TaxTMI 
TaxTMI 
2000 (9) TMI 32
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....mation under section 143(1)(a), the Tribunal is justified in relying on the findings entered in an earlier order of the Tribunal arising out of an order under section 143(1)(a) of the Income-tax Act ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in interfering with the disallowance made in a sum of Rs. 3,571 under section 37(2A) of the Income-tax Act ? (4) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in deleting the disallowance of Rs. 7,31,127 made in the deduction under section 80HH and of Rs. 9,16,910 made in the deduction under section 80-I of the Income-tax Act ? (5) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding that the manufacturing activity and dealing in units of the Unit Trust of India constituted the same business and that a contrary view could be taken only by sorting out the facts and after a process of reasoning and so the issue being debatable, no adjustment under section 143(1)(a) is permissible in the computation of the relief under section 80HH and under section 80-I of the Income-tax ....
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....hargeable under the head 'profits and gains of business or profession' only. Admissible deduction amounts to Rs. 5,476 as against Rs. 16,547. 11,071 (2) Excess claim under s. 80HH The deduction admissible is on the profits and gains derived from the industrial undertaking included in the gross total income. Whole of the profits and gains from business included to Rs. 63,18,453 only as against Rs. 79,21,590 as worked out by the assessee. Hence, deduction is restricted to 20 per cent of Rs. 42,65,953 which works out to Rs. 8,84,318 as against Rs. 15,84,318 claimed. ....
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....bsp; ---------- On receiving this intimation, the assessee filed a letter dated March 10, 1993, objecting to the adjustment. It was claimed before the Assessing Officer that the adjustments were not prima facie admissible. The assessee filed an application for rectification when it received intimation. That application was rejected by the Assessing Officer subject to certain deductions on the ground of arithmetical mistake in the claim under section 37(2A) of the Act. The appeal filed against that order was dismissed. Against the above order, the assessee approached the Tribunal in I. T. A. No. 163 (Coch.) of 1994. With regard to the claim under section 37(2A) of the Act, the Tribunal took the view that whether the dividend income is to be assessed under the head 'Other sources" or under the head "Profits and gains of business" is a debatable issue which has to be determined on the facts and circumstances of the case. Secondly, whether the expenditure incurred by the assessee....
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....g Officer cannot reject the case set up by the assessee without finally deciding the question on the basis of further evidence. Section 143(1)(a) of the Act is as follows : "143. (1)(a) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142,--- (i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly ; and (ii) if any refund is due on the basis of such return, it shall be granted to the assessee : Provided that in computing the tax or interest payable by, or refundable to, the assessee, the following adjustments shall be made in the income or loss declared in the return, namely :--- (i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified ; (ii) any loss....
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....ed by the assessee. But it is seen that after the return is filed, the assessee may claim certain deductions, which according to it, it is entitled to. For example, in the present case itself, the assessee is engaged in the manufacture and sale of asbestos cement sheets making use of the company's amount and as the company's business itself and it may be engaged in some other trade or business. The assessee takes the view that such income forms part of the income of the trade and cannot be put under any other head, These are all cases where the assessee is of the opinion that it can make such claims and the question is whether such claim can be included or not. Of course, if a claim is made which has no basis to stand and was opposed to any decision of the apex court of this country by which there cannot be any doubt, probably the Assessing Officer will be justified in exercising his power under section 143(1)(a) of the Act. But as observed by various courts, this power should be exercised only sparingly, because it causes some hardship to the assessee. Section 143(1)(a) of the Act came for interpretation before various courts. A Division Bench of the Bombay High Court in Khatau....
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....so to minimise litigation and create confidence in taxpayers for submitting true and correct returns, if it appears that the return submitted by the assessee cannot be accepted for the purpose of taking action under section 143(1)(a) then the powers of the Income-tax Officer are not fettered and he can proceed to finalise the assessment after giving an opportunity to the assessee to be heard in respect of any arguable point under section 143(2). A bare perusal of section 143(1)(a) shows that the Income-tax Officer has to accept the return as it is and in the proviso, three exceptions have been given, conferring jurisdiction on him for making adjustment. The action under this section cannot be taken beyond the power permitted by these three exceptions. The third exception provides that any loss carried forward, deduction, allowance or relief claimed in the return which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed." The Calcutta High Court had an occasion to deal with that question in Modern Fibotex India Ltd. v. Deputy CIT [1995] 212 ITR 496. Ruma Pal J. (as she then was) in the above decision h....
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....ch there is an omission of information which is required, under the specific provisions of the Act or the rules, to be furnished along with the return to substantiate such claim . . . (c) A claim for deduction or rebate of any amount which exceeds statutory limit imposed, if such limit is expressed either as a specific mandatory amount or as a percentage, ratio or a fraction, and if the information relevant to application of the statutory limits appear in the return or the accompanying accounts or documents ... (d) Any claim which is patently inadmissible in law ... 3. The Board desires that no other prima facie disallowance should be made except with the previous approval of the Commissioner of Income-tax who will, after according approval in suitable cases, bring the same to the notice of the Board." Another decision cited was CIT v. K. V. Mankaram and Co. [2000] 245 ITR 353. There, a Division Bench of this court held as follows : "Under section 143(1)(a)(i), the intimation is deemed to be a notice of demand under section 156 of the Act. It is not treated as an order of assessment. The two are conceptually different. Except intimation, no other order is contemplated u....