Dalveer Bhandari, J.@mdashThe Commissioner of Income Tax has filed this appeal u/s 260A of the Income Tax Act, 1961 (for short "the Act") against the order passed by the Income Tax Appellate Tribunal (for short "the ITAT") dated 15.5.2001.
2. Brief facts which are necessary to dispose of the appeal are recapitulated as under.
3. In this appeal the revenue has challenged the order of the ITAT relating to the assessment year 1990-91 on the issue of disallowance of Rs. 15,84,216/- made u/s 43B of the Act while processing the return u/s 143(1)(a) of the Act.
4. Mr. Sanjiv Khanna, the learned senior counsel for the appellant submitted that the ITAT without giving any reason decided the appeal in favor of the assessed.
5. It is also submitted by Mr. Khanna that the ITAT has erroneously placed reliance on the decision of the Gauhati High Court reported in
6. The assessed filed its return of income on 31.12.1990 declaring net loss of Rs. 8,56,21,193/- for the assessment year 1990-91. The return filed by the assessed was examined u/s 143(1)(a) of the Act and an addition of Rs. 15,84,216/- was made as the assessed had not filed and furnished any evidence in support of deduction claimed u/s 43B of the Act. The assessed aggrieved by that order filed an application on 21.3.1995 u/s 154 of the Act for rectification which was also dismissed. Thereafter, the assessed preferred an appeal before the Commissioner of Income Tax. In the appeal the learned Commissioner of Income tax after examining the facts in detail remanded the matter to the Assessing Officer to obtain proof of payment, examine it and allow deduction if permissible under the provision of law.
7. The petitioner assessed filed further appeal before the ITAT. The ITAT allowed the assessed''s appeal. The ITAT relied on the decision of the Gauhati High Court reported in India Carbon Ltd. v. Inspecting Asstt. Commissioner of Income Tax (supra) wherein it was held that the amount as sales tax appearing on the liability aside of the balance sheet was neither claimed as deduction nor charged to profit and loss account of the assessed and the same could not be added to the income of the assessed. It was also submitted that no disallowance on this account has been made by the Assessing Officer while computing income u/s 43B of the Income Tax Act. Consequently the adjustment ought to have been deleted from the intimation u/s 143(1)(a) of the Act.
8. The Commissioner of Income Tax aggrieved by the order of the ITAT has filed this appeal u/s 260A of the Income Tax Act. It may be pertinent to mention that a similar issue came up for consideration before a Division Bench of the High Court of Delhi consisting of Hon''ble Mr. Justice B.N. Kirpal and Hon''ble Mr. Justice Arun Kumar in S.R.F. Charitable Trust v. Union of India and Ors., (193 ITR 65). In somewhat similar circumstances this Court observed the adjustments were made for the reason that, in support of the claim, the petitioner assessed had not furnished the proof. The stage of furnishing of the proof is reached as and when proof is demanded by the Income Tax Officer on a notice u/s 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 u/s 143(2) but he could not have unilaterally made this disallowance by seeking to invoke the first proviso to Section 143(1) because the said proviso was not applicable in the present case.
9. We deem it appropriate to extract Section 143 of the Act for the ready reference. Section 143 of the Act reads as under :-
"143(1)(a) Where a return has been made u/s 139, or in response to a notice under Sub-section (1) of Section 142.--
(i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to the provision of Sub-section (2), an intimation shall be sent to the assessed specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued u/s 156 and all the provisions of this Act shall apply accordingly; and
(ii) if any refund is due on the basis of such return, it shall be granted to the assessed;
Provided that in computing the tax or interest payable by, or refundable to, the assessed, the following adjustments shall be made in the income or loss declared in the 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."
10. We also deem it appropriate to set out the relevant part of Circular No. 549 published in [1990] 182 ITR (St.) 1 at page 21 issued by the Central Board of Direct Taxes wherein examples have been given of adjustments which can be carried out:-
"The prima facie adjustments mentioned at (ii) above can be made only on the basis of information available in the return or the accompanying accounts or documents and not on the basis of the past records of the assessed. Some examples of such prima facie admissible or inadmissible in respect of which adjustments can be made to the returned income or loss are:
(i) While computing income under the head ''Salaries'', standard deduction u/s 16(1) is not claimed, or claimed at a figure which is less than or in excess of the permissible limit.
(ii) While computing income under the head ''Income from house property'', deduction for 1/6th for repairs or for a new unit under the proviso to Section 23(1) is not claimed, or claimed at a figure which is less than or is in excess of the permissible amount.
(iii) While computing income under the head ''Profits and gains of business or profession'', depreciation is claimed at rates lower or higher than those provided for in the Income Tax rules.
(iv) While computing capital gains, deduction of Rs. 10,000 u/s 48(2) is not claimed or claimed less or in excess of this amount.
(v) Carried forward speculation loss set off against income from business or against income under any other head.
(vi) Loss under any head, other than under the head ''Profits and gains of business or profession'', carried forward and set off against the current income.
(vii) Carried forward loss of business set off against income of the current year under other heads.
(viii) Old loss of more than eight assessment years set off against the current business income, if the information is available in the return or the accompanying documents.
(ix) Deduction u/s 80C in respect of provident fund contributions or life insurance premia or N.S.C. VI or VII Issue not claimed, though the information is available in the documents accompanying the return, or claimed at a figure which is less than or is in excess of the permissible amount.
(x) Deduction u/s 80L not claimed or claimed at a figure which is less than or is in excess of the permissible amount.
(xi) Deduction u/s 80G not claimed, although allowable on the basis of the information available in the return or the accompanying documents or claimed at a figure which is less than or is in excess of the permissible limit.
(xii) Deduction u/s 80M claimed at sixty per cent of gross dividend income instead of on net dividend income in violation of the provisions of Section 80AA.
It may be mentioned that the above is not an exhaustive but only an illustrative list of prima facie admissible or inadmissible for which adjustments can be made to the returned income or loss."
11. SRF Charitable Trust''s judgment of the Delhi High Court has been followed in a number of subsequent judgments. In
12. Reliance has also been placed on the judgment of the Delhi High Court in the judgment of the Calcutta High Court in
13. In the instant case when the information was available on record and payments were made in the prescribed form but no proof was furnished by the assessed, then the only course left with the Assessing Officer was to call for the information by issuing a notice to the assessed. This is imperative in consonance with the principles of natural justice. This opportunity could have been given to the assessed even at the time of disposing of the application u/s 154.
14. We are in respectful agreement with the judgment of SRF Charitable Trust (supra) in which their Lordships have held that the stage of furnishing of proof is reached as and when the proof is demanded by the Income Tax Officer on a notice u/s 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 u/s 143(2), but he could not have unilaterally made this disallowance by seeking to invoke the provisions of first proviso to Section 143(1).
15. We have carefully perused the impugned judgment of the Tribunal. In our considered opinion, no interference is called for. Consequently, the appeal is accordingly dismissed. The parties are directed to bear their own costs.
