Premier Marine Products, CHENNAI V. DCIT, CHENNAI

ITA 1327/CHNY/1996

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0831 (ITAT-CHENNAI)
• Duration Of Justice: 16 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-02-2013
• Assessment Year: 1992-1993
• Appeal Filed On: 28-06-1996
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Assessee Lawyers: S SRIDHAR
• Keywords: Retrospective amendment
• Section: 143(3); 80HHC; 148; 28

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHENNAI. BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT & SHRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NOS.1326 AND 1327/MDS/1996 ASSESSMENT YEAR 1992-93 PREMIER MARINE PRODUCTS, 3/284, MUTTUKADU ROAD, NEELANGARAI, MADRAS 600 041. [GIR NO.:309-P] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, SPECIAL RANGE V, NUNGAMBAKKAM HIGH ROAD, MADRAS 600 034. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE RESPONDENT BY : DR. S. MOHARANA, CIT DATE OF HEARING : 12 .0 2 .2013 DATE OF PRONOUNCEMENT : 12.02.2013 ORDER PER S.S. GODARA, JUDICIAL MEMBER THESE TWO APPEALS FILED BY THE ASSESSEE PERTAIN TO THE SAME ASSESSMENT YEAR I.E. 1992-93. THE CASE I.T.A. NO. 1 326/MDS/1996 ARISES FROM THE ORDER OF THE COMMISSIONER OF INCOME TAX (A PPEALS) III, MADRAS DATED 12.04.1996 IN ITA NO. 55/93-94 IN PROCEEDINGS UNDER SECTION 143(1)(A) OF THE INCOME TAX ACT 1961 [IN SHORT THE ACT]. WHEREAS, THE CASE I.T.A. NO. 1327/MDS/1996 EMANATES FROM THE ORDER OF THE CIT(A) III, MADRAS DATED 12.04.1996 IN ITA NO. 10/95-96, IN PROCEEDING S UNDER SECTION 143(3) OF THE ACT. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1326 & 1327 1326 & 1327 1326 & 1327 1326 & 1327/M/ /M/ /M/ /M/96 9696 96 2 2. WE FIND FROM THE PAPER BOOK THAT THESE CASES HA VE BEEN RELISTED FOR HEARING IN FURTHERANCE TO THE JUDGMENT DATED 04.01. 2012 OF HONBLE JURISDICTIONAL HIGH COURT DIRECTING AS UNDER: 3. WE HAVE CAREFULLY GONE THROUGH BOTH THE ORDERS OF THE COMMISSIONER OF INCOME TAX APPEALS AS WELL AS THE I NCOME TAX APPELLATE TRIBUNAL. 4. BARRING THE QUESTION AS TO WHETHER THE FINDING OF THE ASSESSING OFFICER IN EXCLUDING 90% ON THE INCENTIVE RECEIVED BY THE ASSESSEE FOR THE COMPUTATION OF DEDUCTION AS AVAILABLE UNDER SEC TION 80HHC IS CORRECT, THERE IS NO OTHER DISCUSSION AS TO THE FIN DING OF THE ASSESSING OFFICER IN RELATION OF THE EXPORTS DONE ON SUPPORT ING MANUFACTURER, AS PROVIDED UNDER SECTION 80HHC (3A) CLAUSE (4), WHICH IN THE ASSESSEES CASE IS NIL, SINCE PROFIT OF THE BUSINESS IS A NE GATIVE FIGURE. THIS BEING A QUESTION TO BE CONSIDERED FACTUALLY BY THE APPELLATE TRIBUNAL AND AS THE SAME WAS NOT CONSIDERED BY THE APPELLATE AUTHORITIES, WE SET ASIDE THE ORDERS OF THE APPELLATE TRIBUNAL THEREBY REMITTING THE MATTER TO THE APPELLATE TRIBUNAL WITH A DIRECTION TO RECON SIDER THE MATTER AFRESH AFTER GIVING OPPORTUNITY TO BOTH PARTIES. AC CORDINGLY, THE PRESENT APPEAL IS ALLOWED. 3. IN THE COURSE OF HEARING, THE AR REITERATES THE GROUNDS RAISED IN I.T.A. NO. 1326/MDS/1996 AND VEHEMENTLY ARGUES THAT THE CI T(A) HAS ERRED IN HOLDING THAT BEING A SUPPORTING MANUFACTURER, THE A SSESSEE IS NOT ENTITLED FOR THE CLAIM OF DEDUCTION RAISED UNDER SECTION 80HHC ( 3) OF THE ACT. PER ASSESSEE, SUCH ADJUDICATION CANNOT BE MADE IN PROCE EDINGS/INTIMATION UNDER SECTION 143(1) OF THE ACT. TO BUTTRESS HIS ARGUMENTS, HE ALSO CITES CASE LAW OF [2012] 243 ITR 48 (SC) CIT VS. HINDUSTA N ELECTRO GRAPHITES LTD. AND PRAYS FOR ACCEPTANCE OF THE APPEAL. 4. IN ADDITION TO THIS, QUA GROUNDS RAISED IN I.T. A. NO. 1327/MDS/1996, I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1326 & 1327 1326 & 1327 1326 & 1327 1326 & 1327/M/ /M/ /M/ /M/96 9696 96 3 THE ASSESSEE SUBMITS THAT BEING A SUPPORTING MANUFA CTURER, THE ASSESSEE IS ENTITLED FOR ITS CLAIM OF DEDUCTION UNDER SECTION 8 0HHC (3). THEREFORE, HE PRAYS FOR ACCEPTANCE OF BOTH APPEALS. 5. PER CONTRA, THE REVENUE STRONGLY SUPPORTS THE F INDINGS OF THE CIT(A) IN BOTH APPEALS AND PRAYS FOR UPHOLDING THE SAME. 6. WE HAVE HEARD BOTH PARTIES AT LENGTH AND ALSO P ERUSED ASSESSMENT ORDERS, CIT(A)S ORDER IN BOTH CASES AND THE DIRECT ION OF THE HONBLE JURISDICTIONAL HIGH COURT AND THE CASE LAW SUBMITTE D BY THE ASSESSEE (SUPRA). 7. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A FIRM. IT IS ENGAGED IN THE BUSINESS OF MARINE FOODS; PROCESSING AND EXPORT . ON 30.12.1992, IT HAD FILED ITS RETURN DECLARING ` . NIL AS INCOME SINCE IT HAD RAISED A CLAIM OF DEDUCTION UNDER SECTION 80HHC REGARDING ITS ENTIRE INCOME. WE FIND FROM THE CASE FILES BEFORE US THAT THE ASSESSING OFFICER PROCESSED ASSESSEES RETURN UNDER SECTION 143(1)(A) OF THE ACT AND T REATED THE IMPUGN AMOUNT OF ` .41,08,599/- AS LIABLE TO BE TAXED BY REWORKING THE DEDUCTION TO ` .1,62,485/- AND ISSUED NECESSARY INTIMATION. THEREA FTER, HE FINALIZED REGULAR ASSESSMENT VIDE ASSESSMENT ORDER DATED 31 .03.1995 AND FOLLOWED THE COMPUTATION ALREADY MADE IN 143(1)(A) PROCEEDIN GS AS STATED HEREINABOVE. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1326 & 1327 1326 & 1327 1326 & 1327 1326 & 1327/M/ /M/ /M/ /M/96 9696 96 4 8. THE ASSESSEE PREFERRED TWO DIFFERENT APPEALS I. E. AGAINST 143(1)(A) INTIMATION AS WELL AS REGULAR ASSESSMENT ORDER DATE D 31.03.1995. WE NOTICE FROM THE IMPUGNED ORDERS IN BOTH CASES THAT ITS CON TENTION STAND REJECTED BY THE CIT(A). IT HAS BEEN HELD IN ORDER ARISING OUT O F PROCEEDINGS UNDER SECTION 143(1)(A) THAT THE ASSESSEE IS ONLY A SUPPORTING MANUFACTURER WHICH DISENTITLES IT FROM CLAIM OF DEDUCTION UNDER SECTIO N 80HHC (3) OF THE ACT. SIMILARLY, THE ASSESSMENT ORDER UNDER SECTION 143(3 ) HAS ALSO BEEN AFFIRMED. THEREFORE, THE ASSESSEE IS AGGRIEVED. 9. AFTER GIVING OUR THOUGHTFUL CONSIDERATION TO TH E ISSUES INVOLVED IN BOTH APPEALS, WE ARE OF THE VIEW THAT THE PURPOSE OF SEC TION 143(1)(A) OF THE ACT IS TO MAKE PRIMA FACIE ADJUSTMENT AND NOT QUA THOSE RAISING DEBATABLE ISSUES. IN THE INSTANT CASE, ADMITTEDLY, THERE IS N EITHER ANY ARITHMETICAL MISTAKE NOR ANY ERROR APPARENT IN ASSESSEES RETUR N SUBMITTED. SO FAR AS THE FINDINGS THAT THE ASSESSEE IS A ONLY SUPPORTIN G MANUFACTURER, HENCE NOT ENTITLED IN DEDUCTION UNDER SECTION 80HHC(3) OF THE ACT IS CONCERNED, IT IS AT THE BEST A CLAIM LIABLE TO BE CONSIDERED NOT IN 143(1)(A) PROCEEDINGS BUT IN REGULAR ASSESSMENT IN APPROPRIATE PROCEEDINGS. 10. FURTHER, A PERUSAL OF THE CASE LAW CITED BY TH E ASSESSEE (SUPRA) MAKES IT CLEAR THAT WHEN ADDITIONAL TAX IN PROCEEDI NGS UNDER SECTION 143(1)(A) HAS INPRINT OF PENALTY, THE SAME IS NOT A UTOMATIC. THE RELEVANT I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1326 & 1327 1326 & 1327 1326 & 1327 1326 & 1327/M/ /M/ /M/ /M/96 9696 96 5 PORTION OF THE JUDGMENT (SUPRA) READS AS UNDER: 3. WE HAVE TO CONSIDER IF THE STAND OF THE REVENU E IS VALID OR WILL IT NOT LEAD TO UNJUST RESULTS FOR THE ASSESSEE. THE RE VENUE SAYS UNDER SECTION 143(1A), THE AO HAS NO CHOICE AND HE HAS TO LEVY ADDITIONAL TAX ONCE HE FINDS THAT THE ASSESSEE HAS NOT SHOWN THE A MOUNT OF THE CASH COMPENSATORY SUPPORT IN HIS RETURN, WHATEVER THE RE ASON BE. THE ASSESSEE CONTENDS IT IS SOMETHING WHICH IS MOST IMP ROPER AND AGAINST THE SETTLED PRINCIPLES. 4. IN MODERN FIBOTEX INDIA LTD. V. DEPUTY CIT [1995 ] 212 ITR 496 (CAL), ONE OF THE TWO ISSUES BEFORE THE COURT RELAT ED TO THE VALIDITY OF AN INTIMATION UNDER SECTION 143(1)(A) OF THE ACT. FOR THE ASSESSMENT YEAR 1989-90, THE ASSESSEE-COMPANY RECEIVED CASH COMPENS ATORY SUPPORT FROM THE CENTRAL GOVERNMENT AMOUNTING TO ABOUT RS. 8 LAKHS. IN ITS RETURN OF INCOME, THE COMPANY CLAIMED THE AMOUNT RE CEIVED BY IT ON ACCOUNT OF CASH COMPENSATORY SUPPORT AS NOT TAXABLE . THE ASSESSING OFFICER ASSESSED THE COMPANY APPLYING THE AMENDED P ROVISION OF SECTION 28 OF THE ACT THUS LEVYING ADDITIONAL TAX U NDER SECTION 143(1A) OF THE ACT. THE COMPANY FILED A WRIT PETITION IN TH E HIGH COURT CHALLENGING THE VERY CONSTITUTIONALITY OF SECTION 1 43(1)(A) READ WITH SECTION 143(1A) AND SECTION 4 AND ALSO THE INTIMATI ON SENT BY THE ASSESSING OFFICER LEVYING ADDITIONAL TAX. THE HIGH COURT SPEAKING THROUGH ONE OF US (RUMA PAL J.) NOTICED THAT SECTIO N 28 OF THE ACT WAS AMENDED WITH RETROSPECTIVE EFFECT FROM APRIL 1, 196 7. IT SAID : 'AN ASSESSEE CANNOT BE IMPUTED WITH CLAIRVOYANCE. W HEN THE RETURN WAS FILED, THE ASSESSEE COULD NOT POSSIBLY H AVE KNOWN THAT THE DECISION ON THE BASIS OF WHICH CASH COMPENSATOR Y SUPPORT HAD BEEN CLAIMED AS NOT AMOUNTING TO THE ASSESSEE'S INCOME CEASED TO BE OPERATIVE BY REASON OF RETROSPECTIVE L EGISLATION.' THE HIGH COURT WAS FURTHER OF THE VIEW THAT THERE W AS LIMITATION ON THE POWER UNDER SECTION 143(1)(A) AND THAT THE ASSESSIN G OFFICER MUST DETERMINE THE QUESTION OF ASSESSMENT THEREUNDER BY APPLYING THE LAW PREVAILING WHEN THE RETURN WAS FILED. ONE HAS TO SE E THE NATURE OF THE OBLIGATION TO WHICH AN ASSESSEE IS SUBJECTED IN FIL ING HIS RETURN AND THE OBJECT SOUGHT TO BE ACHIEVED BY THE INTRODUCTION OF SECTION 143(1A) AND SECTION 143(1)(A) WHICH DIRECT LEVY OF ADDITIONAL T AX. THE OBLIGATION IS TO FILE A CORRECT RETURN WITHIN THE TIME SPECIFIED, THAT IS TO SAY, A RETURN WHICH IS CORRECT ACCORDING TO LAW IN FORCE, WHEN IT IS REQUIRED TO BE FILED. IT WAS NOT DISPUTED THAT THE RETURN WHEN FIL ED BY THE ASSESSEE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1326 & 1327 1326 & 1327 1326 & 1327 1326 & 1327/M/ /M/ /M/ /M/96 9696 96 6 COULD NOT BE TERMED OUT OF HAND AS AN INCORRECT RET URN ON THE DATE OF FILING OF THE RETURN. THIS IS HOW THE HIGH COURT DE ALT THE MATTER : 'WITHOUT GOING INTO THE QUESTION AS TO WHETHER THE PROVISIONS ARE PENAL IN NATURE, BUT KEEPING IN MIND THE CONSEQ UENCES OF AN ADJUSTMENT MADE AND THE INSISTENCE UPON THE ASSESSE E FILING A CORRECT RETURN, IT WOULD FOLLOW THAT THE DATE FOR J UDGING THE QUESTION OF ADJUSTMENT MUST BE THE ACTUAL DATE OF T HE RETURN IN THE LIGHT OF THE LAW THEN PREVAILING. TO HOLD OTHER WISE, MANIFESTLY SHOCKS ONE'S SENSE OF JUSTICE THAT AN AC T, CORRECT AT THE TIME OF DOING IT, SHOULD BECOME INCORRECT BY SOME N EW ENACTMENT (SEE MIDLAND RAILWAY COMPANY V. PYRE [186 1]142 ER 419,424). THE INJUSTICE IN MY VIEW IS MORE SHOCK ING IN THIS CASE HAVING REGARD TO THE FACT THAT THE ASSESSEE HA D ITSELF, IN ITS RETURN, DRAWN THE ATTENTION OF THE INCOME-TAX AUTHO RITIES TO THE BASIS UPON WHICH THE CASH COMPENSATORY SUPPORT HAD NOT BEEN INCLUDED AS INCOME AND HAD CLEARLY OFFERED TO INCLU DE THE SAME IN ANY ASSESSMENT IF THE BASIS IS SHOWN TO EXIST. ADDITIONALLY, THE CHANGE IN THE LAW BY AMENDMENT OF SECTION 28 TOOK PLACE SEVERAL MONTHS AFTER THE RETURN WAS FILED BY THE ASSESSEE. THIS COURT IS NOT DETERMINING THE VALIDITY OF THE AMENDM ENT OF SECTION 28, BUT IS MERELY DETERMINING THE SCOPE OF THE POWER UN DER SECTION 143(1)(A). THE ASSESSEE'S RETURN COULD HAVE BEEN TA KEN UP BY THE ASSESSING OFFICER UNDER SECTION 143 PRIOR TO THE AM ENDMENT. IN THAT EVENT, NO ADJUSTMENT WOULD HAVE BEEN MADE AND NO IN TIMATION WOULD HAVE BEEN SENT. AN ASSESSEE'S LIABILITY CANNOT BE M ADE TO DEPEND UPON SUCH A FORTUITOUS CIRCUMSTANCE.' THE HIGH COURT ALLOWED THE WRIT PETITION TO THE EXT ENT THAT THE IMPUGNED INTIMATION AND ADJUSTMENT UNDER SECTION 14 3(1)(A) WERE SET ASIDE AND QUASHED. 5. IN CEMENT MARKETING CO. OF INDIA LTD. V. ASSIST ANT COMMISSIONER OF SALES TAX [1980] 124 ITR 15 (SC), T HE ASSESSEE DID NOT INCLUDE IN ITS RETURN OF TURNOVER THE AMOUNT OF FREIGHT INCLUDED IN THE PRICE OF SUGAR IN THE BONA FIDE BELIEF THAT IT WAS NOT LIABLE TO BE INCLUDED IN THE TAXABLE TURNOVER. THE ASSESSEE WAS IMPOSED WITH A PENALTY IN VIEW OF SECTION 43 OF THE MADHYA PRADESH GENERAL SALES TAX ACT, 1958, AND SECTION 9 OF THE CENTRAL SALES TAX A CT, 1956, ON THE GROUND THAT IT HAD FURNISHED FALSE RETURN BY NOT IN CLUDING THE AMOUNT OF FREIGHT IN THE TAXABLE TURNOVER DISCLOSED IN THE RE TURNS. THIS COURT SAID THAT IT WAS DIFFICULT TO SEE HOW THE ASSESSEE COULD BE SAID TO HAVE FILED I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1326 & 1327 1326 & 1327 1326 & 1327 1326 & 1327/M/ /M/ /M/ /M/96 9696 96 7 'FALSE' RETURNS, WHEN WHAT THE ASSESSEE DID, NAMELY , NOT INCLUDING THE AMOUNT OF FREIGHT IN THE TAXABLE TURNOVER, WAS UNDE R A BONA FIDE BELIEF THAT THE AMOUNT OF FREIGHT DID NOT FORM PART OF THE SALE PRICE AND WAS NOT INCLUDIBLE IN THE TAXABLE TURNOVER. A RETURN CA NNOT BE SAID TO BE 'FALSE' UNLESS THERE IS AN ELEMENT OF DELIBERATENES S IN IT. IT IS POSSIBLE THAT EVEN WHERE THE INCORRECTNESS OF THE RETURN IS CLAIMED TO BE DUE TO WANT OF CARE ON THE PART OF THE ASSESSEE AND THERE IS NO REASONABLE EXPLANATION FORTHCOMING FROM THE ASSESSEE FOR SUCH WANT OF CARE, THE COURT MAY IN A GIVEN CASE, INFER DELIBERATENESS AND THE RETURN MAY BE LIABLE TO BE BRANDED AS A FALSE RETURN. BUT WHERE T HE ASSESSEE DOES NOT INCLUDE A PARTICULAR ITEM IN THE TAXABLE TURNOVER U NDER A BONA FIDE BELIEF THAT HE IS NOT LIABLE SO TO INCLUDE IT, IT W OULD NOT BE RIGHT TO CONDEMN THE RETURN AS A 'FALSE' RETURN INVITING IMP OSITION OF PENALTY. THIS COURT SAID THAT SECTION 43 OF THE MADHYA PRADE SH GENERAL SALES TAX ACT, 1958, PROVIDING FOR IMPOSITION OF PENALTY WAS PENAL IN CHARACTER AND UNLESS THE FILING OF AN INACCURATE RE TURN IS ACCOMPANIED BY A GUILTY MIND, THE SECTION CANNOT BE INVOKED FOR IMPOSING PENALTY. THIS COURT FURTHER SAID THAT IF THE VIEW CANVASSED ON BEHALF OF THE REVENUE WERE ACCEPTED, THE RESULT WOULD BE THAT EVE N IF THE ASSESSEE RAISES A BONA FIDE CONTENTION THAT A PARTICULAR ITE M IS NOT LIABLE TO BE INCLUDED IN THE TAXABLE TURNOVER, HE WOULD HAVE TO SHOW IT AS FORMING PART OF THE TAXABLE TURNOVER IN HIS RETURN AND PAY TAX UPON IT ON PAIN OF BEING HELD LIABLE FOR PENALTY IN CASE HIS CONTENTIO N IS ULTIMATELY FOUND BY THE COURT TO BE NOT ACCEPTABLE. THAT SURELY COUL D NEVER HAVE BEEN INTENDED BY THE LEGISLATURE, THIS COURT SO OBSERVED . 6. IN CIT V. ONKAR SARAN AND SONS [1992] 195 ITR 1 (SC), THE ASSESSEE FILED RETURNS FOR THE ASSESSMENT YEARS 196 1-62 AND 1962-63 DISCLOSING INCOMES OF RS. 18,935 AND RS. 24,943, RE SPECTIVELY. THE ASSESSMENTS WERE COMPLETED IN THE TOTAL INCOME OF R S. 28,513 AND RS. 28,463, RESPECTIVELY. THE ITO HAVING COME TO KNOW S UBSEQUENTLY THAT THE ASSESSEE HAD FAILED TO DISCLOSE ITS PROFITS FRO M SALE OF CERTAIN LANDS, ISSUED NOTICES UNDER SECTION 148 FOR BOTH THE YEARS . THE ASSESSEE, HOWEVER, DISCLOSED THE SAME INCOME AS IN THE ORIGIN AL RETURNS. THE ITO MADE ADDITIONS AND AFTER COMPLETING THE REASSESSMEN TS ON MARCH 6, 1969, INITIATED PROCEEDINGS UNDER SECTION 271(1)(C) AND THE IAC IMPOSED PENALTY ON THE ASSESSEE ON THE BASIS OF THE AMENDED SECTION 271(1)(C) WITH EFFECT FROM APRIL 1, 1968. THIS COUR T SAID THAT EVEN IN A CASE WHERE A RETURN IS FILED IN RESPONSE TO A NOTIC E UNDER SECTION 148 INVOLVING AN ELEMENT OF CONCEALMENT, THE LAW APPLIC ABLE WOULD BE THE LAW AS IT STOOD AT THE TIME WHEN THE ORIGINAL RETUR N WAS FILED FOR THE ASSESSMENT YEAR IN QUESTION AND NOT THE LAW AS IT S TOOD ON THE DATE ON WHICH THE RETURN WAS FILED IN RESPONSE TO NOTICE UN DER SECTION 148. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1326 & 1327 1326 & 1327 1326 & 1327 1326 & 1327/M/ /M/ /M/ /M/96 9696 96 8 7. THE DECISION OF THE CALCUTTA HIGH COURT IN MODE RN FIBOTEX INDIA LTD.'S CASE [1995] 212 ITR 496, SQUARELY COVE RS THE ISSUE INVOLVED IN THE PRESENT APPEAL. THEN WE HAVE TO SEE THE LAW ON THE DATE OF FILING OF THE RETURN. TO ATTRACT PENAL PROVISION S THERE HAS TO BE SOME ELEMENT OF LACK OF BONA FIDES UNLESS THE LAW SPECIF ICALLY PROVIDES OTHERWISE. THE CASE BEFORE US DOES NOT REPRESENT EVEN A BONA F IDE MISTAKE. IN FACT IT IS NOT A CASE WHERE UNDER SOME MISTAKEN BELIEF T HE ASSESSEE DID NOT DISCLOSE THE CASH COMPENSATORY SUPPORT RECEIVED BY IT WHICH HE COULD OFFER TO TAX. IT IS TRUE THAT INCOME BY WAY OF CASH COMPENSATORY SUPPORT BECAME TAXABLE RETROSPECTIVELY WITH EFFECT FROM APR IL 1, 1967, BUT THAT WAS BY AMENDMENT OF SECTION 28 BY THE FINANCE ACT O F 1990 WHICH AMENDMENT COULD NOT HAVE BEEN KNOWN BEFORE THE FINA NCE ACT CAME INTO FORCE. LEVY OF ADDITIONAL TAX BEARS ALL THE CH ARACTERISTICS OF PENALTY. ADDITIONAL TAX WAS LEVIED AS THE ASSESSEE DID NOT IN HIS RETURN SHOW THE INCOME BY WAY OF CASH COMPENSATORY SUPPORT . THE ASSESSING OFFICER ON THAT ACCOUNT LEVIED ADDITIONAL INCOME-TA X. NO ADDITIONAL TAX WOULD HAVE BEEN LEVIABLE ON THE CASH COMPENSATORY S UPPORT IF THE FINANCE ACT, 1990, HAD NOT SO PROVIDED EVEN THOUGH RETROSPECTIVELY. THE ASSESSEE COULD NOT HAVE SUFFERED ADDITIONAL TAX BUT FOR THE FINANCE ACT OF 1990. AFTER HE HAD FILED HIS RETURN OF INCOM E, WHICH WAS CORRECT AS PER LAW ON THE DATE OF FILING OF THE RETURN, IT WAS THEREAFTER THAT THE CASH COMPENSATORY SUPPORT ALSO CAME WITHIN THE SWAY OF SECTION 28. WHEN ADDITIONAL TAX HAS THE IMPRINT OF PENALTY, THE REVENUE CANNOT BE HEARD TO SAY THAT THE LEVY OF ADDITIONAL TAX IS AUT OMATIC UNDER SECTION 143(1A) OF THE ACT. IF ADDITIONAL TAX COULD BE LEVI ED IN SUCH CIRCUMSTANCES, IT WILL BE PUNISHING THE ASSESSEE FO R NO FAULT OF HIS. THAT CANNOT EVER BE THE LEGISLATIVE INTENT. IT SHOCKS TH E VERY CONSCIENCE IF IN THE CIRCUMSTANCES SECTION 143(1A) COULD BE INVOKED TO LEVY THE ADDITIONAL TAX. THE FOLLOWING OBSERVATIONS BY THE C ONSTITUTION BENCH OF THIS COURT IN PANNALAL BINJRAJ V. UNION OF INDIA [1 957] 31 ITR 565 ARE APT : 'A HUMANE AND CONSIDERATE ADMINISTRATION OF THE REL EVANT PROVISIONS OF THE INCOME-TAX ACT WOULD GO A LONG WA Y IN ALLAYING THE APPREHENSIONS OF THE ASSESSEES AND IF THAT IS DONE IN THE TRUE SPIRIT, NO ASSESSEE WILL BE IN A POSITION TO CHARGE THE REVENUE WITH ADMINISTERING THE PROVISIONS OF THE AC T WITH 'AN EVIL EYE AND UNEQUAL HAND'.' 8. WE UPHOLD THE VIEW EXPRESSED BY THE CALCUTTA HI GH COURT. KEEPING IN VIEW THE PRINCIPLES LAID DOWN BY THIS CO URT IT HAS TO BE HELD I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1326 & 1327 1326 & 1327 1326 & 1327 1326 & 1327/M/ /M/ /M/ /M/96 9696 96 9 THAT IN THE CIRCUMSTANCES OF THE PRESENT CASE LEVY OF ADDITIONAL TAX TAKING INTO ACCOUNT THE INCOME BY WAY OF CASH COMPE NSATORY SUPPORT IS NOT WARRANTED. THE QUESTION IS ANSWERED IN THE AFFI RMATIVE, I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE APPEAL IS ACCORDINGLY DISMISSED WITH COSTS. TAKING CUE FROM THE SAME, WE ALSO EXPRESS OUR AGRE EMENT WITH THE ABOVE LAW AND HOLD THAT THE CIT(A) HAS ERRED IN CONFIRMIN G INTIMATION UNDER SECTION 143(1)(A) OF THE ACT SINCE ADDITIONAL TAX WITHIN THE MEANING OF SECTION 143(1A)(A) HAS AN IMPRINT OF PENALTY WHICH CANNOT B E INVOKED AUTOMATICALLY. 11. COMING TO THE ISSUE INVOLVED IN I.T.A. NO. 132 7/MDS/1996. AS STATED HEREINABOVE, THIS APPEAL IS DIRECTED FROM THE REGUL AR ASSESSMENT ORDER RESTRICTING ASSESSEES CLAIM OF DEDUCTION ON THE GR OUND BEING A SUPPORTING MANUFACTURER; IT IS NOT ENTITLED FOR DEDUCTION. IN THIS REGARD, WE NOTICE THAT THE ASSESSING OFFICER NOWHERE TAKES INTO CONSIDERATION ASSESSEES CLAIM IN QUESTION SUPPORTED BY DOCUMENTS QUA ITS ROLE AS SU PPORTING EXPORTER IN THE CONCERN EXPORT INCIDENCE WITH ALL RELEVANT PARTICUL ARS AND DETAILS. FURTHER, THERE IS NO DISCUSSION AS TO HOW THE PRINCIPAL EX PORTER HAS DISCLAIMED THE EXPORT CREDIT IN QUESTION IN ASSESSEES SUPPORT. TH E ASSESSING OFFICER HAS SIMPLY PROCEEDED ON THE BASIS OF PROCEEDINGS UNDER SECTION 143(1)(A) OF THE ACT WHICH IN TURN HAS ALSO BEEN CONFIRMED BY THE CIT(A). IN OUR VIEW, WHILE ADOPTING THIS APPROACH, THE CIT(A) HAS NOT TAKEN IN TO CONSIDERATION THE DISTINCTION BETWEEN 143(1)(A) PROCEEDINGS AND REGUL AR ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT. IN 1 43(3) PROCEEDINGS, THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1326 & 1327 1326 & 1327 1326 & 1327 1326 & 1327/M/ /M/ /M/ /M/96 9696 96 10 ASSESSING AUTHORITY HAS TO APPLY INDEPENDENT MIND A FTER ASSOCIATING THE CONCERNED ASSESSEE AND THEN PASS A REASONED ORDER, WHICH IS NOWHERE FORTHCOMING IN THE INSTANT CASE. SO FAR AS HONBLE HIGH COURTS DIRECTIONS ARE CONCERNED, IN THE ABSENCE OF DETAILS AFORESAID, WE FEEL THAT THE MATTER REQUIRES RE-EXAMINATION BY THE ASSESSING OFFICER IN ACCORDANCE WITH LAW. THEREFORE, WE DIRECT HIM TO PASS A FRESH ORDER KEEP ING IN MIND THE ORDER OF THEIR LORDSHIPS AFTER AFFORDING ADEQUATE OPPORTUNIT Y OF HEARING TO THE ASSESSEE. SINCE THE CASE IS QUITE AN OLD ONE, IT IS EXPECTED THAT HE WOULD FINALIZE THE ASSESSMENT WITHIN A PERIOD OF SIX MONT HS OF RECEIVING COPY OF OUR ORDER. 12. AS SEQUEL TO OUR ABOVE DISCUSSION, I.T.A. NO. 1326/MDS/1996 IS ALLOWED, WHEREAS I.T.A. NO. 1327/MDS/1996 IS ALLOWE D FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ONTUESDAY, THE 12 TH OF FEBRUARY, 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) VICE - PRESIDENT (S.S. GODARA) JUDICIAL MEMBER CHENNAI, DATED, THE 12.02.2013 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.