TaxTMI 
TaxTMI 
2012 (9) TMI 661
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....4,65,875/-, declared the income to be Nil, and carried loss of Rs.23,94,827/- forward to the A.Y. 1997-98. 4. The return of the income was processed under Section 143 (1) (a) on 'nil' income vide A.O's order dated 16.10.1997. No appeal was filed against the assessment, though the carry forward of the loss of Rs.23,94,827/- was denied. 5. Since the returned income was at a loss of Rs.23,94,830/- and assessed income was 'nil', additional tax under Section 143 (1) (a) was chargeable on the difference of returned and assessed income at Rs.23,94,830/-. The A.O. had failed to do so and consequently a show cause notice was issued under Section 154 (1) (b) to the respondent-assessee for rectifying the mistake. 6. In reply the respondent-assessee submitted that both the units were separate industrial undertaking and hence they were not to be considered separately. In Unit No.I there was profit and hence deduction under Section 80 IA was rightly claimed. In Unit No.II there was loss and hence no deduction under Section 80IA was claimed and thus the aggregate loss at Rs.23,94,827/- was rightly claimed. The assessee further submitted that since it was debatable issue, the order could not be....
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....deduction u/s 80IA at Rs.4,39,792/- (30% of Rs.14,65,875/-). The point at issue is that after calculating deduction u/s 80IA at Rs.38,66,702/-, it had to be restricted to the gross total income of the assessee at RS.14,65,975/- u/s 80A (2) and the balance foregone. Since it has not been done, there was a patent mistake of wrong claim of carry forward of unabsorbed deduction u/s 80IA of Rs.23,94,824/-. This was a prima facie mistake fully covered u/s 143 (1) (a). In fact, the A.O. had rightly computed the income at NIL in his order u/s 143 (1) (a) dated 16.10.97. The appellant has also not filed any appeal against the said order. The only prima facie mistake committed in this order u/s 143 (1) (a) was that additional tax u/s 143 (IA) was not charged. It has been rightly charged u/s 154 (1) (b). Hence the A.O.'s order is confirmed and the appeal dismissed.". 11. The assessee filed Income Tax Appeal No.3914/Del/99, which has been allowed by the Income Tax Appellate Tribunal following the judgment of the Delhi Bench of the Tribunal in the case of Sybly Spinning Mills Pvt. Ltd., ITA No.2662/Del/99 dated 31.1.2000, in which it was held that prima facie adjustment under Section 143 (1) (....
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....ld be whether additional income tax or penalty, or so to say additional tax by way of penalty, could be levied where there is no income but the return originally and after adjustment, shows losses alone. Section 271 of the Act provides for imposition of penalty. Clause (c) of Section 271(1) of the Act quoted above covers cases of concealment of the particulars of "income" or furnishing of inaccurate particulars of "such income". Such conduct, as indicated in Clause (c), can entail imposition of penalty. Explanation 6 to section 271 of the Act provides that, where any adjustment is made in the income or loss declared in the return under Section 143(1)(a) and additional tax is charged under that section, the provisions of Section 271(1) shall not apply in relation to the adjustment so made. From the above provision, it no doubt appears that levy of additional tax under Section 143(1A) of the Act may be by way of penalty but the question which still remains to be considered is as to whether penalty can be imposed in a case of "no income" in terms of Section 143(1A) of the Act. 13. We may now consider the relevant provision contained in Section 143(1A) of the Act. Sub-section (1A)(a) ....
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....xistence of other information in the return or the accompanying accounts or documents." 16. We have considered the submissions and find that the reasoning given by the Income Tax Appellate Tribunal cannot be justified. The Tribunal has followed its earlier judgment in M/s Sybly Spg. Mills Pvt. Ltd. without considering the facts of the case. In Sybly Spg. Mills Pvt. Ltd. it was held by the ITAT (Delhi Bench 'E' New Delhi) that the issue whether deduction under Section 80I could be allowed on profit of Unit-I or it was not allowable at all in view of the gross total income in the case being a loss was contentious and debatable issue and the same could be taken up by the A.O. only in regular assessment proceedings under Section 143 (3) of the Act and not in course of proceedings under Section 143 (1) (a) of the Act. The scope of prima facie adjustment under Section 143 (1) (a) of the Act is limited and it could not cover such contentious and legal issue. The CBDT circular on prima facie adjustment under Section 143 (1) (a) of the Act also made the point clear, which the A.O. had to follow. 17. In the present case we find that there was no debatable or contentious issue. The A.O. had....