Commissioner of Income Tax vs Vanaja Textiles Ltd.

C.N. Ramachandran Nair, J.—The question raised in the appeal filed by the revenue is whether the Tribunal was justified in cancelling the assessment made u/s 143(1)(a) for the reason that disallowances made do not fall within the description "prima facie inadmissible items". After hearing both sides and after going through the proceedings issued u/s 143(1)(a) and the order of the Tribunal, we are unable to uphold the order of the Tribunal for more than one reason. In the first place, against proceedings u/s 143(1)(a) the Assessee itself filed rectification application u/s 154 which goes to prove that the Assessee was satisfied that the proceedings issued u/s 143(1)(a) with additions contained only mistakes. In our view, the Assessee cannot later turn round and say that mistakes are of arguable issue and could not have been corrected in proceedings u/s 154. Further, as is revealed from the proceedings u/s 143, it is clear that Assessee made belated claim of investment allowance relating to assessment years 1984-85 and 1985-86 in the return filed for 1994-95. The reason for disallowance is based on the disallowance u/s 32A(3)(ii) of the Act. We are of the view that the claim is prima facie inadmissible because it is obviously beyond the period of limitation provided under the Act. Further, the next item of disallowance is prior period expenses and the Assessee was not shown in the return and annexures as to the provision under which claim of deduction is made. In our view, the added items are prima facie not admissible under the Act, but still deducted by the Assessee in the computation of taxable income. We are therefore of the view that the Tribunal was not justified in cancelling the proceedings u/s 143 which stood modified in one round of rectification on the Assessees own application and again by the Commissioner of Income Tax in revision. We therefore allow the appeal by reversing the order of the Tribunal and remanding the matter to the Tribunal for deciding the issues on the merits.