (Bom.), J.K.S. Employees Welfare Fund v. ITO [1993] 199 ITR 765 (Raj.), Coats of India Ltd. v. Dy. CIT [1995] 214 ITR 498 (Cal.), God Granites' case, Modern Fibotex India Ltd. v. Dy. CIT [1995] 212 ITR 496 (Cal.), Pardeep Kumar Har Saran Lal v. Assessing Officer [1998] 229 ITR 46 (All.), CIT v. Hindustan Electro Graphites Ltd. [2000] 243 ITR 48 (SC) and CIT v. K.V. Mankaram & Co. [2000] 245 ITR 353 (Ken). 4. No power lies with the Assessing Officer to disallow a claim on the ground that there is no proof in respect of the claim made by the assessee. Clause (iii) of the proviso is analogous to section 154 of the Act where it is evident from the return as filed, alongwith the documents in support thereof that a claim of the assessee is inadmissible, only then an adjustment under the said proviso can be made. If proof in support of the claim is not furnished by the assessee, then for lack of proof, no disallowance or adjust....
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....tion as an Assessing Officer subject to the limitation, if any, placed of its jurisdiction by the Act. The Tribunal is expected to exercise the statutory authority and statutory duty which it is bound to carry out. The right of an appeal is a substantive right and questions of fact and law are at large and are open to review by the Appellate Tribunal but in approaching to those questions of fact and law, the Tribunal shall virtually place it in the same position as that of an Assessing Officer. Law to this effect was laid in State of Orissa v. Babu Lal Chappolia [1966] 18 STC 17 (SC). 7. Terminus ad quem of the powers of the ITAT is not based in an extended horizons. It is co-terminus with the powers of the Assessing Officer. An appellate court cannot exercise the jurisdiction which does not vest in an Assessing Officer. It can correct the wrongs committed by the Assessing Officer which means that it can do the things which ought have been done by the Assessing Officer. But it cannot assume jurisdiction which does not vest in an Assessing Officer. Applying the above ratio, it is clear that the appellate Tribunal can correct the wrongs committed by the Assessing Officer or the Co....
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.... 255 OF THE IT. ACT, 1961, IN THE ABOVE MATTER. Since we differ in our views in the case, the Hon'ble President is requested to refer the question detailed below to the 3rd Member for adjudication: "Whether, the Tribunal has power to go beyond or behind the return, accounts or documents, either in allowing or disallowing any such deduction, allowance or relief, while hearing an appeal against an intimation sent under the provisions of section 143(1)(a) of the Act?" Considering the issue involved, I frame the question for 3rd Member as under: "Where disallowance by way of adjustments under section 143(1)(a) was made on account of the provisions of section 43B on the basis that evidence regarding payments had not been enclosed with the return of income, can the appellate authorities allow relief to the assessee on the basis of evidence of payment subsequently filed?" THIRD MEMBER ORDER M.A. Bakshi, Vice-President. - The appeal of the revenue and the cross-objection filed by the assessee against the order dated 5-9-2000 of CIT(A)-II, Patna was heard by the Division Bench of ITAT, Patna. Since there was a difference of opinion between the Members of the Bench, I was n....
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....; ---------------- Total : Rs. 5,70,12,385 5. The assessee appealed to the CIT(A) and the latter held that the adjustment made by the Assessing Officer under section 143(1)(a) of the Income-tax Act, 1961 was without jurisdiction. He, accordingly, deleted the adjustment made of Rs. 5,70,12,385 and also deleted the consequential additional tax. Revenue appealed to the Tribunal on the following ground: "Whether in the facts and circumstances of the case, Ld. CIT(A) erred in deleting the disallowance of Rs. 5,70,12,385 made by the Assessing Officer by way of prima facie adjustment under section 143(1)(a) without appreciating the facts in correct perspective and without assigning any cogent reasons." 6. The appeal was heard by the Patna Division Bench of the Tribunal. The Ld. Accountant Member pro....
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....ntimation sent under the provisions of section 143(1)(a) of the Act?" As per Ld. Accountant Member: "Where disallowance by way of adjustment under section 143(1)(a) was made on account of the provisions of section 43B on the basis that evidence regarding payments had not been enclosed with the return of income, can the appellate authorities allow relief to the assessee on the basis of evidence of payment subsequently filed?" 9. In my considered view, the identification of the point of difference does not seem to be in order. The real point of dispute between the Accountant Member and the Judicial Member is as to whether the Assessing Officer was justified in making the adjustment in respect of interest on loans from SIDBI of Rs. 2,09,83,719 and Rs. 8,534 in respect of bonus. 10. In order to appreciate the validity of adjustment made by the Assessing Officer under section 143(1)(a) in this case, it will be useful to refer to section 143(1)(a). The section reads as under: "143(1)(a) - Where a return has been made under section 139, the Assessing Officer may, without requiring the presence of (he assesses or the production by him of any evidence in support of the return....
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....ubsequently furnished, rectification under section 154 should be carried out to the extent permitted by the Board's Circular No. 669 dated 25-10-1993. No prima facie disallowance shall, however, be made if any evidence, required to be filed along with the return of income only in pursuance of the non-statutory guidance notes for filing in the return of income, is not so filed. (d) " (e) " 4. The above procedure applies to all returns pending processing under section 143(1) on the date of issue of this circular." 11. The question in this case is as to whether the adjustment made by the Assessing Officer under section 143(1)(a) was within his powers under the said section. Reading section 143(1)(a) in conjunction with the circular of the CBDT referred to above, it is evident that the Assessing Officer can make adjustment in respect of any deduction which on the basis of the return of income and accompanying records is prima facie inadmissible. It is not disputed in this case that the return of income was accompanied by P/L Account, Balance Sheet and other statements. In the P/L Account which is placed on record, the assessee had claimed a deduction on account of interest ....
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....e P/L Account the total claim of interest is detailed as under: IDBI Rs. 4,21,53,326.23 Rs. 3,75,40,555.00 SIDBI Rs. 2,35,38,791.00 Rs. 2,04,84,899.00 It is evident from the facts stated above that out of the claim of interest made by the assessee in the case of IDBI a sum of Rs. 3,59,51,611 (Rs. 4,08,03,419 - Rs. 48,51,808) was outstanding as on the end of the previous year and in the case of SIDBI, the total claim of interest outstanding as on the end of the previous year was Rs. 2,09,83,719. From the P/L Account and the balance sheet it is evident that the above interest payable to IDBI and SIDBI remained unpaid as on the end of the previous year. It will be relevant to ascertain as to whether such interest was patently disallowable under the provisions of section 43B. It would, therefore, be necessary to refer to relevant portion of section 43B as under:- "43B. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of- [(c) any sum referred to....
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....urn of income for the relevant previous year. This is subject to a condition that the evidence of such payment is furnished by the assessee along with the return. So, the proviso to section 43B would be attracted if two conditions are satisfied. One is that the amount which was outstanding as on the end of the previous year has been paid before the time allowed for filing of the return of income. The second condition to be satisfied for applicability of the proviso to section 43B is that the evidence of such payments is furnished by the assessee along with the return. Presently it is nobody's case that the assessee had furnished any evidence along with the return evidencing the payments made out of the interest that remained unpaid as at the end of the previous year. 13. Now it will be easy to appreciate as to whether the Assessing Officer was empowered to make an adjustment under section 143(1)(a). I have quoted section 143(1)(a) as well as CBDT circular No. 689 elsewhere in this order. The assessee had made the claim of deduction in the P/L Account in contravention of provisions of section 43B. The incorrectness of the claim was evident from the information in the return and t....
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....ction of the Ld. Accountant Member of allowing relief to the assessee in regard to the payments verified by the Assessing Officer during the course of proceedings under section 143(3). In my considered view whether the appellate authority had power or not in entertaining fresh evidence is an area which need not be explored for the purpose of present controversy. The Ld. Judicial Member has himself pointed out in his order that the appellate authority can do what the Assessing Officer can do. To that extent the power of the appellate authority has been recognized by the Ld. Judicial Member. Since in this case the Assessing Officer was required to rectify the adjustment/intimation under section 143(1)(a) on production of evidence before him, the CIT(A) or the Appellate Tribunal cannot be said to have exceeded the powers when such a power could be exercised by the Assessing Officer himself. There is nothing wrong in my view in giving relief to the assessee in respect of the payments falling within the proviso to section 43B by the Tribunal on the basis of the order under section 143(3). It may also be pertinent to mention that before its omission w.e.f. 1-6-1999, section 143(1A) also ....