2022 (12) TMI 224

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....y 'the Act' hereinafter) assailing the order dated 21.08.2001 passed by the Income Tax Appellate Tribunal, Hyderabad Bench 'B', Hyderabad (briefly 'the Tribunal' hereinafter) in I.T.A.No.1845/Hyd/1996 for the assessment year 1995-96. 3. On 02.11.2022, learned counsel for the appellant made a submission that the disputed tax may be below the limit of one crore. She therefore, prayed for time to obtain instructions. 4. On instructions received, today learned counsel for the appellant submits that disputed tax would be above one crore outer limit. Therefore, the appeal would have to be heard on merits. 5. Though this appeal was admitted for hearing on 24.02.2003, no substantial question of law was framed. However, from the memo of app....

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.... respondent could be construed as a prima facie adjustment so that the same could be carried out under Section 143(1)(a) of the Act. By the order dated 15.07.1996, CIT(A) allowed the appeal of the respondent by declaring that such prima facie adjustment could not have been carried out by the assessing officer while issuing intimation under Section 143(1)(a) of the Act. 10. Revenue carried the matter in further appeal before the Tribunal. By the order dated 21.08.2001, Tribunal dismissed the appeal of the revenue. Hence, this appeal. 11. Learned Senior Standing Counsel for the appellant submits that set-off of adjustment of interest earned by the respondent against interest paid for borrowed funds was no longer a debatable issue inasmu....

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....ng officer could not have made prima facie adjustment and ought to have issued notice under Section 143(2) of the Act to the respondent. 13. Submissions made by learned counsel for the parties have received the due consideration of the Court. 14. Short point for consideration is whether the assessing officer could have made prima facie adjustment by disallowing the claim of adjustment of interest on deposits by the respondent/assessee at the stage of issuance of intimation under Section 143(1)(a) of the Act ? 15. To appreciate the rival contentions, we may advert to the order passed by the CIT(A). CIT(A) held that in the guise of prima facie adjustment, assessing officer cannot adjudicate upon debatable issues. Reliance was placed ....

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....ete the prima facie adjustment carried out to the tune of Rs.2,06,77,948/-. 16. CIT(A) noted that the decision of this Court in Godavari Fertilizers and Chemicals Limited v. CIT (supra) on which heavy reliance is placed by the revenue was appealed against before the Supreme Court and the appeal was pending. CIT(A) held that the issue was highly debatable on which two opinions were clearly possible and on such a highly debatable issue, prima facie adjustment ought not to have been carried out by the assessing officer. Taking the view that interest payments sought to be set off against interest receipts having the same origin namely borrowed funds, CIT(A) set aside the prima facie adjustment made by the assessing officer. 17. In further....