DY. C. I. T. vs. JUPITER CEMENT IND. LTD.

Facts

The assessee, Jupiter Cement Ind. Ltd., engaged in cement manufacturing, filed its return for Assessment Year 1994-95 showing a loss of Rs. 451.71 Lakhs. The Assessing Officer (AO) initially made an addition of Rs. 5,12,62,300/- on account of accrued interest on term loans that were debited to the profit and loss account but not paid. Subsequently, acting on the assessee's letter dated 10.08.1995, the AO rectified the order under Section 143(1)(a), reducing the disallowance under Section 43B to Rs. 61,04,000/-. The assessee appealed to the CIT(Appeals), who allowed the appeal. The revenue then appealed to the ITAT, which dismissed the revenue's appeal. The present appeal is filed by the revenue against the ITAT's order dated 31.08.2000.

Held

The High Court agreed with the view taken by the ITAT. The Tribunal had observed that the AO made an addition for accrued interest on term loans not paid. The CIT(A) noted that a letter dated 19.03.1995, intimating the AO about a wrong statement in the original return and providing a revised computation, was served on the AO, evidenced by postal receipts and dispatch register entries. The CIT(A) found that this letter was not considered by the AO. The Tribunal held that there was no question of entertaining new evidence as the letter was already on the AO's record. It further noted that under Section 139(1), a revised return could be filed before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment order, whichever was earlier. Since the assessee had intimated the AO about the wrong statement and furnished a revised computation before the intimation under Section 143(1)(a) was passed, the CIT(A) rightly directed the AO to recompute the additional tax. The High Court found no reason to interfere and dismissed the appeal, answering the questions in favour of the assessee.

Key Issues

1. Whether, on the facts and in the circumstances, the ITAT erred in law by confirming the CIT(A)'s order which admitted additional evidence (a letter dated March 19, 1995) in contravention of Rule 46A, directing the AO to recompute tax without giving the AO an opportunity? 2. Whether, on the facts and in the circumstances, the ITAT erred in law by confirming the CIT(A)'s order when the assessee's rectification application under Section 154 dated August 10, 1995, did not mention the alleged letter dated March 19, 1995? Assessee's Contention: The assessee supported the ITAT's order, arguing that the view taken by the authorities below was just and proper and required no interference. The assessee also implicitly argued that the letter dated March 19, 1995, was duly served on the AO and that the CIT(A) rightly considered it. Revenue's Contention: The revenue argued that both the CIT(A) and the ITAT had committed errors and that the ITAT had not properly appreciated the material on record.