TMI Blog2003 (12) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... . The AR points out that the amount at item (b) above was paid on 15-4-1997 for which reason in the regular assessment there is no disallowance for the same. In respect of item at (a) above, in the regular assessment the disallowance has been kept at Rs. 8,534 only. That in respect of item at (c)(i) (Interest to IDBI), in the scrutiny assessment there is no disallowance. That large payments were made to IDBI within the time mentioned in section 139(1). In the regular assessment the disallowance under section 43B in respect of interest payable to SIDBI has been retained at Rs. 2,09,83,719 as in the adjustment under section 143(1)(a). The D.R. referred to clause (iii) of section 143(1)(a). That the deduction for expenditure by way of interest is prima facie inadmissible in view of the provisions of section 43B. 4. The AR of the assessee has referred to a decision of the Karnataka High Court in God Granites v. CBDT [1996] 218 ITR 298. The assessment year involved was 1993-94, and the matter related to the deduction under section 80HHC. The High Court have noticed that the prima facie adjustment is to be made on the basis of information available in the return including the account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal under the provisions of section 253 of the Act, claiming that the Commissioner (Appeals) has erred in deleting the disallowance of Rs. 5,70,12,385 made by the Assessing Officer by way of prima facie adjustments. 2. Scope of prima facie adjustments under the provisions of section 143(1)(a) of the Act has been canvassed before us. A bare perusal of section 143(1)(a) of the Act shows that the Assessing Officer has to accept the return as it is and in the proviso 3 exceptions has been given conferring jurisdiction on him for making adjustment. The action under this section cannot be taken beyond the power permitted by these 3 exceptions. Under the clause (ii) of the proviso, any loss carried forward, deduction, allowance or relief has to be allowed on the basis of the information available in such return, accounts or documents accompanying it. Similarly clause (iii) provides that any loss carried forward deductions, allowances or relief claimed in the return which, on the basis of information in such return, accounts or documents, is prima facie inadmissible, shall be disallowed. This clause contemplates that power could be exercised only: (a)(i) in respect of loss carried forwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee have no opportunity to produce evidence before the Assessing Officer in support of his claim. He cannot do so in the rectification application which he may file from an intimation because, under section 154 of the Act it is not open to an assessee to produce new evidence. When an ITO disallows any claim on the ground of absence of evidence, which an assessee is ultimately entitled, the assessee would not be able to establish his claim in any subsequent application pertaining to intimation such as rectification application moved under section 154 or a revision from it under section 264 of the Act. Clearly, therefore, such disallowances are not contemplated at intimation stage. Reference can be made to the judgment in Khatau Junkar Ltd.'s case. 6. While recording his order the ld. Accountant Member refers that a sum of Rs. 7,055 was paid by the assessee on 15th of April, 1997 towards, EPL, DIT insurance and employer's contribution to Provident Fund, for which reason no disallowance was made in the regular assessment on that count. He further notes that during the course of regular assessment disallowance towards bonus, under the provisions of section 43B of the Act, was kept a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance or relief. Here in the instant case, the ld. Accountant Member had gone a step ahead and assumed the jurisdiction which was not vesting in the Assessing Officer. Keeping the disallowance at Rs. 8,534 under the head bonus, deleting the disallowance of Rs. 7,055 under the head EPL, DIT insurance and employer's contribution to Provident Fund and Rs. 3,59,51,611 under the head interest accrued to IDBI, the ld. Accountant Member had assumed the jurisdiction which was vesting in the Assessing Officer in a regular assessment, carried out under the provisions of sub-section (3) of section 143 of the Act. Thus, it is clear that the jurisdiction which the ld. Accountant Member wants to assume does not vest with the Tribunal. 8. Whether an intimation survives a regular assessment, is a question which confronts me while adjudicating the issue. Since I was of the view that the order of Commissioner (Appeals) is in consonance with the provisions of law, for that the Assessing Officer had transgressed its power while making adjustment, parties were not called upon to advance arguments on the proposition referred above. When the Accountant Member tried to keep the disallowance under the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of hearing, none appeared on behalf of the assessee. I have, accordingly, proceeded ex parte qua the assessee. 3. The Standing Counsel of the department appeared. He was heard on 18th November as well as on 19th November, 2003. On perusal of the records including the dissenting orders of the Ld. Members and the contentions advanced on behalf of the revenue, I proceed to dispose of the points of difference arising in this appeal and the cross-objection. 4. The relevant facts briefly stated are that the assessee had filed return of income on 25-11-1994 claiming a loss of Rs. 7,88,35,461. The Assessing Officer processed the return under section 143(1)(a) and made a disallowance of Rs.5,70,12,385 in respect of the following amounts claimed as deduction: (a) U/s 43(B) - Bonus (Provided not paid) Rs. 70,000 (b) EPL, DIT Insurance and Employer's Rs. 7,055 contribution to Provident Fund (c) Interest accrued but not paid: (i) IDBI Rs. 3,59,51,611 (ii) SIDBI Rs. 2,09,83,719 Rs. 5,69,35,330 ------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee falling within the ambit of proviso to section 43B of the Act. 7. The Ld. Judicial Member, on the other hand, has questioned the view expressed by the Ld. Accountant Member about the powers of the appellate authority. So, however, he has ultimately not expressed any firm opinion about the view insofar as the parties were not heard on that issue and in view of his decision of upholding the order of the CIT(A) on other ground, such a discussion according to him was inconsequential. 8. The Ld. Members after passing a dissenting order made a reference to the Hon'ble President identifying the point of difference separately as under:- As per Ld. Judicial Member: "Whether, the Tribunal has power to go beyond or behind the return, accounts or documents, either in allowing or disallowing any such deduction, allowance or relief, while hearing an appeal against an intimation sent under the provisions of section 143(1)(a) of the Act?" As per Ld. Accountant Member: "Where disallowance by way of adjustment under section 143(1)(a) was made on account of the provisions of section 43B on the basis that evidence regarding payments had not been enclosed with the return of income, ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he existence of other information in the return or the accompanying accounts or documents. 10. any claim in respect of which there is an omission of information which is required, under the specific provisions of the Act or the Rules, to be furnished along with the return to substantiate such claim. Example: If the audit report specified under section 80HHC(4), which is required to be filed along with the return of income is not so filed, the deduction claimed under that section can be disallowed as a prima facie adjustment. Some more examples in this regard are the non-filing of audit reports or other evidence along with the return of income as required under sections l2A(b), 33AB(2), 35E(6), 43B (first proviso), 54(2), 54B(2), 54D(2), 54F(4), 54G(2), 80HH(5), 80HHA(4), 80HHB(3), 80HHD(6), 80HHE(4), 80-I(7), 80-IA(8) and the like. But if evidence is subsequently furnished, rectification under section 154 should be carried out to the extent permitted by the Board's Circular No. 669 dated 25-10-1993. No prima facie disallowance shall, however, be made if any evidence, required to be filed along with the return of income only in pursuance of the non-statutory guidance notes for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2,04,84,899.00 It is evident from the facts stated above that out of the claim of interest made by the assessee in the case of IDBI a sum of Rs. 3,59,51,611 (Rs. 4,08,03,419 - Rs. 48,51,808) was outstanding as on the end of the previous year and in the case of SIDBI, the total claim of interest outstanding as on the end of the previous year was Rs. 2,09,83,719. From the P/L Account and the balance sheet it is evident that the above interest payable to IDBI and SIDBI remained unpaid as on the end of the previous year. It will be relevant to ascertain as to whether such interest was patently disallowable under the provisions of section 43B. It would, therefore, be necessary to refer to relevant portion of section 43B as under:- "43B. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of- [(c) any sum referred to in clause (ii) of sub-section (1) of section 36,] [or] [(d) any sum payable by the assessee as interest on any loan or borrowing from any public financial institution [or a State financial corporation or a State industrial investment corporation], in accordance with the terms and condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end of the previous year has been paid before the time allowed for filing of the return of income. The second condition to be satisfied for applicability of the proviso to section 43B is that the evidence of such payments is furnished by the assessee along with the return. Presently it is nobody's case that the assessee had furnished any evidence along with the return evidencing the payments made out of the interest that remained unpaid as at the end of the previous year. 13. Now it will be easy to appreciate as to whether the Assessing Officer was empowered to make an adjustment under section 143(1)(a). I have quoted section 143(1)(a) as well as CBDT circular No. 689 elsewhere in this order. The assessee had made the claim of deduction in the P/L Account in contravention of provisions of section 43B. The incorrectness of the claim was evident from the information in the return and the accompanying accounts in documents. The adjustment under section 143(1)(a) was thus permissible. As per the C.B.D.T. circular in respect of claims under section 43B etc., if the requisite evidence is not attached to the return of income the Board has expressed the view that a prima facie adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h need not be explored for the purpose of present controversy. The Ld. Judicial Member has himself pointed out in his order that the appellate authority can do what the Assessing Officer can do. To that extent the power of the appellate authority has been recognized by the Ld. Judicial Member. Since in this case the Assessing Officer was required to rectify the adjustment/intimation under section 143(1)(a) on production of evidence before him, the CIT(A) or the Appellate Tribunal cannot be said to have exceeded the powers when such a power could be exercised by the Assessing Officer himself. There is nothing wrong in my view in giving relief to the assessee in respect of the payments falling within the proviso to section 43B by the Tribunal on the basis of the order under section 143(3). It may also be pertinent to mention that before its omission w.e.f. 1-6-1999, section 143(1A) also provided for adjustment of additional tax on the basis of any order under sections 143(3), 154, 250 etc. Therefore, I do not agree with the Ld. Judicial Member that the Ld. Accountant Member had exceeded his jurisdiction by deleting the adjustment in respect of the payments covered under proviso to se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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