TMI Blog1996 (4) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... return on 11-3-1994 on total income of Rs. 5,67,65,120. While arriving at the said total income, the assessee claimed deduction under section 80HHC of the Act at Rs. 15,58,37,625. In other words, the claim, of the assessee under section 80HHC was reduced in the revised return. The reason for reduction in the claim under section 80HHC was that in the revised return, 90% of other specified income was taken at Rs. 3,65,83,198 as against a lower figure in the original return. In the revised return, interest income was taken in respect of the gross amount of interest whereas in the original return, this figure had been taken on the amount of net amount of interest. The Assessing Officer issued a notice under section 143(2) dated 17-12-1993 post ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s placed on the Calcutta High Court decision in the case of Modern Fibotex India Ltd. v. Dy. CIT [1995] 212 ITR 496 at 497. The learned Counsel in particular drew our attention to the following observations of the High Court : " The third limitation on the exercise of the powers under section 143(1)(a) is that once the notice under section 143(2) has been issued, there is no scope for the authorities either to make prima facie adjustment on the basis of the return as filed or issue an intimation under section 143(1)(a). The omission by the Legislature to make the issuance of a notice under section 143(2) without prejudice to an intimation under section 143(1)(a) while specifically providing that the issuance of an intimation under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted above in the submissions of the learned Counsel for the assessee. The learned D. R. has not pointed out any authority to the contrary. We, therefore, accept the rationale and the reasoning of the aforesaid judgment and decide ground No. 1 in favour of the assessee by holding that the intimation under section 143(1)(a) was invalid because the Assessing Officer had already issued a notice under section 143(2) and heard the assessee in response thereto. This ground is allowed. 6. Ground No. 2 which is the only other substantive ground is on merit and is against the non-allowance of claim under section 80HHC in full and against the charging of additional tax at Rs. 16,09,466. 7. Shri Navdeep Sharma submitted that under section 143(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs which had nothing to do with the proceedings from which the present appeal had emanated. The learned Counsel for the assessee relied on the ratio of the Tribunal's decision in the case of Avon Cycles Ltd.v. Asstt. CIT [1995] 52 ITD 426 (Chd.). In particular, the learned Counsel for the assessee relied on the following observations of the Chandigarh Bench of the Tribunal contained in para 18 of the order : " 18. We have carefully considered the rival submissions as also the facts on record. We wish to make it clear that we are not expressing any final opinion on the various issues involved in this appeal. The question to be decided is as to what is the scope and ambit of the adjustments to be made under section 143(1)(a) of the Act. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 28 to 43 and section 80HHC of the Income-tax Act. It was submitted that the learned CIT(A) had unnecessarily introduced an element of further controversy into the matter which was also not relevant to section 143(1)(a) of the Act. 8. The learned D. R. contended that the Assessing Officer had taken income from non-trade investments as non-business income on the basis of the material produced and on the basis of the profit and loss account and the balance-sheet of the assessee. It was submitted that such an adjustment was called for because the assessee had committed a mistake which was apparent, self-evident and glaring. It was also pointed out that when the matter was further enquired into at the time of framing the assessment under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is material and not the external trappings. In spite of the presentation as indicated above, the assessee while making claim under section 80HHC of the Act had claimed the aforesaid income of Rs. 2,04,27,492 as business income. This was a matter of controversy and debate and without putting the matter across to the assessee, the Assessing Officer, in our opinion, could not have proceeded under section 143(1)(a) of the Act by making the so-called prima facie adjustment. The learned CIT(A) has also not improved upon the matter as he has brought in unnecessarily the controversy to which a reference has been made in the submissions of the learned Counsel for the assessee. We are clear in our mind that the kind of adjustment made by the As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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