TaxTMI 
TaxTMI 
2003 (3) TMI 69
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.....B). Consequently, the assessing authority added the difference (Rs. 27,55,383 minus 23,20,428) of Rs. 4,34,955 to the income declared by the appellant. Aggrieved by the said action of the assessing authority, the appellant preferred revision under section 264 of the Act before the Commissioner Income tax, Karnataka-II, Bangalore. Before the Commissioner, the appellant con tended that the income declared was not based on any books of account, as he did not maintain regular books of account; that the assessing authority failed to allow expenses against additional gross receipts of Rs. 4,34,955; and, if, the expenses are allowed, his total income including the income declared earlier, would be Rs. 90,140 only as against Rs. 86,810. In support of that plea, the appellant-assessee filed a computation statement wherein he estimated profit at eight per cent. on net contract receipts and claimed depreciation at Rs. 60,421. The Commissioner of Income-tax having opined that the appellant did not produce any evidence to show that the expenses debited to the profit and loss account filed along with the return, are not in relation to the entire gross bills of Rs. 27,55,383, did not find any....
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.... 143(1)(a) of the Act, particularly, when the intimation falls under clause (i) of the proviso to section 143(1)(a) of the Act. In support of his submission, learned senior standing counsel placed reliance on the judgment of this court in Bidar Sahakari Sakkare Kharkhane Niyamat v. Union of India [1999] 237 ITR 445. Mr. Seshachala submitted that Writ Appeal No. 1396 of 1999, filed against the said judgment of the learned single judge was dismissed by a Division Bench of this court by order dated May 29, 2002, and that order was allowed to become final. Learned standing counsel also contended that the appellant-assessee along with the return of income, furnished profit and loss account and balance-sheet, etc., and there is nothing to show that the expenses debited to the profit and loss account are not in relation to the entire gross bills of Rs. 27,55,383. By way of reply, Sri G. Sarangan contended that what fell for consideration in Bidar Sahakari Sakkare Kharkhane Niyamat v. Union of India [1999] 237 ITR 445 (Karn) was constitutional validity of section 143(1A) and, therefore, the observations made by this court in that judgment are not relevant in construing section 143(1)(a) of....
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....as a result of which, if the assessing authority wanted to make an assessment on the basis of the return as filed, he was entitled to make certain adjustments to the income or loss declared in the return. Under this provision, the assessing authority could rectify any arithmetical error in the return or accounts and documents accompanying it. The assessing authority could allow any deduction, allowance, or relief which, on the basis of the information available in the return, accounts and documents, was prima facie admissible but was not claimed; and, similarly, he could disallow any deduction, allowance or relief claimed in the return which, on the basis of the information available in such return, accounts or documents was prima facie inadmissible. The new amended provisions have been brought into effect from April 1, 1989, under the Direct Tax Laws (Amendment) Act, 1989. As a result, there is no summary assessment to start with. Only an intimation has to be sent by the assessing authority, as set out in section 143(1)(a) as in force. Since there is no assessment, the right of the assessee to object to a summary assessment has also been deleted. It is true that, as held by the....
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....penditure in connection with the earnings of Rs. 27,55,383. In that view of the matter, non-issuance of notice by the assessing authority before the impugned intimation under section 143(1)(a) of the Act was sent, would not vitiate the impugned intimation. This court in Bidar Sahakari Sakkare Kharkhane Niyamat v. Union of India [1999] 237 ITR 445, while upholding the validity of section 143(1A) and section 143(1)(a) of the Act, held that the very object of section 143(1)(a) of the Act by making prima facie adjustment is to avoid hearing being given. We are in respectful agreement with the view of the learned judge. Further, the object of new section 143, is carefully stated by the Central Board of Direct Taxes in its Circular No. 549, dated October 31, 1989. In the said circular, it has stated thus: "The new section 143, as substituted by the Amending Act, 1987, while dispensing with the necessity of passing assessment orders in all cases, did not contain any deterrent provision against filing of incorrect returns to show lesser tax liabilities. Consequently, the new scheme of assessment was liable to be misused by unscrupulous taxpayers, who might return lesser income by mak....
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.... ultimate analysis, the petitioner may not be entitled for the deduction claimed from the total income does not mean that recourse can be had to disallowance under section 143(1)(a), dispensing with hearing and denying the opportunity to the petitioner to challenge the assessment. Under the guise of effecting an adjustment under section 143(1)(a), the Assessing Officer cannot decide debatable issues. Reference may be made in this behalf to the decision of the Bombay High Court in Khatau Junkar Ltd. v. K.S. Pathania [1992] 196 ITR 55 wherein it is held that unless the inadmissibility of a deduction is evident and obvious (as in the case of section 154), from the return and its annexures, the Assessing Officer who wants to disallow a deduction or a claim, is bound to follow the procedure under section 143(2) of giving a notice to the assessee; and that no substantial adjustments which require examination of evidence or which would require a hearing, are contemplated under section 143(1)(a). Hence, the intimation dated March 31, 1995 (annexure C), is liable to be set aside. The petitioner is entitled to a notice under section 143(2) even though the result of the hearing and consequent....
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....,416 was payable by the petitioner on account of interest under sections 234B and 234C of the Act. Thus, a total amount of Rs. 50,22,066 was payable by the petitioner and the tax so determined was actually paid by it. Along with the return the petitioner furnished details of computation of taxable income for the year ending on March 31, 1992, and also the details of the depreciation allowable, additions made to the fixed assets during the year 1992, amounts disallowable under section 143(1B) (sic) of the Act, etc. The first respondent, however, made prima facie adjustments in the purported exercise of the powers under section 143(1)(a) of the Act and added back certain income mentioned in paragraph 5 of the petition. The first respondent accordingly determined the adjusted total income at Rs. 1,54,33,291 and the total tax payable was determined at Rs. 69,44,981 along with surcharge of Rs. 10,41,747. Additional tax under section 143(1A) of the Act amounting to Rs. 6,29,615 was also levied. After adjustment of the amount already paid a sum of Rs. 60,59,651 was determined as tax payable by the petitioner. The petitioner filed a petition under section 154 of the Act for rectification o....
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....ter justice and not to thwart justice. The principles of natural justice should reflect and guard the values of fairness and impartiality. It is true that audi alteram partem and nemo judex in causa sua are twin formidable pillars supporting natural justice. In order to decide whether in the instant case notice to the assessee before issuance of intimation under section 143(1)(a) of the Act was necessary, it becomes necessary to know whether the appellant-assessee suffered any prejudice on account of non-issuance of notice. It is not the case of the appellant-assessee that the assessing authority made use of some undisclosed information or evidence before he added a sum of Rs. 4,34,955 to his income. Addition is made solely on the basis of the return filed by the assessee and the documents produced by him. Principles of natural justice are not engraved on tablets of stone as Lord Bride of Harwich said in Lloyd v. McMahon [1987] 1 All ER 1118 (CA). The Supreme Court in Rattan Lal Sharma v. Managing Committee, Dr. Hari Ram (Co-education) Higher Secondary School [1993] 83 FJR 25; AIR 1993 SC 2155 opined that natural justice is not a fixed but a flexible concept, that there is no invar....