TMI Blog1993 (3) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... that the aforesaid amounts had been paid within the due dates specified by law. The Assessing Officer, however, following the Board's circular No. 581 dated 28-9-1990, rejected the application for rectification. The learned CIT (Appeals) upheld the action of the Assessing Officer. 4. Shri M.S. Syali, the learned Counsel for the assessee, submitted that there were two circulars of the Board which were against the assessee. The first circular is circular No. 581 dated 28-9-1990 which stands reproduced in 186 ITR (Statutes). According to this circular where deduction under section 43B was disallowed as prima facie inadmissible, on the ground that the assessee had not furnished evidence of payment of tax, duty etc. along with the return, such sums cannot be allowed later on under section 154. The other circular is circular No. 601 dated 4-6-1991 which stands reproduced in 190 ITR 4 (Statutes) which specifically deals with the disallowances made under section 43B of the Act. This circular lays down that according to the first proviso to section 43B when the payments are made belatedly, the evidence of such payments has to be furnished along with the return. By way of liberalization i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the return happened to be grossly understated. It was thus argued that where there are substantial disputes, the Revenue must be sympathetic and liberal in calling for information from the assessee if it had not been filed along with the return. Shri Syali further placed reliance on the Bombay High Court decision in Khatau Junkar Ltd. v. K. S. Pathania [1992] 196 ITR 55 for the proposition that the disallowance of claim for deduction can be made only on the basis of information available in the return and in the documents and accounts accompanying it and that a claims should be prima facie inadmissible. It was submitted that so far as the facts of the present case were concerned, it could not be said that the assessee had not paid the necessary amounts before the due date. It was vehemently argued that the absence of narration of particular facts should not be taken to mean absence of payment before the due date. Relying on the Delhi High Court decision in Geep Industrial Syndicate Ltd. v. Central Board of Direct Taxes [1987] 166 ITR 88 it was submitted that a circular issued by the Board was not binding on the Officers in respect of the areas or fields covered by judicial dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was explained that submission of audited report along with the return was not a mandatory condition just as submission of evidence regarding payment of tax, duty etc. was not a mandatory condition in the present case. In this regard it was pointed out that the Punjab and Haryana High Court in CIT v. Jaideep Industries [1989] 180 ITR 81 had held that audit report must be filed along with the return if special deduction for newly established industrial undertaking under section 80J was to be claimed. It was, however, pointed out that when two views on the matter were available, the view favourable to the assessee must prevail and if the assessee had not given proof of payment of tax along with the return, it should not have been singled out for a harsh treatment. Shri Syali, therefore, submitted that, in the first instance the Assessing Officer should not have made a prima facie disallowance that he did and secondly, when application under section 154 was moved in which it was proved that the payments of tax etc. had been made before the due date for filing of the return under section 139(1), then such rectification application should have been accepted and the relief allowed to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 143(1)(a) and not with respect to any subsequent point of time. It was submitted that reference to the provisions of section 139(9) would not be proper because the Assessing Officer could not presume that the assessee had made the payment. According to the learned D.R., there was no defect which required to be cured for which an opportunity had to be given to the assessee. It was also submitted that the learned Counsel for the assessee had relied on several decisions which were not relevant for our limited purpose. It was repeatedly emphasised that subsequent events were not relevant and one had to see the position as at the point of time when the prima facie disallowance was made. Since the matter was highly debatable, it was submitted that the revenue authorities had correctly rejected the rectification application of the assessee. It was submitted that the record available at the original intimation did not show that the assessee was entitled to any deduction and that the subsequent revised audit report could not render the initial prima facie disallowance bad. It was also submitted that the Delhi High Court decision in the case of S.R. F. Charitable Trust was distinguis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance but in an area like the present one where it cannot be said for certain as to what the factual position was, the Assessing Officer, in our opinion, was duty bound to make an enquiry from the assessee and if the claim made by the assessee was wrong, penal consequences would have followed. Instead of following that course, however, the Assessing Officer has made the disallowance and thereby saddled the assessee with the additional liability of interest under various sections of the Act. The Supreme Court in the case of Central Provinces Manganese Ore Co. Ltd. v. CIT [1980] 160 ITR 961 has held that interest levied under section 139(8) or section 215 is not penal but compensatory. For the same reasoning, interest chargeable under sections 234A, 234B and 234C is also held to be compensatory and not penal in nature. We, therefore, do not accept the argument of the learned D.R. that with a view to penalising the assessee, the interest had to be charged. The word " prima facie " means " on the face of it ". In the present case, can it be said that the prima facie disallowance could be made simply because there was no evidence of proof of payment before the due date of filing of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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