NAMDANG TEA CO. (INDIA) LTD. vs DEPUTY COMMISSIONER OF INCOME TAX and Another

D. N. BARUAH, J. :

By this application under Art. 226 of the Constitution the petitioner challenges annexure "II", order dt. 19th February, 1993, issued by the Dy. CIT, (Asst.), Range-II, Gauhati, initiating proceedings under s. 143(1)(a) of the IT Act, 1961 (for short "the Act"), and annexure "IV" order dt. 10th June, 1993, issued by him in purported exercise of the power under s. 154 of the Act refusing to rectify the mistakes so far as interest on deposit and interest on loan are concerned and adding the same in the total income of the petitioner.

The petitioner is a company incorporated under the Companies Act and is an assessee under the Act. It submitted its return of income for the asst. yr. 1992-93 relevant to the previous year 1991-92 on 30th December, 1992, showing a total income of Rs. 93,50,050. The total tax including surcharge payable by the petitioner was Rs. 48,38,650. A sum of Rs. 1,83,416, was payable by the petitioner on account of interest under ss. 234B and 234C of the Act. Thus, a total amount of Rs. 50,22,066 was payable by the petitioner and the tax so determined was actually paid by it. Along with the return the petitioner furnished details of computation of taxable income for the year ending on 31st March, 1992, and also the details of the depreciation allowable, additions made to the fixed assets during the year 1992, amounts disallowable under s. 143B (sic) of the Act, etc. The first respondent, however, made prima facie adjustments in the purported exercise of the powers under s. 143(1)(a) of the Act and added back certain income mentioned in paragraph 5 of the petition. The first respondent accordingly determined the adjusted total income at Rs. 1,54,33,291, and the total tax payable was determined at Rs. 49,44,981, along with surcharge of Rs. 10,41,747. Additional tax u/s 143(1A) of the Act amounting to Rs. 6,29,615 was also levied. After adjustment of the amount already paid a sum of Rs. 60,59,651 was determined as tax payable by the petitioner. The petitioner field a petition under s. 154 of the Act for rectification of the mistake apparent on the face of the record. It was pointed out in the said rectification petition that the addition in the purported exercise of the powers under s. 143(1)(a) of the Act had resulted in double taxation in the hands of the petitioner. It was submitted that the profit before taxation was Rs. 4,97,94,521 which included other income of Rs. 73,72,014. The petitioner submitted that from the break up it would be clear that the other income of Rs. 73,72,014 included the income which had been added back by the first respondent. Accordingly, the petitioner prayed before the first respondent to rectify the mistakes apparent on the face of the records and also to stay the tax demanded of Rs. 69,59,651, till disposal of the petition under s. 154 of the Act. The petition under s. 154 was disposed of by annexure-IV order dt. 10th June, 1993. By the said order, the first respondent rectified other mistakes. However, so far as interest on deposit and interest on loan were concerned the first respondent refused to rectify and upheld the addition of the same. Accordingly, after making computation, a sum of Rs. 49,16,088 was determined as payable on account of Income Tax, additional tax and interest. According to the petitioner the addition of various incomes to the total income in purported exercise of the powers under s. 143(1)(a) of the Act was illegal and without jurisdiction. Hence, the present petition.

I have heard Dr. A. K. Saraf, learned counsel appearing on behalf of the petitioner, and Mr. U. Bhuyan, learned counsel appearing on behalf of the Revenue.

Dr. Saraf submits that the authority acted without jurisdiction in adding the amount of interest on deposits and interest on loan, holding, inter alia, that those were not business income but income from other sources. Dr. Saraf submits that under s. 143(1)(a), the Revenue was not competent to make the adjustment holding that the income derived from interest on deposits is income from other sources. Dr. Saraf further submits that the action of the first respondent in adding the various incomes to the total income in the purported exercise of the power under s. 143(1)(a) of the Act was illegal and without jurisdiction inasmuch as no deduction, allowance or relief for loss carried forward was claimed by the petitioner in the return and, therefore, the question of making the prima facie adjustment of the income did not arise. In support of his submission, Dr. Saraf draws my attention to two decisions of the Bombay High Court in Khatau Junkar Ltd. and another Vs. K.S. Pathania and another, and in Indian Rayon and Industries Ltd. and another Vs. J.R. Kanekar, Assistant Commissioner of Income Tax and another, and also other decisions. Mr. Bhuyan does not dispute the legal position. Therefore, I find that the addition of the amount was not justified. Accordingly, I set aside the impugned orders and the initiation of proceedings under s. 143(1)(a) of the Act. However, it is open to the Department to take recourse to any other provision under the Act. The petition is disposed of.

In the facts and circumstances of the case, I make no order as to costs.