TMI Blog2003 (3) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... hty ground to interfere with the order of the learned single judge. - - - - - Dated:- 20-3-2003 - Judge(s) : S. R. NAYAK., K. RAMANNA. JUDGMENT The judgment of the court was delivered by S.R. NAYAK J.-The assessee feeling aggrieved by the order of the learned single judge of this court, dated January 22, 1999, in Writ Petition No. 43139 of 1993 has preferred this writ appeal. The facts in brief are: The appellant who claims to be a civil contractor declared a total income of Rs. 86,810 in his return of income filed on February 6, 1992, for the assessment year 1991-92. The return was accompanied by a profit and loss account, balance-sheet, statement of tax deducted at source, etc. The assessing authority in intimation under section 143(1)(a) of the Income-tax Act, 1961 (for short, "the Act"), computed the total income of the appellant-assessee at Rs. 5,21,760, as, while processing the return, he found that the assessee had short-totalled the gross bills received from the Karnataka Housing Board (K.H.B). Consequently, the assessing authority added the difference (Rs. 27,55,383 minus 23,20,428) of Rs. 4,34,955 to the income declared by the appellant. Aggrieved by the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, particularly having regard to the fact that, in the return filed by the assessee, no allowance has been provided for the materials, wood, sand, labour, etc. Sri G. Sarangan pointed out that a specific ground in that regard was taken in the revision petition. Sri G. Sarangan, in support of his contention placed reliance on the judgments of this court in God Granites v. Under Secretary, Central Board of Direct Taxes [1996] 218 ITR 298 and ITO v. Mandira D. Vakharia [2001] 250 ITR 432, judgment of the Bombay High Court in Khatau Junkar Ltd. v. K.S. Pathania [1992] 196 ITR 55 judgment of the Delhi High Court in CIT v. Modi Spinning and Weaving Mills Co. Ltd. [2002] 258 ITR 65 and judgment of the Gauhati High Court in Namdang Tea Co. (India) Ltd. v. Deputy CIT [1997] 226 ITR 867, Sri M.V. Seshachala, learned senior standing counsel for the Income-tax Department, on the other hand, contended that the law does not require issuance of any notice by the assessing authority, before issuing intimation under section 143(1)(a) of the Act, particularly, when the intimation falls under clause (i) of the proviso to section 143(1)(a) of the Act. In support of his submission, learned senior sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e return, namely:- (i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified; (ii) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, is prima facie admissible but which is not claimed in the return, shall be allowed; (iii) any loss carried forward, deduction, allowance or relief claimed in the return, which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed." Under section 143(1) of the Act, as it originally stood, the assessing authority was required to make a summary assessment, unlike the amended section which requires merely an intimation to be sent. If the assessing authority wanted to make such an assessment on the basis of the return, he had to take the return as he found it. He had no power to make any adjustment. However, after April 1, 1971, section 143(1)(a) was amended as a result of which, if the assessing authority wanted to make an assessment on the basis of the return as filed, he was entitled to make certain adjustments to the income or loss d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,34,955, the assessing authority was justified in adding that sum to the income of the appellant-assessee. The ground urged before the Commissioner of Income-tax that the assessing authority did not make any allowance towards materials, wood, sand, labour, etc., also does not deserve acceptance. Nothing is produced before the assessing authority or before the Commissioner of Income-tax or before this court to show that the expenses debited to the profit and loss account which were filed along with the return are not in relation to the entire gross bills of Rs. 27,55,383 received from the K.H.B., Shimoga. It is not the case of the appellant-assessee that the assessing authority failed to consider the expenses which the assessee might have incurred in connection with the earning of gross receipts of Rs. 27,55,383. It also needs to be noticed that it is not the case of the appellant-assessee that he has some evidence in the form of separate books of account or otherwise to show that he incurred some expenditure in connection with the earnings of Rs. 27,55,383. In that view of the matter, non-issuance of notice by the assessing authority before the impugned intimation under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -94. The petitioner had returned a total income of Rs. 44,135. The Assessing Officer disallowed the deduction of Rs. 37,13,849 claimed by the petitioner under section 80HHC and added the same to the total income, by way of adjustment under section 143(1)(a) of the Act. The petitioner was not heard in the matter. In the premise of that fact situation, a learned single judge of the court held: "Under the first proviso to section 143(1)(a), the Assessing Officer could make an adjustment in the income, by disallowing the deduction claimed in the return, only if it is prima facie inadmissible, on the basis of the information available in such return or accounts or documents accompanying the return. It cannot be said that inadmissibility of the claim of the petitioner in regard to deduction under section 80HHC, is so clear and self-evident from the return and the annexed documents, that the Assessing Officer could have recourse to adjustment by disallowance, under section 143(1)(a). The fact that on ultimate analysis, the petitioner may not be entitled for the deduction claimed from the total income does not mean that recourse can be had to disallowance under section 143(1)(a), dispens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the principles of natural justice. This opportunity could have been given to the assessee even at the time of disposing of the application under section 154." In the same judgment, it was further held that: "...that the stage of furnishing of proof is reached as and when the proof is demanded by the Income-tax Officer on a notice under section 143(2) being issued. If no proof in support of the claim was available with the Income-tax Officer, he could have issued a notice under section 143(2), but he could not have unilaterally made this disallowance by seeking to invoke the provisions of the first proviso to section 143(1)." In Namdang Tea Co. (India) Ltd. v. Deputy CIT [1997] 226 ITR 867 (Gauhati), the petitioner-assessee submitted his return of income for the assessment year 1992-93 relevant to the previous year 1991-92 on December 30, 1992, showing a total income of Rs. 93,50,050. The total tax including surcharge payable by the petitioner was Rs. 48,38,650. A sum of Rs. 1,83,416 was payable by the petitioner on account of interest under sections 234B and 234C of the Act. Thus, a total amount of Rs. 50,22,066 was payable by the petitioner and the tax so determined w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the addition of various incomes to the total income in the purported exercise of the power under section 143(1)(a) of the Act was illegal and without jurisdiction. Placing reliance on two decisions of the Bombay High Court in Khatau Junkar Ltd. v. K.S. Pathania [1992] 196 ITR 55 and in Indian Rayon and Industries Ltd. v. J.R. Kanekar, Asst. CIT [1993] 200 ITR 747. We are at a loss to understand how, the above judgments cited by Sri G. Sarangan would in any way support the contention advanced by him that the impugned intimation should have been preceded by a notice to the appellant-assessee to have his say in the matter. Suffice it to state that all the decisions cited by learned senior counsel dealt with situations falling under clause (ii) and/or clause (iii) of the proviso to section 143(1)(a) of the Act and not under clause (i) of the proviso. Therefore, these decisions have no bearing in the decision-making in the present case. The object of principles of natural justice is to foster justice and not to thwart justice. The principles of natural justice should reflect and guard the values of fairness and impartiality. It is true that audi alteram partem and nemo judex in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed are either non-existence, or even if they exist, they do not justify the proposed action. The core decision on this question will necessarily and invariably depend upon the peculiar facts and circumstances of each case, including the nature of the decision-making body, the nature of the action proposed, the grounds on which the action is proposed, the materials on which the allegations are based, the attitude of the party against whom the action is proposed in showing cause against such proposed action, the nature of the plea raised by him, his admissions by conduct or otherwise of some or all of the allegations, the effect of the ruling made and all other matters which help the mind of the authority in coming to a fair conclusion on the question. In Smt. Maneka Gandhi v. Union of India, AIR 1978 SC 597, the Supreme Court was pleased to observe: "The rules of natural justice are not embodied rules. What particular rule of natural justice should apply to a given case must depend to a great extent on the facts and circumstances of that case, the framework of the law under which the enquiry is held and the constitution of the Tribunal or body of persons appointed for that purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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