Commissioner of Income Tax, Panchkula vs Haryana Toursim Corporation Ltd.

M.M. Kumar, J.—This appeal filed u/s 260A of the income tax Act, 1961 (for brevity ''the Act'') is directed against the order dated 13.9.2006 passed by the Income Tax Appellate Tribunal Bench "B", Chandigarh in ITA No. 740/Chandi/2003 for the assessment year 2001-02 raising the following substantive question of law: Whether in the facts and circumstances of the case the Ld. ITAT was right in holding that since the AO did not have any jurisdiction to carry out any adjustment to the income tax return while framing intimation u/s 143 ignoring the clear provisions of Section 154 of the IT Act, 1961?

The Tribunal has held that in terms of Finance Act, 1991 w.e.f. 1.6.1999, which was applicable to return filed by assessee for assessment year 2001-02, Assessing Officer did not have any jurisdiction to carry out any adjustment in return while processing the return u/s 143 of the Act. In other words, such intimation could also not be subjected to rectification u/s 154 of the Act subsequently so as to include within its scope issue which could not be gone into by Assessing Officer while framing original intimation u/s 143 of the Act. In the instant case, the Assessing Officer, while passing the order dated 18.12.2002 u/s 154 of the Act has rectified claim of depreciation as accepted while processing the return u/s 143 of the Act. The afore-mentioned action of the Assessing Officer has been held to be outside scope of the provisions of Section 154 of the Act. Therefore, the order has been held to be without jurisdiction.

After hearing learned counsel, we are of the considered view that no legal infirmity in the impugned order passed by the Tribunal could be found because the Assessing Officer while exercising jurisdiction u/s 154 of the Act has not made rectification on an issue which was disputed by the assessee and was a debatable issue. Once he has allowed depreciation at a particular rate, he cannot later on record a conclusion while exercising jurisdiction u/s 154 of the Act that excessive depreciation was allowed when facts were disputed by the assessee and reframe the assessment on that basis. There is no merit in this appeal and the same is dismissed.