Ester Industries Ltd. vs Commissioner of Income Tax

After hearing learned Counsel for the parties, we are of the view that even though several questions have been framed by the appellant, only two substantial questions of law would arise for our consideration. These are as follows:

(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the levy of MAT is permissible while issuing intimation to acknowledge the receipt of return filed by the assessed u/s 143(1)(a) when the levy of MAT involves substantial legal issues and grounds and the same could not have been done without notice of hearing, opportunity to the assessed and by passing a speaking and reasoned order, after proper application of mind, which are neither done nor contemplated u/s 143(1)(a)?

(ii) Whether, on the facts and in the circumstances of the case, the Tribunal had any basis or justification valid in law to accept the plea of the Revenue for upholding the illegal levy of MAT through intimation u/s 143(1)(a) of the IT Act and for charging mechanically, perversely and automatically the levies of interest u/s 234B and 234C when the assessed has pointed out that the levy is not at all permissible or attracted in this case as no such demand could at all have been issued/raised without any hearing or proceeding before any quasi-judicial authority in accordance with law and in compliance with natural justice ?

Insofar as question No. (ii) is concerned, it is now common ground that in view of the decision of the Karnataka High Court in Kwality Biscuits Ltd. Vs. Commissioner of Income Tax, interest u/s 234B and 234C of the IT Act in the case of assessment of a company on the basis of book profits u/s 115J of the Act cannot be levied. A SLP was filed by the Revenue against that decision. The SLP having been dismissed by the Supreme Court in Commissioner of Income Tax Vs. Kwality Biscuits Ltd., , the question with regard to levy of interest u/s 234B and 234C must be answered in the negative and in favor of the assessed.

We make it clear that though the question of levy of MAT is a part of question No. (i) above, this order is not to be construed as having rendered any decision in respect of question No. (i).

Admit.

The following question of law is framed for our consideration:

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the levy of MAT is permissible while issuing intimation to the assessed u/s 143(1)(a) ?

Paper books be filed in accordance with the High Court rules.

IA No. 5428/2005 (stay)

Learned Counsel for the appellant points out that the regular assessment has already been made in respect of the assessed u/s 143(3) of the IT Act and an appeal is pending before the Tribunal and tax has already been recovered by the Revenue.

By the impugned order, the matter has been sent back to the AO with the direction to recompute the deemed income and directing an opportunity of hearing to the assessed before passing an order.

In view of the fact that a regular assessment has already been made and the assessed has already deposited the tax we stay the further proceedings before the AO pursuant to the order passed by the Tribunal.

The application is disposed of.