ORDER
P. Bengra, J.M.
1. This is an appeal by assessee against an order of CIT(A)-17, New Delhi pertaining to asst. yr. 1992-93. The assessee originally raised the following grounds :
“1. That, on the facts and circumstances of the case, the order of the CIT(A) confirming the action of the AO in making the prima facie adjustment and its disallowing the claim of deduction by way of IPRS received by the assessee under s. 143(1)(a) is bad in law and deserves to be set aside.
2. That the Revenue authorities erred in disallowing the claim of the assessee of IPRS receipt being capital in nature while determining and computing the income under s. 143(1)(a) of the Act. The said receipt under this section could not be adjusted as the same was debatable in nature.
3. That since the regular assessment under s. 143(3) in the present case stood finalised, assessment proceedings under s. 143(1)(a) stood automatically closed and no demand on account of these proceedings could be freshly raised by way of additional tax.
4. That the order of the AO passed in pursuance to the direction given by the Tribunal is contrary to law as under s. 143(1)(a), prima facie adjustment of IPRS receipt claimed by the assessee to be non-taxable could not have been made as the very nature of this receipt involved a debate and hence could not have been made the subject-matter of adjustment.
5. The learned CIT(A) has erred in relying on the final accounts of the appellant as the view taken by an assessee is irrelevant in adjudicating tax matters.”
The following additional grounds were also raised, which were admitted by the Tribunal vide order dt. 29th June, 1998 :
“1. The learned AO having already passed an order dt. 19th August, 1994, by giving effect to Hon’ble Tribunal order dt. 13th July, 1994, the impugned intimation under s. 143(1)(a)/254 of the IT Act, dt. 7th March, 1997, being without jurisdiction is null and void and consequently the same and also the levy of additional tax of Rs. 60,56,360 deserves to be cancelled/deleted.
2. That the impugned intimation dt. 7th March, 1997, under s. 143(1)(a)/254 of the IT Act is barred by limitation and consequently the same deserves to be quashed.
3. That even otherwise, no additional tax was legally leviable on the facts and in the circumstances of the case.
4. That without prejudice to Ground Nos. 1 to 5 of the memo of appeal and above additional grounds of appeal, the additional tax as levied is very excessive.”
2. The assessee-company is engaged in manufacture and export of hand-tools for which the raw material used are of certain categories of steel. The export of hand-tools was to be organised and developed in a very competitive field of international market and no exporter of such products could venture to compete in the world market unless it was assured of the supply of steel at international price level. It was realised that the raw material available in the local market was available at a much higher price than the price obtaining in the international market. Unless the material was made available at a price much lesser than obtaining in the local market, no exporter would be willing to undertake the production of hand-tools for purposes of export. The Government of India announced a scheme called International Price Reimbursement Scheme (IPRS) to give assistance/incentive/support to the hand-tool exporters. The assessee-company in its audited account has shown the amount of Rs. 5,26,64,000 received under IPRS. The assessee-company filed a return of loss of Rs. 1,72,26,000. The AO sent an intimation to the assessee under s. 143(1)(a) of the IT Act, 1961, enclosing along with the said intimation the adjustment explanatory sheet carrying out the adjustment to the returned income/loss. For the sake of convenience the same is reproduced below :
Rs.
“Name Jhalani Tools (I)Ltd.
Returned total income/loss (-) 1,72,26,000
Adjustments under s. 143(1)(a)
IPRS receipts being export
incentive which is taxable 5,26,64,000
---------------
(+) 3,54,38,000
Less BF loss to the extent of income 3,54,38,000
---------------
Nil
3. The AO raised a demand of Rs. 60,56,360 as additional tax. The assessee moved an application under s. 154 of the Act on 14th July, 1993 requiring the AO to cancel the adjustment of Rs. 5,26,64,000 representing the amount received under IPRS for the reasons given in his abovementioned letter and explaining that the addition made by him was not a prima facie disallowance. Along with the application the assessee referred several case law mentioned at pp. 10 and 11 of the paper book. The AO in his order under s. 154 dt. 13th August, 1993, rejected the application by referring the provisions of s. 28(iiib) of the Act.
4. Aggrieved by that order the assessee filed an appeal before the CIT(A). The assessee raised the issue of adjustment of receipt on account of IPRS of Rs. 5,26,64,000. The plea of the assessee before the CIT(A) was that it was capital in nature and that the reimbursement represented difference between the price prevailing in the national market and the international market and the amount so received under the scheme was with a view to support the assessee. The CIT(A) however, was of the view that the receipt under IPRS was very much revenue in nature. The assessee also raised the plea that intimation to be made under s. 143(1)(a) permitted additions/disallowances only those which do not call for any further examination or evaluation. Only prima facie adjustment could be made under s. 143(1)(a), but not anything which could be a controversial issue could be brought within the ambit of s. 143(1)(a). For this contention the assessee has relied on several case laws which were placed before the AO also, specifically the decision of Hon’ble Bombay High Court in the case of Khatau Jankar Ltd. vs. K. S. Pathania (1992) 196 ITR 55 (Bom). The CIT(A) concurred with the finding given by the AO, observing as under :
“I have gone through the submissions of the learned representative for the appellant, the orders of the AO under s. 143(1)(a) and also under s. 154 and also the records of the appellant company. The appellant company in his audited account has shown the amount of Rs. 5,26,64,000 received under IPRS as income from export benefits. It is also a revenue receipt in the form of cash assistance received by the appellant company by way of reimbursement for steel price difference. Thus, prima facie, there can be no dispute regarding the taxability of this amount. It is, in these circumstances, that the AO has brought to tax the same under s. 143(1)(a) and has subsequently refused rectification under s. 154. The various decisions cited by the learned representative for the appellant come into effect only when the addition is not prima facie adjustment, in the appellant’s case its own audited and also the treatment given in it, clearly show the nature of the same. In these circumstances, there is no need to interfere with the order of the AO.”
5. The matter was carried before the Tribunal. The Tribunal vide is order dt. 13th July, 1994 in ITA No. 5748(Del)/1993 set aside the matter with the following observations :
“6. The rival submission in regard to the above have been very carefully considered. The Supreme Court in Union of India vs. T. R. Verma, AIR 1957 SC 882 has categorically held that a judicial authority who is required to observe the rule of natural justice, if he fails to do so, the order so passed by him would be an invalid order. The Supreme Court in Suptd. Central Excise vs. Pratap Rai (1978) 114 ITR 231 (SC) had held that the orders passed without following the rules of natural justice being invalid orders, such orders must be stuck down as invalid and must be restored to the point in which the invalidity occurred. The Bombay High Court in Khatau Jankar (supra) observed that prima facie adjustment does not include carrying out the adjustments which require further examination or evaluation. In effect anything which could be a controversial issue could not be brought within the ambit of prima facie adjustment. Considering the Supreme Court decision supra in the present circumstances of the case, we are of the view that the order of assessment and the impugned order of the CIT(A) needs to be set aside and we hereby set aside this case with the direction that he shall afford sufficient opportunity to the assessee in regard to the nature of receipt of Rs. 5,26,64,000 bring on record such facts and re-do the assessment. The assessee shall place on record the entire scheme so that the AO is in a position to appreciate and bring the real nature of the scheme before making fresh assessment as directed above.”
6. It will be pertinent to mention here that the Ref. Appln. No. 1025(Del)/1994 was also rejected vide order dt. 30th December, 1994, and the Department moved misc. application against the said order under s. 254(2) but the same was also rejected vide M.A No. 45(Del)/1997, dt. 20th August, 1997.
7. After the receipt of the Tribunal order the AO passed order dt. 19th August, 1994 giving effect to the order of the Tribunal under s. 254 of the IT Act, 1961 as under :
“Consequent upon the order of the Tribunal vide their order No. ITA 5748(Del)/1993 dt. 13th July, 1994, the revised income/loss is computed as under :
Rs.
Income determined as per
order under s. 143(1)(a),
dt. 19th May, 1993 3,54,38,000
Relief allowed by the Tribunal 5,26,64,000
--------------
(-) 1,72,26,000"
--------------
8. Thereafter the AO passed a regular assessment order on 28th November, 1994 under s. 143(3), thereby added Rs. 5,26,64,000 on account of receipt of IPRS. Thereafter the AO issued notice on 24th July, 1996, nearly after two years of passing of order under s. 254, in which by referring the order of the Tribunal dt. 13th July, 1994, it was intimated that an opportunity is being allowed to explain the nature of receipt of Rs. 5,26,64,000 claimed as exempt. In response to the said notice, assessee filed reply dt. 29th July, 1996, in which it was mentioned that the issue about impugned addition under s. 143(1)(a) is already closed and does not call for any fresh action. Any action to the contrary would only be infructuous and unlawful. The AO again sent the impugned intimation under s. 143(1)(a)/254 creating a demand of Rs. 60,56,360 towards additional tax.
9. The assessee filed an appeal before the CIT(A) against this order under s. 143(1)(a)/254 of the Act. The CIT(A) concurred with the finding given by the AO for the following reasons :
“I have considered the facts of the case. Clause (iii) to the proviso to s. 143(1)(a) reads as under :
‘Any loss carried forward, deduction, allowance or relief claimed in the return, which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible shall be disallowed.’
This has to be read in the context of s. 28(iiib) which reads as under :
‘Cash assistance (by whatever name called) received by any person against exports under any scheme of Government of India.’
The above is chargeable to income-tax under the head ‘profits and gains from business or profession’.”
10. The assessee is aggrieved.
11. The learned counsel for the assessee very vehemently argued that the assessee received amount from the Government under “Scheme for Price Protection and Supply of Steel at International Price” formulated by the Government in August, 1981. Such scheme as explained by Shri Sapra, had to be brought in by the Government to enable the manufacturers of hand-tools, who were required to use special type of steel of which the prices in India were higher as compared to international prices, so that such manufacturers could compete with such industries at the international level. According to Shri Sapra, such receipts were being claimed as capital receipts by the assessee right from 1984-85 assessment year in its returns and never in the past, the AO had added it back while issuing intimations under s. 143(1)(a) of the IT Act. It was for the first time that the AO vide intimation under s. 143(1)(a) added Rs. 5,26,64,000 towards the income of the assessee vide adjustment explanatory sheet attached to the intimation, copies placed at pp 2-3 of the paper book, and charged additional tax of Rs. 60,56,360 under s. 143(1A) of the Act, though the income computed is nil even as per the intimation because the AO adjusted the brought forward losses to the extent of income computed at Rs. 3,54,38,000 by the AO though such brought forward losses as already computed were of much higher figure.
11.1. The appellant filed on 22nd July, 1993 an application under s. 154 dt. 14th July, 1993 before the AO, copy placed at pp. 4-11 of the paper book, objecting to the addition of Rs. 5,26,64,000 received on account of IPRS but the AO vide order dt. 13th August, 1993 rejected the same on the ground that under s. 28(iiib) of the IT Act, IPRS was also to be added since the amount under the said scheme also represented cash assistance. The learned CIT (A) vide his order dt. 7th October, 1993 agreed with the views of the AO and dismissed the appeal of the assessee. On second appeal filed by the Appellant, Tribunal vide its order dt. 13th July, 1994, restored back the matter to the file of the AO because it felt that ‘anything which could be controversial issue could not be brought within the ambit of prima facie adjustment’ and by relying on the Supreme Court judgment in Suptd., (Tech.I) Central Excise vs. Pratap Rai (supra).
11.2 It is submitted that the Revenue filed a reference application under s. 256(1), which was rejected by the Tribunal vide its order dt. 30th December, 1994. Revenue also moved an application under s. 254(2) before the Tribunal, which too had been dismissed vide order dt. 20th August, 1997, by the holding that the said M.A. was beyond the scope of s. 254(2) of the Act. The learned counsel further submitted that in the meantime the AO had passed an order under s. 264 (sic) of the IT Act on 19th August, 1944 giving effect to the order of the Tribunal. The learned counsel also submitted that an order under s. 143(3) dt. 28th November, 1994 had also been passed by the AO, copy of which is placed at pp. 29-32 of the paper book, by which the AO again added Rs. 5,26,64,000 on account of IPRS by saying that the matter is in appeal and the amount was of the nature of revenue receipt falling under s. 28(iiib). Consequently the AO computed the income in the said order, already cited above.
11.3. Thereafter a letter dt. 16/19/24th July, 1996, had been issued to the assessee requiring it to explain the nature of receipt of Rs. 5,26,64,000 claimed as exempt in the return, which was added to its income in the intimation under s. 143(1)(a) dt. 19th May, 1953, and to produce documentary evidence in support of its reply. The appellant vide its letter dt. 29th July, 1996, copy placed at P. 27-28 of the paper book, submitted before the AO that the Tribunal had allowed the appeal holding that controversial issue could not be brought within the ambit of prima facie adjustment and further fresh assessment order under s. 143(3) had already been passed on 28th November, 1994, in which the above issue had been discussed against which appeal before the Tribunal is pending and that issue about addition under s. 143(1)(a) is already closed and does not call for any fresh action. It was further submitted that any action to the contrary in this regard will only be infructuous and unlawful. But the AO vide order dt. 7th March, 1997 by describing it as “Intimation under s. 143(1)(a) of the IT Act to give effect to orders of Tribunal passed under s. 254 of the IT Act” again added IPRS receipts of Rs. 5,26,64,000 as export incentive taxable under s. 28(iiib), though the income so arrived at was adjusted by the brought forward losses to the extent of income by taking the income at Nil, but charging the additional tax of Rs. 60,56,360 under s. 143(1A) as was done vide original intimation dt. 19th May, 1993. The appellant filed an appeal against this order of the AO before the CIT(A) who vide his order dt. 3rd November, 1997, dismissed the same for the reasons discussed by him in his order, against which the assessee has filed the present appeal.
11.4. The assessee has raised with the memo of appeal as many as 5 grounds challenging the impugned intimation under s. 143(1)(a) dt. 7th March, 1997, and order passed by the CIT(A) dt. 3rd November, 1997, on the ground that IPRS could not be added by way of prima facie adjustment; the regular assessment order under s. 143(3) having already been passed, the impugned intimation could not be issued and that the entry showing IPRS as receipt/income by the appellant in its accounts was not relevant to decide about its real nature and taxability. In the course of hearing of appeal earlier, the appellant had raised additional grounds mentioned above.
11.5. Shri Sapra had also filed written submissions on various grounds of appeal, including the additional grounds by relying on various case law, a copy of which had also been given to the learned Departmental Representative on the previous hearing on 30th June, 1998. The main contention of Shri Sapra is that no substantial adjustments requiring examination of any evidence or even which could require hearing to be given to assessee are contemplated under s. 143(1)(a) and prima facie adjustments could not be made for issues which were controversial or debatable or even doubtful. Reliance, in this connection, has been placed on the following decisions :
Khatau Jankar Ltd.’s case (supra), S.R.F. Charitable Trust vs. Union of India (1992) 193 ITR 95 (Del), Kamal Textiles vs. ITO (1991) 189 ITR 339 (MP), JKs Employees Welfare Fund vs. ITO (1993) 199 ITR 765 (Raj), Modern Fibotex India Ltd. vs. Dy. CIT (1995) 212 ITR 496 (Cal), Premier Automobiles Ltd. vs. Asstt. CIT (1997) 63 ITD 418 (Mum), Asstt. CIT vs. M. Srinivasulu (1997) 59 TTJ (Hyd)(SB) 393 : (1997) 62 ITD 159 (Hyd)(SB), CIT vs. Premier Industries (P) Ltd., Bank of America NT & SA vs. Dy. CIT (1993) 200 ITR 739 (Bom), Adamas Gem Industries Ltd. vs. Smt. Neela Krishnan, CIT (1993) 203 ITR 737 (Bom) and Fag Precision Bearing Ltd. vs. Dy. CIT (1994) 47 TTJ (Ahd) 673 : (1993) 47 ITD 193 (Ahd).
11.6. The learned counsel also relied on the findings recorded by the Tribunal in its reference order dt. 30th December, 1994 vide para 6 in assessee’s own case, reproduced supra, in which the Tribunal had held that IPRS receipt in question being controversial cannot fall within the scope of s. 143(1)(a) and that its taxability is a controversial issue. Shri Sapra also drew our attention to the opinion of senior Advocate dt. 13th November, 1989, copy placed at pp 39-52 of the paper book, by which he had analysed the scheme dt. 9th February, 1981, and then had given reasons and also the case law to come to the conclusion that IPRS receipt could not be regarded profits liable to tax under the IT Act. Shri Sapra also submitted that even the Tribunal in its order dt. 13th July, 1994, had mentioned by relying on Bombay High Court judgment in Khatau Jankar Ltd.’s case (supra) that prima facie adjustment does not include carrying out the adjustment which require further examination or evolution and in effect anything which could be controversial issue could not be brought within the ambit of prima facie adjustments. According to Mr. Sapra, no doubt, the Tribunal had restored back the issue to the AO but it could not confer jurisdiction on the AO for making adjustment which was beyond the ambit of s. 143(1)(a) of the IT Act. He went on to argue that in fact opportunity of the nature of s. 143(2) is not provided under s. 143(1)(a) and, therefore, the Tribunal order dt. 13th July, 1994, is to be read only to the extent of setting aside the issue to the AO to see if the amount could be added under s. 143(1)(a) of the IT Act. Shri Sapra submitted that further the position has to be seen as on the date of filing of the return, which in this case, was filed on 24th December, 1992, but the amendment in s. 143(1A) was made retrospectively w.e.f. 1st April, 1989, by Finance Act of 1993, which received the assent of the President of India on 13th May, 1993, by dint of which following the judgment of Ahemdabad Bench of Tribunal, Fag Precision Bearing Ltd.’s case (supra) additional tax could not be levied because the appellant had substantial Determined Accumulated losses in the preceding years, as a result whereof there was no positive income during the year under appeal. Before the above amendment no additional tax was leviable if there was no positive income or there was a loss, as held in Modi Cement Ltd. vs. Union of India (1992) 193 ITR 91 (Del) and Indo-Gulf Fertilizers & Chemicals Corpn. Ltd. vs. Union of India (1992) 195 ITR 485 (All). Shri Sapra further submitted that in the past also adjustment of IPRS amount as received were not made by the AO while issuing intimations under s. 143(1)(a) of the IT Act. According to him, principles of res judicata may not be applicable to IT proceedings but rule of consistency does apply and decision reached in earlier years should prevail in subsequent years. In this connection, the learned counsel for the assessee relied on the following case law :
(a) CIT vs. Godavari Corpn. (1985) 156 ITR 835 (MP);
(b) Taraben Remanbhai Patel (1991) (Guj) (sic);
(c) CIT vs. Hindustan Motors Ltd. (1991) 192 ITR 619 (Cal); and
(d) Bhopal Stud & Agrl. Farm vs. ITO (1986) 24 TTJ (Ind) 343 : (1985) 14 ITD 93 (Ind)(TM).
11.7. The learned counsel further argued that in the Memorandum to 1993 Finance Bill (200 ITR St. 161-162) while levying the additional tax where loss stood reduced as a result of prima facie adjustment it was stated that such additional tax was being levied so that the assessee could avoid committing intentional mistake while filing the returns. Certainly the receipt of IPRS claimed by the appellant as capital receipt was not a mistake, what to speak of an intentional mistake, because it was so claimed on the basis of legal advice. It was also held to be debatable and controversial issue by Tribunal in appellant’s own case as mentioned above. Shri Sapra submitted that if the additional tax is to be levied on bona fide claims on controversial/debatable/ doubtful issue then how could an assessee make a legitimate claim in its return which it fervently believes to be non-taxable if the mere making of such claim is to fasten the assessee with additional tax which is akin to penalty even though the assessee did not enjoy any taxable income till date. By relying on the Supreme Court judgments in CIT vs. J. H. Gotla (1985) 156 ITR 323 (SC) and Saroj Aggarwal vs. CIT (1985) 156 ITR 497 (SC) it is submitted by the learned counsel that Equity and Taxation are not strangers and even if some violence has to be done to the language used in a provision, Courts must do it. In assessee’s case even after adding IPRS amount, there was admittedly still a loss in view of huge brought forward losses, benefit of which stands allowed by the AO himself. It is the submission of the learned counsel that till today there are huge losses of more than Rs. 20 crores and, therefore, additional tax as levied was inequitable from this angle also. The learned counsel further referred to CBDT Circular F. No. 244/11/IT/1989, dt. 4th November, 1989, issued as Departmental instruction No. 1814, of which para 10 has been reproduced in appellant’s letter dt. 14th July, 1993, filed before the AO, and CBDT Circular No. 549, dt. 31st October, 1989, [(1990) 182 ITR (St) 1] and submitted that the case of the appellant was clearly outside the scope of levy of additional tax because the appellant had neither been negligent nor had committed a mistake by claiming IPRS receipt as capital receipt. as was the case in the earlier years. According to Shri Sapra, CBDT had clearly laid down that the AOs should exercise due care in the matter and strictly confine the scope of the adjustments to patent errors or obvious mistakes as determined by the parameters laid down by the Supreme Court in the case of T. S. Balaram, ITO vs. Volkart Bros. (1971) 82 ITR 50 (SC), as also cited by the CBDT in its circular.
11.8. The next contention of Shri Sapra is that the AO having already passed an order under s. 143(3) on 28th November, 1994, and earlier under s. 254 on 19th August, 1994, copies placed at pp. 29-32 and 25 respectively of the paper book, the impugned intimation dt. 7th March, 1997 is illegal. The learned counsel for the assessee also relied on Gujarat Poly-AVX Electronics Ltd. vs. Dy. CIT (1996) 222 ITR 140 (Guj) and Modern Fibotex India Ltd.’s case (supra), in which it was held that an intimation could not be issued after the issuance of notice under s. 143(2), then how could be impugned intimation be held as valid and legal after the completion of regular assessment under s. 143(3) and after giving effect to the earlier Tribunal order on 19th August, 1994. The learned counsel further submitted that in view of Hon’ble Supreme Court judgments Sutlej Cotton Mills Ltd. vs. CIT (1979) 116 ITR 1 (SC) and Kedarnath Jute Mfg. Co. Ltd. vs. CIT (1971) 82 ITR 363 (SC), reference to book entries as made by the CIT(A) in his order regarding IPRS receipts was irrelevant.
11.9. On the additional grounds of appeal, the submissions of the learned counsel are reproduced below, from the written arguments as filed before us. On additional ground No. 1, the learned AO having already passed an order dt. 19th, August, 1994, by giving effect to Tribunal order dt. 13th July, 1994, the impugned intimation under s. 143(1)(a)/254, dt. 7th March, 1997, is without jurisdiction and consequently the same is null and void. Therefore, levy of additional tax of Rs. 50,56,360 deserves to be deleted. It is trite law that two orders cannot be passed to give effect to the order of the Tribunal. The second impugned order dt. 7th March, 1997 is, therefore, clearly without jurisdiction, non-est and beyond the provisions of the IT Act.
11.10. On additional ground No. 2, it is submitted that third proviso below ss. 143(1)(a), (b) & (c) clearly shows that s. 143(1) is a self-contained code for the purpose of limitation. Third proviso below s. 143(1)(a) reads as under :
“Provided also that an intimation for any tax or interest due under this clause shall not be sent after the expiry of two years from the end of the assessment year in which the income was first assessable.”
11.11. It is further submitted that limitation provisions are provided under s. 143(1)(b) and under s. 143(1)(c), which have to be applied in the circumstances stated therein with reference to orders passed under s. 143(1)(a). None of the circumstances/provisions of s. 143(1)(b) and s. 143(1)(c) apply to the case of this appellant and accordingly the intimation involved in this case was to be passed within the limitation provisions provided in the third proviso to s. 143(1)(a), referred to above. The impugned appeal effect order dt. 7th March, 1997, is beyond the limitation provision, provided in the third proviso, and is accordingly time barred and as such the same too is a nullity, as the same has been passed after the expiry of two years from the end of the assessment year in which the income was first assessable, which date in this case would be two years from the end of 31st March, 1993. Accordingly limitation ended for passing of a lawful intimation in this case on 31st March, 1995.
11.12. It is submitted that s. 246(1) & (2) of the IT Act gives a right to an assessee aggrieved by any of the orders of the AO to file appeal and then cl. (2)(a) talks of limitation or order specified in sub-s. (1) where such intimation is sent or such order is made by the Dy. CIT. In other words, even for filing of appeals, w.e.f. 1st April, 1989, the legislature has given a right to an assessee to file separate appeals against intimation and an assessment order. This clearly means that the limitation for the issuance of intimation will be governed by the limitation contained in s. 143(1)(a), (b) and (c) and will not be governed by the limitation as provided in s. 153(2) of the IT Act, because s. 153(2) lays down limitation for orders of assessment, reassessment, or re-computation made under s. 147. Similarly, s. 153(2A) also talks of limitation in respect of assessment orders. Moreover, Expln. to s. 143 also says that an intimation sent to the assessee under sub-s. (1) or sub-s. (1B) shall be deemed to be an order for the purposes of ss. 246 and 264 only. In other words, an intimation is not deemed to be an order for the purpose of s. 153 of the Act. Therefore, it is submitted, in the context of limitation provided under s. 143(1)(a) etc., the impugned intimation dt. 7th March, 1997 under s. 143(1)(a)/ 254 of the IT Act is barred by limitation. The AO appears to be under misconception of the legal position as if he could send a fresh intimation within two years from the expiry of the years in which the Tribunal had delivered its judgment dt. 17th July, 1994. The fresh intimation, if at all could be issued, though according to the appellant the same could not be legally issued, till 31st March, 1995 i.e., two years from the end of the assessment year viz., 1992-93 as provided in the 3rd proviso below s. 143(1)(a).
11.13. On additional ground No. 3, it was submitted that even vide intimation dt. 7th March, 1997, the AO had reduced the income to Nil. Sec. 143(1)(a) in terms did not apply because as a result of the adjustment made by the AO neither the income declared by the assessee had been increased nor the loss declared by the appellant in the statement of total income, as filed, was converted into income. Therefore, the additional tax @ 20 per cent was not legally chargeable. In this connection reliance is placed on Tribunal Indore Bench judgment in the case of Dy. CIT vs. Nimar Kshetriya Gramin Bank (1998) 64 ITD 190 (Ind). In assessee’s case also there are huge unabsorbed losses till today.
11.14. Without prejudice to the appellant’s other claims and submissions, it is submitted that additional tax under s. 143(1A) can only be levied where as a result of the net aggregate adjustments made under the first proviso to clause (a) of sub-s. (1) of s. 143, income declared is increased or less declared is reduced or converted into income. As per first proviso to cl. (a) of sub-s. (1) aforesaid, adjustments to be made in the income/loss declared include :
“(ii) any loss carried forward, deduction, allowance or relief, which on the basis of the information available in such return, accounts or documents is prima facie admissible, but which is not claimed in the return, shall be allowed.
(iii) any loss carried forward, deduction, allowance or relief claimed in the return, which on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed.”
11.15. Thus, it was submitted, with reference to the above even if IPRS amount claimed as capital receipt was capable of being adjusted and added back as income, then allowance would also have to be made for the loss carried forward from past years as borne out by record and as borne out by p. 34 of the paper book, which loss far exceeded the said adjustments for IPRS and as such too the net aggregate effect of the aforesaid would not increase the loss declared as per statement of total income, which is at p. 1 of the paper book, and accordingly as such no additional is leviable under s. 143(1A). It may not be out of place to mention here that the brought forward losses/unabsorbed depreciation brought forward to asst. yr. 1992-93 were of several crores of rupees and even as on date, the accumulated loss losses/unabsorbed depreciation are more than Rs. 20 crores.
11.16. In Circular No. 549, dt. 31st October, 1989, also reported in (1990) 182 ITR (St.) 1 and also noticed by Indore Bench of the Tribunal at page Nimar Khetriya Gramin Bank’s case (supra), the CBDT had given justification for the levy of additional tax in the following words :
“The new s. 143 as substituted by the Amendment Act, 1987, while dispensing with the necessity of passing assessment orders in all cases did not contain any different provision against filing of incorrect return to show lesser tax liabilities. Consequently the new scheme of assessment was liable to be misused by unscrupulous taxpayers, who might return lesser income by making obvious mistakes or by claiming obviously incorrect deductions and taking a change that if the same are detected by the Department, they would have to pay the correct tax only. Besides the deterrent effect, the purpose of this levy is also to persuade all taxpayers to file their returns of income carefully to avoid mistakes. It is, thus, a sort of negligence tax on the assessee and compensates the Department for the effort involved in detecting obvious mistakes committed by the taxpayers on their returns of income or loss.”
In this case, the appellant had not been negligent while filing the return nor it had committed any intentional mistake nor it was an unscrupulous taxpayer.
12. As against this the learned Departmental Representative, Shri Goel submitted that the use of the word “assessment” in the Tribunal order is of no consequence. In fact it is an intimation under s. 143(1)(a). According to s. 28(iiib) of the IT Act, 1961, cash assistance by whatever name called, received or receivable by any person against export under any scheme of the Government of India, is to be taxed under the head “profit and gains of the business or profession” and if the assessee has claimed the same as capital receipt, which is prima facie revenue receipt under this provision, adjustment can be made while sending intimation under s. 143(1)(a) of the IT Act. It is pointed out that after this amendment there is no debate on this issue. The Tribunal in its order has simply set aside the issue and if it mentioned that sufficient opportunity should be given to the assessee regarding the nature of receipt, it does not mean that the issue becomes controversial and it requires investigation, when the section is clear in itself. It is pointed out that the order of the AO under s. 254 of the Act is not an order and the direction given by the Tribunal is also an interim order and not an order. The learned Departmental Representative, thus, submitted that prima facie adjustment could be made while sending the intimation under s. 143(1)(a). Regarding the plea of limitation, it is pointed out that as per sub-s. (2A) of s. 153 the time-limit of two years starts from the order of the Tribunal passed on 13th July, 1994. According to this sub-s. (2A) of s. 153, the AO could pass order by 31st March, 1997. However, the present order was passed on 7th March, 1997. Therefore, it is within time. It is also pointed out that intimation sent under s. 143(1)(a) after amendment by way of Explanation inserted vide Finance Act (No. 2), 1991 w.e.f. 1st October, 1991 it had been made clear that an intimation sent to the assessee shall be deemed to an order appealable under s. 256/264 of the IT Act. Therefore, it will be deemed as an order and the period of limitation will be counted as per the provisions of s. (2A) of s. 153. Shri Goel argued that s. 153(2A) and s. 143(1)(a) had to be harmoniously read and construed and on harmonious rule of construction, he relied on Addl. CIT vs. Surat Art Silk Cloth Mfrs. Association (1980) 121 ITR 1 (SC), CIT vs. B. R. Constructions (1993) 202 ITR 222 (AP) (FB), CIT vs. Smt. Anita Ghosh (1993) 202 ITR 991 (Cal) and Inaroo Ltd. vs. CIT (1993) 204 ITR 312 (Bom). According to the learned Departmental Representative the impugned intimation as issued is not barred by limitation. Shri Goel further submitted that levy of additional tax was automatic as soon as an adjustment was made by the AO while issuing the intimation and no one had any discretion not to levy it or even to reduce it. He further relied on Delhi High Court judgment Apogee International Ltd. vs. Union of India (1996) 220 ITR 248 (Del) and Rakesh Aggarwal vs. Asstt. CIT (1997) 225 ITR 496 (Del) which were followed in V. K. Paints (India) Ltd. vs. Dy. CIT (1998) 66 ITD 450 (Del) for the proposition that even if a notice under s. 143(2) had been issued, the AO could still issue intimation under s. 143(1)(a) of the IT Act. According to the learned Departmental Representative the observations of the Tribunal in para 6 of its reference order, are obiter and the Tribunal in its earlier order dt. 13th July, 1994 had not decided that the issue was controversial and, therefore the observations in both the order of the Tribunal, as relied upon by the learned counsel for the assessee, were of no avail. The learned Departmental Representative pointed out that in view of amended provision of s. 143(1A) even if the total income computed is loss, additional tax can be levied. In short, the learned Departmental Representative opposed each and every contention raised by Shri Sapra and submitted that the impugned intimation as also the order of the CIT(A) deserve to be upheld.
13. In reply, Shri Sapra submitted that the assessee had not claimed any deduction but, as in the past had claimed IPRS receipts as of capital nature. He invited our attention to the statement of income filed with the return and intimation under s. 143(1)(a) issued by the AO for the asst. yrs. 1990-91 and 1991-92 of which copies are placed at pp. 53 to 62 of the paper book, and reiterated that right from asst. yr. 1984-85, assessee had been receiving IPRS from the Government which had been claimed as capital receipt and none of the years upto asst. yr. 1991-92, the AO had added the same by way of prima facie adjustment in the intimation issued under s. 143(1)(a) a fact not controverted by the learned Departmental Representative Shri Sapra further submitted that s. 28(iiib) was there even when intimations for the asst. yrs. 1990-91 & 1991-92 had been issued. According to him, claiming the amount as capital receipt did not amount to claiming a deduction and, therefore, s. 143(1)(a) in terms did not apply to the facts of this case. Shri Sapra further submitted that the words used in s. 28(iiib) cash assistance (by whatever name called) were due to the fact that earlier cash subsidy was available to all the exporters, which after a few years was renamed as cash assistance and finally as cash compensatory support and this is why the words ‘by whatever name called’ were incorporated in s. 28(iiib) of the IT Act, which was brought in by the Finance Act of 1990 retrospectively w.e.f. 1st April, 1967. According to Shri Sapra, IPRS became effect from 9th February, 1981 which was meant for those exporters who exported engineering goods and that also by using specified categories of steel for production of engineering goods. Exporters of such products were also entitled to cash assistance but IPRS was not available to other exporters. According to the learned counsel, if s. 28(iiib) was sufficient to bring in every scheme of cash assistance, then there was no need to insert s. 28(iiic) retrospectively w.e.f. 1st April, 1972 which talks of duty drawback to any person against exports. Shri Sapra further submitted that after the AO had passed an order dt. 19th August, 1991 giving effect to the Tribunal order dt. 13th July, 1994, the AO had lost his jurisdiction to issue the impugned intimation coupled with the fact that an assessment order dt. 28th November, 1994, had also been passed under s. 143(3) of the IT Act. The submission of Shri Sapra is that it was not an interim order as was canvassed by the senior Departmental Representative, and that the said order still holds the field. By drawing our attention to the letter dt. 16th, 19th/24th July, 1996, as issued by the AO, Shri Sapra contended that nowhere the AO had called for the scheme because it was already there on his record, nor be had analysed the same in the impugned intimation order, as alleged by the Departmental Representative Shri Sapra vehemently argued that if to find out the taxability of any item, we have to refer to a scheme and to the other provisions of the IT Act, issue becomes controversial, debatable and at any rate not free from doubt and, therefore, IPRS could not make the matter of adjustment under s. 143(1)(a) of the IT Act. He further submitted that till date there is no judgment of any Court saying that IPRS receipt is taxable as revenue receipt. As regards the limitation, Shri Sapra once again submitted that s. 143(1)(a) was a self-contained code and s. 153(2A) had no application because it does not talk of intimation at all. Intimation is now deemed to be an order only for the limited purpose of filing an appeal under s. 246 or for a revision under s. 264. Even s. 263 had not been made applicable to an intimation as held by Tribunal Bombay Bench in 64 ITD 1. According to Shri Sapra question of applying harmonious rule of construction in this case does not arise because both s. 153(2A) and s. 143(1)(a) have application independent to each other in their respective fields. Shri Sapra further submitted that the Hon’ble Supreme Court in the case of Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC), had held that if there was technical or venial breach of law, no penalty should be imposed even though minimum penalty is prescribed. According to Shri Sapra, the CBDT had described the additional tax as negligence tax and, therefore, the learned Departmental Representative is not correct in arguing that there was no discretion with anyone not to levy additional tax or to reduce the same. By drawing our attention to a chart placed at p. 34 of the paper book, Shri Sapra pointed out that upto asst. yr. 1993-94, the accumulated losses as determined were more than Rs. 33 crores and even till date such losses were more than Rs. 20 crores and, therefore, the assessee having not enjoyed any income, was not liable to income-tax at all nor the adjustment of IPRS as income has made the appellant liable to income-tax in any of the years till date and consequently, the equitable considerations in deciding the issue have to be taken in view. Shri Sapra submitted that the case law relied upon by the learned Departmental Representative had no application to the facts of this case. He, therefore, emphatically submitted that viewed from whatever angle, the impugned intimation order dt. 7th March, 1997, deserves to be annulled.
14. We have given our thoughtful consideration to the facts of the case and also the arguments advanced by both the sides. We have also perused various papers filed in the paper book and also the scheme formulated by the Government under which the assessee had received IPRS of Rs. 5,26,64,000. We have no hesitation in holding on the facts of this case that IPRS amount could not be made subject-matter of prima facie adjustment under s. 143(1)(a) of the IT Act, as it was undoubtedly a controversial and a debatable issue. It has also been so held by the Tribunal vide its order dt. 30th December, 1994 vide para 6, reproduced above. We cannot lose sight of the fact that even in the earlier years, no such adjustment was made under s. 143(1)(a) by the Revenue in respect of IPRS receipts though duly shown in its account by the assessee and claimed as capital receipt in its returns, notwithstanding the fact that s. 28(iiib) of the Act, under which the AO had added IPRS receipts and levied additional tax in this year was there on the statute. Moreover, as to whether IPRS receipts fall to be considered under s. 28(iiib) of the Act or not, is itself a debatable and controversial issue, on which we will not like to express our opinion at this stage because the issue is pending in appeals before the Tribunal against the regular assessment orders since the asst. yrs. 1984-85 till 1992-93, as was pointed out to us in the course of hearing by the learned counsel for the assessee. In our considered opinion, the claim of the assessee in the return that IPRS receipts were of capital nature does not amount to claiming of a deduction, allowance or relief, as provided under s. 143(1)(a)(ii) of the IT Act.
14.1. The Hon’ble Rajasthan High Court in the case of JKs Employees Welfare Fund vs. ITO (supra) had held that “the provisions of s. 143(1)(a) cannot be invoked and the jurisdiction being limited for disallowing only prima facie inadmissible deductions, allowance, etc. the ITO was not justified in sending intimation creating the demand by applying a provision the application of which itself was a disputed one.” Sec. 28(iiib) does not specifically mention IPRS receipts and as to whether cash assistance mentioned in that section will cover IPRS receipts or not require lot of debate and at least is not free from doubt. Similarly, the Hon’ble Calcutta High Court in the case of Modern Fibotax India Ltd. (supra) had held : “The jurisdiction of the AO under s. 143(1)(a) of the IT Act, 1961 to make an adjustment and to issue an intimation is limited not only to the obvious but also to that which is deducible from the return as filed, without doubt or debate. This is clear from the language of the section and is supported by authorities as well as the circulars issued by the CBDT in this connection.” In the case of M. Srinivasulu (supra) Hyderabad Special Bench of the Tribunal had an occasion to deal with the case of a Development Officer in LIC, who claimed deduction of 40 per cent of the incentive bonus received by him towards expenses. The AO made an adjustment under s. 143(1)(a) by disallowing the assessee’s claim and issued an intimation by levying additional tax. The AO rejected assessee’s application under s. 154 on the ground that the incentive bonus formed part of salary in view of the decision of the Hon’ble Andhra Pradesh High Court in K. A. Choudhary vs. CIT (1990) 183 ITR 29 (AP). On appeal the CIT(A) held that issue involved was highly debatable and would not fall within the purview of s. 143(1)(a). Notwithstanding the jurisdictional High Court judgment, Special Bench of the Tribunal held that the issue involved was debatable or controversial which could not be made the subject-matter of prima facie adjustment under s. 143(1)(a) and consequently, it upheld the view of the CIT(A).
14.2. The Hon’ble Bombay High Court in the case of Bank of America NT & SA (supra), where the assessee had not included in its return a sum of Rs. 2,30,11,855 towards interest on securities, as according to the assessee, such amount was not taxable has held as under :
“That s. 143(1)(a) provides for issuance of an intimation and the first proviso thereto specifically enumerates the circumstances under which such adjustments are permissible. The only relevant clause would be cl. (iii) of the first proviso which provides that, in the event of there being any loss carried forward, deduction, allowance or relief claimed in the return which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, then such amount shall be disallowed. In the case of the petitioner, it was obvious that the amount of Rs. 2,30,11,856 was not an amount falling within any of the items enumerated under the first proviso to s. 143(1)(a). The AO, therefore, clearly had no jurisdiction to make any such adjustment by adding the aforesaid sum to the total income. The order of intimation and the consequent claim for additional tax were not valid and were liable to be quashed.”
14.3. In the instant case IPRS receipts claimed as capital receipts do not amount to claiming any deduction, allowance or relief and therefore, could not be considered as prima facie adjustment under s. 143(1)(a). Further we have noted above that there is no judgment of any Court so far to the effect that IPRS receipts were revenue receipt and not capital receipt. We also agree with the learned counsel Shri Sapra that in view of the specific order passed by the AO on 19th August, 1994, consequent upon the order of the Tribunal dt. 13th July, 1994 (wrongly mentioned as 29th July, 1994 by AO) in ITA No. 5748(Del)/1993, the AO had no jurisdiction to pass the impugned intimation dt. 7th March, 1997 because the order dt. 19th August, 1994, having not been got vacated by an Appropriate Authority, still holds the field. The fact that an order by under s. 143(3), dt. 28th November, 1994, had been passed prior to the issue of the impugned intimation also cannot be lost sight of. In our considered opinion, two orders viz., dt. 19th August, 1994, and impugned order dt. 7th March, 1997, could not legally be passed to give effect to the order of the Tribunal dt. 13th July, 1994. On these facts we quash the impugned intimation order dt. 7th March, 1997 and direct deletion of the entire additional tax as levied.
14.4. Since we have quashed the intimation passed under s. 143(1)(a) dt. 7th March, 1997, and have deleted the additional tax, as levied, on the above grounds, we need not discuss and dispose of other issues raised by the assessee.
15. In the result, the appeal of the assessee is allowed.