Haryana Oil & Soya Ltd, Jind V. ACIT, Bhiwani

ITA 2828/DEL/2008

• Counselvise Citation: 282820114 RSA 2008
• Duration Of Justice: 3 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 12-12-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 01-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Assessee Lawyers: SANJEEV BAJAJ
• Keywords: Rectification of order
• Section: 234B; 154; 2; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `C: NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI C.L. SETHI, JUDICIAL MEMBER I.T. A. NO.2828/DEL/2008 ASSESSMENT YEAR: 2004-05 HARYANA OILS & SOYA LTD., ASSTT. COMMISSIONER OF I NCOME-TAX, 449/456, 1 ST FLOOR, VS. BHIWANI. NAYA BANS, KHARI BAOLI, DELHI-6. PAN: AAACH3954P (APPELLANT) (RESPONDENT ) APPELLANT BY : SHRI SANJEEV BAJAJ, AR. RESPONDENT BY : SHRI SALIL MISHRA, SR. DR. O R D E R PER C.L. SETHI, JUDICIAL MEMBER: IN THIS APPEAL, FILED BY THE ASSESSEE, AGAINST THE ORDER DATED 30.06.2008 OF THE LEARNED COMMISSIONER OF INCOME-TA X (APPEALS) IN THE MATTER OF AN ORDER DATED 27.03.2007 PASSED UNDER SE C. 154 OF THE INCOME-TAX ACT, 1961 (THE ACT) BY THE ASSESSING OFFICER FOR TH E ASSESSMENT YEAR 2004- 05, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE AR E AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONF IRMING THE ORDER PASSED BY THE ASSESSING OFFICER AS THE ORDER PASSED U/S 2 154 OF THE INCOME TA ACT, 1961 IS BAD AND AGAINST T HE PROVISIONS OF THE SECTION IN SPITE OF THE ACCEPTANC E THAT RECTIFICATION OF MISTAKE APPARENT FROM RECORD SHOUL D NOT BE DEBATABLE. 2. THE LEARNED CIT(A) HAS ERRED IN OT CONSIDERING T HE FACTS OF THE CASE THAT THE APPELLANT HAS NOT BOUGHT OR SOLD FOREIGN CURRENCY BUT LOSS INCURRED ON FCL LOAN A/C DUE TO H EDGING TO PROTECT HEAVY LOSSES BY THE BANK AS PER POLICY OF R BI. 2. IN THIS CASE, THE ASSESSING OFFICER PASSED ORDER UNDER SEC. 154 OF THE ACT DATED 27.03.207 BY OBSERVING AS UNDER:- THE RETURN OF INCOME WAS FILED ON 29.10.04 AT RS.1149090/-. THE RETURN WAS PROCESSED ON 15.2.200 5 AT RETURN INCOME. ON PERUSAL OF THE RETURN IT REVEALED THAT THE ASSESSEE COMPANY CLAIMED EXPENDITURE OF RS.196800/- ON ACCOU NT OF FOREIGN EXCHANGE FLUCTUATION. HOWEVER, AS PER NOTE S TO ACCOUNTS THE COMPANY HAS NOT INCURRED EXPENDITURE/P URCHASE IN FOREIGN CURRENCY AND THERE WAS NO EARNING IN FOR EIGN CURRENCY. FURTHER LIABILITY OF RS.40076 ON ACCOUNT OF HGST, RS.5454 ON A/C OF CST AND VAT OF RS.103 TOTALLING R S.45633 SHOWN AS UNPAID IN THE AUDIT REPORT. NOTICE U/S 15 4 WAS ISSUED ON 17.7.06 & 01.9.06. THE REPLY IS NOT SATISFACTOR Y. THE ABOVE MENTIONED INCOME IS ADDED AS UNDER:- INCOME ON A/C OF FOREIGN EXCHANGE = 196800 UNPAID EXPENSES = 45633 INCOME IN ADDITION U/S 143(1) ORDER = 242433 I.TAX & SURCHARGE = 86971 INTT. U/S 234B = 9559 PAYABLE = 96530 3. ON AN APPEAL, THE LEARNED CIT(A) CONFIRMED THE A OS ACTION BY CONCLUDING AS UNDER:- 3 4.1 THE ISSUE INVOLVED AND THE SUBMISSIONS MADE BY THE APPELLANT HAVE BEEN CONSIDERED. SECTION 154 DEALS W ITH RECTIFICATION OF MISTAKE APPARENT FROM RECORD, BE I T OF LAW OR OF FACTS. ONLY THOSE MISTAKE CAN BE RECTIFIED DECISIO N ON WHICH IS POSSIBLE WITHOUT LONG DRAWN PROCESS OF REASONING OR DEBATE. THE MISTAKE MUST BE APPARENT FROM RECORD AND SHOULD NOT BE HAVING TWO CONFLICTING INTERPRETATIONS THEREON. IN THE APPEAL UNDER CONSIDERATION THE APPELLANT HAS CLAIMED AN AM OUNT OF RS.55,55,311/- IN ITS PROFIT AND LOSS ACCOUNT AND B REAKUP OF THIS AMOUNT IS SHOWN IN SCHEDULE O TO THE BALANCE SHEET IN WHICH FOREIGN EXCHANGE FLUCTUATION APPEARS AT RS.1,96,800 /-. HOWEVER ION THE NOTES TO ACCOUNTS IT HAS BEEN SPECI FICALLY MENTIONED UNDER ITEM NOS. 3 & 4 THAT THE COMPANY HA S NOT INCURRED EXPENDITURE/PURCHASE IN FOREIGN CURRENCY D URING THE YEAR 2003-04 AND THAT THERE AS NO EARNING IN FOREIG N CURRENCY DURING THE YEAR 2003-04. IN VIEW OF THE AFORESAID THERE WAS NO ALTERNATIVE WITH THE AO OTHER THAN RECTIFYING THE P ROCESSING DONE BY HIM ON 15.2.2005. THEREFORE THE ORDER OF T HE AO IS CONFIRMED AND THE APPEAL IS DISMISSED. 4. FROM THE ORDERS OF THE AUTHORITIES BELOW, IT IS CLEAR THAT THE AO HAS PASSED ORDER UNDER SEC. 154 WITH A VIEW TO RECTIFY THE INTIMATION U/S 143(1) UNDER WHICH THE RETURN WAS PROCESSED ON 15.02.2005 AT RETURNED INCOME. THE ASSESSMENT YEAR INVOLVED IS ASSESSMENT YEAR 200 4-05. THE RETURN OF INCOME FILED BY THE ASSESSEE ON 29.10.2004 WAS PROC ESSED ON 15.02.2005 AT RETURNED INCOME UNDER SEC. 143(1) OF THE ACT. THER EAFTER, THE ASSESSING OFFICER MADE ADJUSTMENT TO THE RETURNED INCOME BY W AY OF DISALLOWING FOREIGN EXCHANGE EXPENDITURE OF RS.1,96,800/- AND U NPAID EXPENSES AMOUNTING TO RS.45,633/-, AND MADE A TOTAL ADDITION OF RS.2,42,433/- TO THE RETURNED INCOME. THE AMOUNT OF RS.2,42,433/- WAS T REATED AS INCOME IN 4 ADDITION TO THE INCOME AS PER ORDER UNDER SEC. 143( 1) OF THE ACT. IT IS, THUS, A CASE WHERE THE INTIMATION U/S 143(1) MADE BY THE AO ON 15.02.2005 HAS BEEN RECTIFIED BY MAKING ADDITION OF RS.2,42,433/- TO THE RETURNED INCOME. AGAINST THIS ADDITION MADE BY THE AO UNDER SEC. 154 OF THE ACT, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A), WHER E THE ASSESSEE HAS SUBMITTED THAT THIS APPEAL HAS BEEN PREFERRED ONLY AGAINST THE ADDITION OF RS.1,96,800/- ON ACCOUNT OF DISALLOWANCE OF LOSSES ON FOREIGN EXCHANGE FLUCTUATION/EXPENSES. THEREFORE, OUR THIS ORDER SH ALL CONFINE ONLY TO THE AMOUNT OF RS.1,96,800/-, WHICH WAS DISPUTED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) AS WELL AS BEFORE US. 5. ON PERUSAL OF SEC. 143(1) OF THE ACT, WE FIND TH AT SEC. 143(1) OF THE ACT WAS AMENDED WITH EFFECT FROM JUNE 1, 1999 WHERE BY CERTAIN POWERS AVAILABLE WITH THE AO TO MAKE PRIMA FACIE ADJUSTMEN T AGAINST ALLOWABLE AND DISALLOWABLE CLAIMS AND DEDUCTIONS WHILE PROCESSING THE RETURN OF INCOME UNDER SEC.143(1) OF THE ACT, WERE DONE AWAY WITH, A ND THE POWER WAS CONFINED ONLY TO MAKE ARITHMETICAL CALCULATION OF T AX, PENALTY OR INTEREST PAYABLE ON THE BASIS OF RETURN OF INCOME FILED BY T HE ASSESSEE. ANY ARITHMETICAL ERROR IN THE COMPUTATION OF TAX, INTER EST PAYABLE OR REFUNDABLE ON THE BASIS OF RETURN OF INCOME COULD ONLY BE CORRECTED BY WAY OF RECTIFICATION UNDER SECTION 154(1)(B) OF THE ACT ON AND FROM 5 JUNE 1, 1999. IN OTHER WORDS, THE PROVISIONS OF SE C. 143(1) EFFECTIVE FROM JUNE 1, 1999, DOES NOT CONTAIN ANY PROVISION FOR AN Y ADJUSTMENT IN RESPECT OF ANY CLAIM MADE BY THE ASSESSEE IN HIS RETURN, AND T HE AOS POWER TO MAKE PRIMA FACIE ADJUSTMENT TO THE INCOME OR LOSS DECLAR ED IN THE RETURN WHILE PROCESSING THE RETURN UNDER SEC. 143(1)(A) AS THEY STOOD PRIOR TO JUNE 1, 1999, WERE DONE AWAY WITH BY THE FINANCE ACT, 1999 W.E.F. 1.06.1999. IN OTHER WORDS, IT MAY BE SAID THAT THE ADJUSTMENTS PE RMISSIBLE UNDER SEC. 143(1)(A) PRIOR TO THE AMENDMENT MADE BY THE FINANC E ACT, 1999 W.E.F. 1.06.1999 ARE NO MORE PERMISSIBLE WHILE PREPARING I NTIMATION UNDER SEC. 143(1) OF THE ACT ON OR AFTER JUNE 1, 1999 EXCEPT M AKING ARITHMETICAL CALCULATION OF TAX, PENALTY OR INTEREST PAYABLE BY THE ASSESSEE IN THE RETURN OF INCOME. THUS, THE POWER OF RECTIFICATION OF INTIMA TION OR DEEMED INTIMATION UNDER SEC. 154(1)(B) SHALL BE CONFINED TO THE POWER OF THE AO TO MAKE ADJUSTMENT ONLY WITH REGARD TO THE CALCULATION OF T AX, PENALTY OR INTEREST PAYABLE ON THE BASIS OF RETURN FILED BY THE ASSESSE E AND NOT OTHERWISE. SINCE U/S 143(1) W.E.F. 1.06.1999, THE AO CANNOT REVISE T HE RETURNED INCOME AND RE-DETERMINE THE INCOME AFTER MAKING CERTAIN ADJUST MENT TO THE RETURNED INCOME, IT WOULD FOLLOW THAT THE AO CANNOT REVISE T HE INTIMATION AND RE- DETERMINE THE INCOME IN PURPORTED EXERCISE OF POWER UNDER SEC. 154 OF THE ACT. THE POWER TO RECTIFY INTIMATION ISSUED UNDER SEC. 143(1) ON OR AFTER 6 1.06.1999 CANNOT GO BEYOND THE SCOPE AND EFFECT OF SEC. 143(1) OF THE ACT. WHAT COULD NOT HAVE BEEN DONE DIRECTLY WHILE MAKING INTIMATION UNDER SEC.143(1) ON AND FROM JUNE 1, 1999, CANNOT BE DONE INDIRECTLY IN THE GARB OF RECTIFICATION OF POWER GIVEN UNDER SEC. 154(1)B) OF THE ACT. THEREFORE, THE POWER OF RECTIFICATION UNDER SEC. 154 OF THE AC T SHOULD BE LIMITED TO THE SCOPE AND POWER OF MAKING INTIMATION UNDER SEC. 143 (1) OF THE ACT, AND AS SUCH THE POWER OF RECTIFICATION UNDER SEC. 154(1)(B ) SHOULD BE LIMITED TO THE MATTERS FALLING WITHIN THE SCOPE AND AMBIT OF SEC. 143(1) EFFECTIVE FROM JUNE 1, 1999. SINCE IN THE PRESENT CASE, THE AO HAD NO POWER TO MAKE ANY ADJUSTMENT TO THE RETURNED INCOME AT THE TIME OF PR OCESSING THE RETURN OF INCOME UNDER SEC. 143(1) OF THE ACT, WE HOLD THAT T HE ASSESSING OFFICER HAD NO AUTHORITY OR POWER TO RECTIFY THE INTIMATION UND ER SEC. 143(1) SO AS TO RE- DETERMINE THE RETURNED TOTAL INCOME BY MAKING CERTA IN ADJUSTMENTS TO THE RETURNED INCOME. THE AO CAN RECTIFY THE INTIMATION UNDER SEC. 143(1) ONLY ON OR AFTER 1.06.1999 WITH A VIEW TO DETERMINE ANY SUM PAYABLE BY THE ASSESSEE OR ANY REFUND DUE TO THE ASSESSEE STRICTLY ON THE BASIS OF RETURNED INCOME AND NOT AFTER RE-DETERMINING THE INCOME SHOW N BY THE ASSESSEE IN THE RETURN OF INCOME AFTER MAKING CERTAIN ADJUSTMENTS T O THE RETURNED INCOME. AT THIS STAGE, IT IS TO BE NOTED THAT SEC. 143(1) H AS BEEN FURTHER AMENDED BY THE FINANCE ACT, 2008 W.E.F. 1.04.2008, WITH WHICH WE ARE NOT CONCERNED IN 7 THE PRESENT CASE. THE PRESENT CASE HAS BEEN DECIDED IN THE LIGHT OF THE PROVISIONS CONTAINED IN SEC. 143(1) EFFECTIVE FROM 1.06.1999 TO 31.03.2008; THE ASSESSMENT YEAR BEING 2004-05, A RETURN OF WHIC H WAS PROCESSED U/S 143(1) ON 15.02.2005 AND RECTIFIED U/S 154 SUBSEQUE NTLY ON 27.03.2007. EVEN OTHERWISE, THE ADDITION OF RS.1,96,800/- MADE BY THE ASSESSING OFFICER CAN ONLY BE MADE AFTER DUE VERIFICATION OF THE DETA ILS OF NATURE OF FOREIGN EXCHANGE FLUCTUATION AND OTHER EVIDENCES RELATING T HERETO, AND NOT CERTAINLY BY WAY OF RECTIFICATION TREATING THE ITEM TO BE IN THE NATURE OF A MISTAKE APPARENT FROM RECORD RECTIFIABLE UNDER SEC. 154 OF THE ACT. 6. IN THE LIGHT OF THE DISCUSSIONS MADE ABOVE, WE T HEREFORE, HOLD THAT THE AO WAS NOT JUSTIFIED TO MAKE AN ADDITION OF RS.1,96 ,800/- ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION TO THE RETURNED INCOME ORIGINALLY DETERMINED UNDER SEC. 143(1) OF THE ACT BY WAY OF RECTIFICATIO N U/S 154 OF THE ACT, AND WE, THEREFORE, DIRECT HIM TO EXCLUDE THE SAME FROM THE TOTAL INCOME. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 8. THIS DECISION IS PRONOUNCED IN THE OPEN COURT ON 16 TH DECEMBER, 2011. SD/- SD/- (G.D. AGRAWAL) (C.L. SETHI) VICE PRESIDENT JUDICIAL MEMBER DATED: 16 TH DECEMBER, 2011 8 ITA NO.2828/DEL/2008 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.