Commissioner of Income Tax vs M.D. Thomas

K.S. Radhakrishnan J.

1.This is a reference u/s 256(1) of the Income Tax Act, 1961. The following question is referred for decision of this court :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that additional tax u/s 143(1A) was not leviable on the assessee ?"

The assessee filed a return for the assessment year 1991-92 claiming total loss of Rs. 6,04,043. In arriving at the loss the assessee had claimed deduction under sections 80HH and 80J to the extent of Rs. 2,63,130. The Assessing Officer processed the return u/s 143(1)(a) of the Income Tax Act and determined the loss at Rs. 3,40,930. The assessee''s claim for relief under Sections 80HH and 80J was disallowed on the view that the result of the business being loss, deduction was not permissible. In the intimation issued u/s 143(1)(a) on the reduced loss of Rs. 3,40,930, additional tax of Rs. 24,450 was levied u/s 143(1A). The assessee then filed a petition for rectifying the intimation and deleting the additional tax. The Assessing Officer rejected the request for rectification. Appeal preferred by the assessee was also dismissed.

The assessee took up the matter before the Tribunal. The Tribunal however held that the revenue authorities were not justified in levying additional tax u/s 143(1)(a). The assessee raised a contention that at the time when the loss return was filed and also processed u/s 143(1)(a), the matter was not free from doubt as to whether there could be levy of additional tax u/s 143(1)(a) in a loss return. Further it was also pointed out that in view of the consequence of adjustment made and the insistence upon the assessee for filing a correct return, it would follow that the date of judging the question of adjustment must be the actual date of the return in the light of the law then prevalent. The Tribunal however noticed that whether with the amendment effected in the relevant provisions retrospectively there could be levy of additional tax was not free from doubt and there could be two views on that. We notice that the position has been resolved by the apex court in Assistant Commissioner of Income Tax Vs. J.K. Synthetics Ltd., . The apex court reversed the decision of the Delhi High Court in J.K. Synthetics Ltd. Vs. Assistant Commissioner of Income Tax, and held that the retrospectively substituted Sub-section (1A) made it clear that even where the loss declared by the assessee had been reduced by reason of adjustments made under Sub-section (1)(a) the provisions of Sub-section (1A) applied and the additional tax could be imposed.

Counsel appearing for the assessee however took up the stand, placing reliance on the decision of the apex court in Commissioner of Income Tax Vs. Hindustan Electro Graphites Ltd., , that since there is no dishonest intention the assessee cannot be held liable. The Legislature has not used the expression "dishonest intention". Over and above, the decision in Commissioner of Income Tax Vs. Hindustan Electro Graphites Ltd., , has been distinguished and doubted by the apex court in Assistant Commissioner of Income Tax Vs. J.K. Synthetics Ltd., . In such circumstances, we answer the question in favour of the Revenue and against the assessee.