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Issues involved: Challenge to the validity of an intimation u/s 143(1)(a) of the Income-tax Act, 1961 increasing returned total income for assessment year 1989-90.
Judgment Details: The first petitioner, a limited company engaged in the business of glass and glassware, challenged an intimation sent by respondent No. 1 u/s 143(1)(a) of the Income-tax Act, 1961, increasing the returned total income for the assessment year 1989-90 by Rs. 11,35,690 and demanding a total income-tax of Rs. 25,88,717. The petitioner's previous year for the assessment year 1989-90 was 21 months from July 1, 1987, to March 31, 1989, due to amendments in section 3 of the Act. The petitioner computed its income for the assessment year 1989-90 by considering accounts for the years ending on June 30, 1987, and June 30, 1988, as well as the period from July 1, 1988, to March 31, 1989. The book profits under section 1151 were Rs. 86,82,178, and 30% of this amounted to Rs. 26,04,653. The returned total income was Rs. 31,19,800. The intimation dated August 3, 1990, adjusted the total income to Rs. 42,55,489, disallowing deductions under the Companies Act, resulting in tax of Rs. 23,40,511, surcharge of Rs. 1,17,026, and additional tax u/s 143(1A) of Rs. 1,31,192. The court held that the intimation u/s 143(1)(a) cannot reopen the assessee's account to recalculate income by allowing or disallowing deductions, citing a previous judgment. The impugned intimation was set aside, and the additional tax levied u/s 143(1A) was also set aside. The respondents were directed to issue a fresh intimation u/s 143(1)(a) in accordance with the law and the court's judgment, granting any refunds due to the petitioners. The rule was made absolute with no order as to costs.
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