TaxTMI 
TaxTMI 
1968 (9) TMI 3
X X X X Extracts X X X X
X X X X Extracts X X X X
....9 (Loss) 31,48,707 (Loss) 1959-60 28,77,487 (Loss) 20,62,180 (Loss) 1960-61 11,35,365 (Loss) Assessment pending 1961-62 66,086 (Loss) 1962-63 44,93,236 (Profit) 1963-64 74,52,402 (Profit) 1964-65 59,89,757 (Profit) Against the orders of assessment made by the Income-tax Officer for the years 1954-55 to 1959-60 determining its net income or loss as set out in the chart the company appealed to the Appellate Assistant Commissioner, and the appeals were pending at the dates of commencement of the petitions in the High Court of Rajasthan which give rise to the proceedings in this court. Assessments for the years 1960-61, 1961-62, 1962-63, 1963-64 and 1964-65 were, however, then not completed. In its return of income for the assessment year 1963-64 the company claimed to set off against the income returned Rs. 1,03,03,935 being the aggregate amount of loss which it claimed it had suffered in the previous years and was entitled to set off against the income of that year. The Income-tax Officer made a provisional assessment of the tax under section 141 of the Income-tax Act, 1961, and against the income returned by the company he allowed dedu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of tax on the basis of the return made by the assesse. The Act contains several provisions for collection of tax before regular assessment, e.g., payment of advance tax, deduction of tax at source from salary and dividends, provision for self-assessment, etc. The object of these provisions is to collect tax on certain classes of income before regular assessment. The provisional assessment does not bind the assessee nor the department : the quantum of tax computed and the levy thereof are not binding upon the assessee and the revenue. Tax paid pursuant to provisional assessment is liable to be adjusted in the light of the final order in the regular assessment. An appeal against the order is expressly prohibited. The Income-tax Officer must, however, apply the rate operative in the assessment year by viture of the Finance-Act and give effect to the allowances mentioned in sub-section (2) of section 141 whether the assessee has claimed them or not. But the assessee has no right to be heard or to explain or elucidate and has no right of appeal against the computation or the levy of tax. The company claimed that it was entitled to deduct the aggregate of losses which it had suffe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....profits and gains of business, profession or vocation may be carried forward to the next succeeding year only if it has been determined in pursuance of a return filed under section 139. If it is not so determined in the assessment of the subsequent year the loss cannot be carried forward and set off against the profit of the subsequent year or years. By sub-section (2) of section 141 the Income-tax Officer is enjoined to give effect to the loss so certified and carried forward. But it does not follow therefrom that when the assessee claims that out of the income of the year returned by him certain amounts are liable to be deducted in computing the taxable total income, the Income-tax Officer may adjudicate upon the validity of the claim in making a provisional assessment. In our judgment, if it be granted that the Income-tax Officer has jurisdiction to hold an enquiry into disputed matters, the expression "provisional assessment" may lose all significance : the Income-tax Officer may under a summary assessment without giving an opportunity to the assessee to explain his claim negative it and the assessee has no redress under the Act against any erroneous or arbitrary action. The co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed that provisional assessment has to be made in accordance with and subject to the provisions of the Act, distinction between a provisional assessment and a regular assessment gets completely blurred. The scheme of section 141 is to call upon the assessee to pay tax provisionally at the appropriate rate on what he admits is his taxable income, subject to the benefit of the allowances under sub-section (2). The section does not permit an enquiry to be made whether the total income returned by the assessee exceeds the amount admitted by him, nor whether the allowances or deductions claimed are admissible. If there be a discrepancy between the return made and the accounts and documents accompanying the return, the Income-tax Officer may ask the assessee to explain the discrepancy, but he must make a provisional assessment on the basis of the return initially made or clarified and the accounts and documents filed. He cannot make a provisional assessment by holding that certain claims made by the assessee are in law unjustified. If it transpires that the assessee has without reasonable cause concealed particulars of his income or has furnished inaccurate particulars of his income, it m....