TMI Blog1998 (11) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... under sub-clause (i) of clause (a) of sub-section (1) ; (ii) where any refund is due under sub-section (1), reduce the amount of such refund by an amount equivalent to the additional income-tax calculated under sub-clause (i). (b) Where as a result of an order under section 154 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264, the amount on which additional income-tax is payable under clause (a) has been increased or reduced, as the case may be, the additional income-tax shall be increased or reduced accordingly, and,--- (i) in a case where the additional income-tax is increased, the Assessing Officer shall serve on the assessee a notice of demand under section 156 ; (ii) in a case where the additional income-tax is reduced, the excess amount paid, if any, shall be refunded. Explanation.--For the purpose of this sub-section, 'tax payable on such excess amount' means,--- (i) in any case where the amount of adjustments made under the proviso to clause (a) of sub-section (1) exceed the total income, the tax that would have been chargeable had the amount of adjustments been the total income ; (ii) in any other case, the difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 143, the Assessing Officer shall reduce the amount of such refund by an amount equivalent to the additional income-tax calculated as aforesaid." The Madhya Pradesh High Court in the case of Kamal Textiles v. ITO [1991] 189 ITR 339, has considered section 143(1)(a)(i) as not opposed to the principles of natural justice and the validity of the provisions was upheld on the ground that adjustments are only in respect of apparent arithmetical errors in the return, accounts or documents accompanying the return, loss carried forward, deduction, allowance or relief, which is prima facie admissible on the basis of the information available in the return but not claimed in the return, and, similarly, those claims which are on the basis of information available in the return, prima facie inadmissible, are to be disallowed. Entry 82 of List I of the Seventh Schedule to the Constitution of India authorises Parliament to legislate in respect of taxes on income other than agricultural income. Entry 97 refers to any other matter not enumerated in List II or List III including any tax not mentioned in either of those lists. The provisions for self assessment were existing since the Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discretionary power of the tax administration so as to minimise opportunities for bribery, and reducing the costs of checking the expected excuses that would be submitted for almost every case of arithmetical error and prima facie inadmissible claims, it is necessary to build in a system of automatic sanction in the nature of additional tax, The committee, therefore, recommends the continuation of the existing scheme of levying additional income-tax under section 143(1A) of the Income-tax Act. Further, in the interest of an equitable tax system, it is necessary that taxpayers committing the same fault should be subjected to the same penal consequences. Therefore, the existing policy of first completing every case under the summary assessment scheme and only, thereafter, initiating proceedings for scrutiny assessment should be continued." The Central Board of Direct Taxes issued Circular No. 549, dated October, 31, 1989, justifying levy of additional tax as under : "The new section 143, as substituted by the Amendment Act, 1987, while dispensing with the necessity of passing assessment orders in all cases, did not contain any deterrent provision against filing of incorrect retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Parliament to legislate on any subject so long as it is not enumerated in List II or List III and the levy of additional tax can also be justified under entry 97. The Madhya Pradesh High Court in the case of Sanctus Drugs Pharmaceuticals Pvt. Ltd. v. Union of India [1997] 225 ITR 252, observed thus : "Penal provision means imposition of penalty or any criminal prosecution. That is not the case here. It is only the device to check evasion of tax by the clever taxpayers. Hence, it is more of a compensatory nature. Parliament is competent to enact the law prospectively and this power also denotes the competence of Parliament to make the law retrospective also. In this connection, reference can be made to a decision in the case of Rai Ramkrishna v. State of Bihar [1963] 50 ITR 171 (SC) ; AIR 1963 SC 1667, wherein their Lordships have held as under : 'The legislative power conferred on the appropriate Legislatures to enact law in respect of topics covered by the several entries in the three Lists can be exercised both prospectively and retrospectively. Where the Legislature can make a valid law, it may provide not only for the prospective operation of the material provisions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Ireland Act, 1920, section 51 and section 3 of the Finance Act, (Northern Ireland), 1934, In re, [1936] AC 352 ; [1936] 2 All ER 111 are apposite (page 475 of 59 Comp Cas) : "....it is the essential character of the particular tax charged that is to be regarded, and the nature of the machinery-often complicated-by which the tax is to be assessed is not of assistance except in so far as it may throw light on the general character of the tax." Further in CIT v. B. C. Srinivasa Setty [1981] 128 ITR 294 (SC), it was observed : "The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus, the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section." From the various judgments, which are given by different High Courts, it is found that the validity of section 143(1A) has been upheld. Entry 82 of the First List of the Seventh Schedule of the Constitution (Union List) authorises imposition of tax on income other than agricultural inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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