Sumerpur Co-Operative Marketing … vs Asstt. Cit on 5 February, 2002

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Rajasthan High Court
Sumerpur Co-Operative Marketing … vs Asstt. Cit on 5 February, 2002
Equivalent citations: (2002) 75 TTJ NULL 322


ORDER

B.L. Khatri, A.M.

This is an appeal against the order of the Commissioner (Appeals), Jodhpur, for assessment year 1992-93. The appellant agitated on the ground that the Commissioner (Appeals) erred in holding that the assessing officer was justified in disallowing the claim of depreciation, gratuity and sales-tax while making adjustment to returned loss under section 143(1)(a). The learned Commissioner (Appeals) also erred in holding that the application filed by the appellant under section 154 was rightly rejected. It was submitted before the assessing officer that he was not empowered to make any disallowance/adjustment for the claim made in Income Tax Return. The Commissioner (Appeals) upheld the order of the assessing officer and held that the assessing officer was entitled to make adjustment/disallowance under section 143(1)(a) for inadmissible claim in the absence of evidence.

2. The learned authorised representative submitted that the learned Commissioner (Appeals) erred in holding that the provision of section 143(1)(a) permits the assessing officer to make adjustment in respect of assessees claim regarding sales-tax, gratuity and depreciation. He explained the extent and ambit of the prima facie adjustments to be made under the first proviso to section 143(1)(a) and empowers for the following adjustments :

(i) only apparent arithmetical errors in the return, accounts or documents, accompanying the return,

(ii) loss carried forward, deduction, allowance or relief. Which was prima facie admissible on the basis of information available in the return but not claimed in the return; and

(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 was prima facie inadmissible, was to be disallowed.

This only meant that, at that stage only errors apparent on the face of the record alone might be corrected and even this was permissible on the basis of information accompanying the return. In other words, the assessing officer had no power to go beyond or behind the return, accounts or documents either in allowing or in disallowing such deduction, allowance or relief. He relief upon the judgment of Khatau Junkar Ltd. v. K.S. Pathania (1992) 196 ITR 55 (Bom).

3. The learned Commissioner (Appeals) erred in holding that the assessing officer was entitled to make adjustment/disallowance claimed in the absence of evidence. The assessing officer could not make adjustment to the income and loss declared in the return it on the basis of information available in such return, accounts or documents, deductions, allowance or relief claimed was prima facie inadmissible. No power was given to the assessing officer to disallow a claim for the reason that there was no proof in support of the claim made by the assessee. The learned authorised representative relied upon the case of S.R.F Charitable Trust v. Union of India (1992) 193 ITR 95 (Del). If proof in support of the claim was not furnished by the assessee, then for the lack of proof, no disallowance or an adjustment could be made. The only option which was open to the assessing officer, in such a case, was that he could require the assessee to furnish proof in which case he would presumably have to issue notice under section 143(2). The learned authorised representative also explained the merits of the case as under :

(a) Disallowance of sales-tax Rs. 2,097 : The assessing officer erred in disallowing the sales-tax demand of Rs. 2,097, though the necessary details had already been submitted along with rectification application. The addition on sales-tax account cannot be made for the reasons that it was outstanding and proof of payment was not attached along with the return, but for sales-tax demand debited in profit & loss account.

(b) Disallowance of depreciation of Rs. 1,52,752 : The assessing officer had disallowed this claim for the reason that it was not supported by depreciation chart. The learned authorised representative submitted that by the Taxation Laws (Amendment & Misc. Provisions) Act, 1986 with effect from 1-4-1988, which has omitted section 34(1) of Income Tax Act, 1961, and accordingly, the assessee is no longer obliged to furnish the prescribed particulars of the assets which were required under rule 5AA. Further, the rule 5AA of the Income Tax Rules has also been omitted by the Income Tax (Third Amendment) Rule, 1987 with effect from 2-4-1987, meaning thereby that the assessing officer is bound to allow depreciation allowance in respect of assets entitled to, even if particulars relating to such assets were not furnished by the assessee. He also contended that the Commissioner (Appeals) has also erred in holding that the additional tax was chargeable since there was loss even after adjustments made. This ground was not pressed as there was an amendment in by the Finance Act, 1993, retrospectively with effect from 1-4-1989, and making additional tax leviable even in the cases of loss also.

4. We have considered the rival submissions. The law does not require the assessee to furnish with the return all documents to prove every single claim made in the return. If unilateral adjustments were permitted on the ground of absence of proof in the return, several genuine claims would be disallowed. The assessee would not be able to produce documents even in a rectification application under section 154. Thus, it could not be said that disallowance could be made under the first proviso to section 143(1)(a) for lack of proof or inadequacy, of evidence. One could not read into section 143(1)(a) more than what was provided which would result in the section becoming arbitrary or unreasonable (Ref. Khatau Junkar Ltd. v. K.S. Pathania (supra)). Similarly while making prima facie adjustments under section 143(1)(a) depreciation cannot be disallowed for lack of particulars of assets, we agree with the reasons given by the learned authorised representative. Therefore, the disallowance of sales-tax, and disallowance of depreciation made by the assessing officer and sustained by the Commissioner (Appeals) are hereby deleted. The assessing officer is directed to allow necessary relief to the assessee.

5. In the result, the appeal is allowed.

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