ORDER
C.L. Sethi, J.M.
The assessee has filed this appeal against the order dated 26-2-2002, passed by the Commissioner (Appeals) in the matter of an order made under section 143(1)(a) of the Act for assessment year 1996-97.
2. The grounds of appeal taken up by the assessee revolve around the point related to the prima facie adjustment of Rs. 18,35,000 on account of interest debited to P&L a/c but not paid during the year under consideration.
3. The assessing officer made prima facie adjustment of Rs. 18,35,000, amongst others, on account of interest payable to West Bengal Industrial Development Corpn. Ltd. (herein after referred to as WBIDC) while processing the return of income under section 143(1)(a) of the Act by invoking the provisions of section 43B of the Act. It is stated in the intimation under section 1430)(a) of the Act that the aforesaid amount is debited to P&L a/c but not paid during the year. Hence, calls for prima facie adjustment under section 143(1)(a). On an appeal, the Commissioner (Appeals) confirmed the assessing officer’s action by observing that the assessing officer had with him at the relevant time tax audit report and the annual accounts which clearly indicated the fact of outstanding interest payable to WBIDC on borrowed funds. Still aggrieved, the assessee is in appeal before the Tribunal.
4. We have considered the rival contentions of both the parties and have gone through the orders of the authorities below. We find that it is mentioned in the tax audit report that interest to WBIDC amounting to Rs. 18,35,000 is debited to P&L a/c but not paid during the year under consideration and nothing more than that. On perusal of the provisions of clause (d) of section 43B of the Act, we find that any sum payable as interest on any loan or borrowing from any public financial institution or State Financial Corpn. or State Industrial Investment Corpn. in accordance with the terms and conditions of the agreement governing such loan or borrowing shall not be allowed unless the sum is actually paid during the relevant previous year. It is, therefore, clear that only the interest payable during the year in accordance with the terms and conditions of the agreement are meant to be disallowed under section 43B if the same is not paid during the year. Unless there is an information in the return of income or the documents accompanying with it about the agreement governing such loan and further information to the effect that interest has become payable during the year under consideration, the provisions of section 43B(d) cannot be invoked. In the instant case it is clear that the amount was debited to P&L a/c and not paid during the year, but at the same time it is not clear as to whether this amount was payable during the year itself in accordance with the terms and conditions of the agreement. The tax audit report enclosed with the return of income has giv6n no such information as to the point as to when the interest in question had become payable. Thus, in the absence of any information in the form of statement of account or other papers accompanying the return of income that interest on loan from WBIDC had become payable by the assessee during the year under consideration, the assessing officer was not justified in invoking the provisions of section 43B(d) and to make prima facie adjustment under section 143(1)(a) of the Act. it is also well settled that in the proceedings under section 143(1)(a) travelling beyond the return of income or its accompanied accounts and documents is not permissible and as such no prima facie adjustment could be made to the returned income. Thus, the matter in issue could have been decided and adjudicated by the assessing officer only after making enquiry and investigation. The option available to the assessing officer in this case was to issue notice under section 143(2) or section 142(1) to the Act to require the assessee to furnish the evidence and materials instead of invoking the provisions of section 143(1)(a) of the Act, In this connection we may refer to a decision of Tribunal, ‘E’ Bench, Kolkata, in the case of Dy. CIT v. Telelink Kicco Ltd. (2001) 73 TTJ (Cal) 28, on which a strong reliance has been placed by the learned counsel for the assessee, A similar view has been adopted by the Tribunal in the above-mentioned case of Telelink Nicco Ltd. (supra) for the reasons given above and in this view of the matter we are of the considered opinion that the assessing officer was not justified in making the prima facie adjustment by disallowing the claim of the assessee on account of interest of Rs. 18,35,000 debited to the P&L a/c during the year under consideration. The prima facie adjustment made by the assessing officer on this count is, therefore, deleted. The assessing officer shall modify the intimation accordingly.
5. In the result, the appeal, filed by the assesse’e, is allowed.