Kerala H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that additional tax under s. 143(1A) was not leviable on the assessee ?

High Court Of Kerala

CIT vs. M.D. Thomas

Section 143(1A)

Asst. Year 1991-92

K.S. Radhakrishnan & C. Kuriakose, JJ.

IT Ref. No. 181 of 1999

27th October, 2003

Counsel Appeared

P.K.R. Menon & George K. George, for the Applicant : Raju K. Mathews, for the Respondent

JUDGMENT

K.S. Radhakrishnan, J. :

This is a reference under s. 256(1) of the IT Act. The following question is referred for decision of this Court : “Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that additional tax under s. 143(1A) was not leviable on the assessee ?” Assessee filed return for the asst. yr. 1991-92 claiming total loss of Rs. 6,04,043. In arriving at the loss assessee had claimed deduction under ss. 80HH and 80J to the extent of Rs. 2,63,130. The AO processed the return under s. 143(1)(a) of the IT Act and determined the loss at Rs. 3,40,930. Assessee’s claim for relief under ss. 80HH and 80J was disallowed on the view that the result of the business being loss, deduction was not permissible. The intimation issued, under s. 143(1)(a) on the reduced loss of Rs. 3,40,930. Assessee’s claim for relief under ss. 80HH and 80J was disallowed on the view that the result of the business being loss, deduction was not permissible. In the intimation under s. 143(1)(a) on the reduced loss of Rs 3,40,930, additional tax of Rs. 24,450 was levied under s. 143(1A). Assessee then filed a petition for rectifying the intimation and deleting the additional tax. The AO rejected the request for rectification. Appeal preferred by the assessee was also dismissed. The assessee took up the matter before the Tribunal. The Tribunal however held that the Revenue authorities were not justified in levying additional tax under s. 143(1)(a). Assessee raised a contention that at the time when the loss return was filed and also processed under s. 143(1)(a), the matter was not free from doubt as to whether there could be levy of additional tax under s. 143(1)(a) in a loss return. Further, it was also pointed out that in view of the consequence of adjustment made and the insistence upon the assessee for filing a correct return, it would follow that the date of judging the question of the adjustment must be the actual date of the return in the light of the law then prevalent. Tribunal however noticed that whether with the amendment effected in the relevant provisions retrospectively there could be levy of additional tax was not free from doubt and there could be two views on that. We notice that the position has been resolved by the apex Court in Asstt. CIT vs. J.K. Synthetics Ltd. (2001) 166 CTR (SC) 498 : (2001) 251 ITR 200 (SC). Apex Court reversed the decision of the Delhi High Court in J.K. Synthetics Ltd. vs. Asstt. CIT (1993) 109 CTR (Del) 171 : (1993) 200 ITR 584 (Del) and held that the retrospectively substituted sub-s. (1A) made it clear that even where the loss declared by the assessee had been reduced by reason of adjustments made under sub-s. (1)(a) the provisions of sub-s. (1A) applied and the additional tax could be imposed.

Counsel appearing for the assessee however took up the stand, placing reliance on the decision of the apex Court in CIT vs. Hindustan Electro Graphites Ltd. (2000) 160 CTR (SC) 8 : (2000) 243 ITR 48 (SC), that since there is no dishonest intention assessee cannot be held liable. The legislature has not used the expression “dishonest intention”. Over and above, the decision in Hindustan Electro Graphites Ltd.’s case (supra), has been distinguished and doubted by the apex Court in J.K. Synthetics Ltd.’s case (supra). In such circumstances, we answer the question in favour of the Revenue and against the assessee.

[Citation : 267 ITR 761]

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