TaxTMI 
TaxTMI 
1996 (3) TMI 157
X X X X Extracts X X X X
X X X X Extracts X X X X
....earing on 1-6-1992. 6. 27-8-1992 Application given by the assessee under section 154 of the Act seeking deletion of additional tax under section 143(1A) amounting to Rs. 9,48,189. Reliance placed on decision of the Allahabad High Court in the case of Indo-Gulf Fertilisers, 195 ITR 485 (All.). 7. 31-8-1992 Order under section 154 passed accepting the assessee's contention and cancelling additional tax under section 143(1A). 8. 24-1-1994 Regular assessment completed under section 143(3) of the Act computing a loss of Rs. 19,10,39,880 including unabsorbed depreciation allowance. Disallowances included, inter alia, provision for doubtful advances Rs. 2,59,76,755 under section 36(1)(vii) of the Act and interest payable to financial institutions Rs. 16,85,833 under section 43B of the Act. 9. 22-4-1994 Notice issued by the Assessing Officer under section 154 of the Act seeking to revise intimation under section 143(1)(a) dated 17-3-1992 and order under section 154 dated 31-8-1992 for the following : (a) charging additional tax in view of the retro-\spective amendment of section 143 with effect from 1-4-1989 ; (b) For reducing the loss on account of-- (i) unpaid interest to fina....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 154 dated 31-5-1994. 7. Regarding unpaid interest to financial institutions of Rs. 16,85,833 and provision for doubtful debts/advances of Rs. 2,59,76,755, the assessee submitted before the Assessing Officer that revised computation of income as per letter dated 16-1-1994, already accepted the above disallowances, which was before the finalisation of the assessment. The Assessing Officer did not accept this contention either. He observed that there was no dispute about the disallowability of these two items and the assessee had itself offered these disallowances in the revised computation dated 16-1-1994. As such, omission to make adjustments of the two sums while processing the return under section 143(1)(a) on 17-3-1992 constituted a glaring mistake of law apparent from the record. Accordingly, he made adjustments of these two amounts also in the order under section 154 dated 11-5-1994. 8. A preliminary objection was raised before the CIT(Appeals) saying that once the regular, assessment was completed under section 143(3) of the Act, the earlier intimation under section 143(1)(a) ceased to exist legally. It was also stated that once the return had been taken up for scrutiny u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat there could be no rectification under section 154 either. For these propositions, he relied on the following decisions : 1. Kerala State Coir Corpn. Ltd. v. Dy. CIT [1994] 50 ITD 1 (Coch.) at pages 11 and 12. 2. Modern Fibotex India Ltd. v. Dy. CIT [1995] 212 ITR 496 (Cal.). 3. Monarch Foods (P.) Ltd. v. Asstt. CIT [1995] 214 ITR 64 (Ahd.) (A.T.). 13. The learned Departmental Representative, on the other hand, relied on the order of the CIT(Appeals) and submitted that there was no merger of the processing under section 143(1)(a) with the order under section 143(3). 14. We have considered the rival submissions carefully. In order to arrive at a proper decision, we will first take up the three cases relied upon by the learned counsel for the assessee. In the case of Kerala State Coir Corpn. Ltd., it was held, inter alia, that validly initiated assessment proceedings under section 143(2) should prevail and supersede provisions of section 143(1)(a). The relevant facts were that the assessee filed its return showing loss. The Assessing Officer accepted the figure of loss shown in the return as such in what was purported to be an intimation under section 143(1)(a) sent to th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se of Monarch Foods (P.) Ltd., reliance was placed, on the decision of the Bombay High Court in CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589, where it was observed that an authority like the Tribunal, acting anywhere in the country, has to respect the law laid down by the High Court in the country, though of a different State, so long as there is no contrary decision of any other High Court on that question. This decision was relied upon by the learned counsel for the assessee before us in support of his contention that the decision of the Calcutta High Court in the case of Modern Fibotex India Ltd. should be applied here also. However, as we have noted above, the facts in the present case are distinguishable. The decision, therefore, does not help the assessee here either. 18. We will now take up the question whether processing under section 143(1)(a) gets merged with an assessment order under section 143(3) of the Act. For this purpose, it will be first be examined whether processing under section 143(1)(a) is an " order ". 19. Processing under section 143(1)(a) of the Act was introduced by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1-4-1989. Prior to tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ith effect from 1-4-1989. The CIT(Appeals) has held that such additional tax can be charged in view of the decision of the Supreme Court in Bombay Dyeing & Mfg. Co. Ltd.'s case, relevant extract from which is given below :---- "... If a mistake of fact apparent from the record of the assessment order can be rectified under section 35, we see no reason why a mistake of law which is glaring and obvious cannot be similarly rectified. Prima facie, it may appear somewhat strange that an order which was good and valid when it was made should be treated as patently invalid and wrong by virtue of the retrospective operation of the Amendment Act. But such a result is necessarily involved in the legal fiction about the retrospective operation of the Amendment Act...." 24. Both sides reiterated before us arguments given at earlier stages. 25. We find that the above decision is squarely applicable to the facts of the present case. We, therefore, uphold the decision of the CIT(Appeals) that additional tax can be charged under section 143(1A) of the Act in an order under section 154 in the present case in principle. The quantum thereof will depend upon the quantum of prima facie adjustments....