ESTER INDUSTRIES LTD vs. COMMISSIONER OF INCOME TAX IV

IN THE HIGH COURT OF DELHI AT NEW DELHI ITA 270/2005 . ESTER INDUSTRIES LTD ..... Appellant Through Mr. R. Santhanam, Adv. versus . COMMISSIONER OF INCOME TAX IV ..... Respondent Through Ms. P. L. Bansal, Adv. CORAM: HON'BLE MR. JUSTICE MADAN B. LOKUR HON'BLE MR. JUSTICE VIPIN SANGHI O R D E R 31.08.2006 After hearing learned counsel for the parties, we are of the view that even though several questions have been framed by the Appellant, only two substantial questions of law would arise for our consideration. These are as follows :- (i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the levy of Minimum Alternative Tax is permissible while issuing intimation to acknowledge the receipt of return filed by the assessee under Section 143(1)(a) when the levy of Minimum Alternative Tax involves substantial legal issues and grounds and the same could not have been done without notice of hearing, opportunity to the assessee and by passing a speaking and reasoned order, after proper application of mind, which are neither done nor contemplated under Section 143(1)(a)? . (ii) Whether, on the facts and in the circumstances of the case, the Tribunal had any basis or justification valid in law to accept the plea of the Revenue for upholding the illegal levy of MAT through intimation under Section 143(1)(a) of the Income Tax Act and for charging mechanically, perversely and automatically the levies of interest under Section 234-B and 234-C when the assessee has pointed out that the levy is not at all permissible Page 1 of 3 or attracted in this case as no such demand could at all have been issued/raised without any hearing or proceeding before any quasi-judicial authority in accordance with law and in compliance with natural justice? . . . In so far as question no. (ii) is concerned, it is now common ground that in view of the decision of the Karnataka High Court in Kwality Biscuits Ltd. vs CIT [2000] 243 ITA 519 interest under Section 234-B and 234-C of the Income Tax Act in the case of assessment of a company on the basis of book profits under Section 115 J of the Act cannot be levied. A Special Leave Petition was filed by the Revenue against that decision. The SLP having been dismissed by the Supreme Court in Commissioner of Income Tax vs. Kwality Biscuits Ltd. [2006] 284 ITR 434 (SC), the question with regard to levy of interest under Section 234 B and 234 C must be answered in the negative and in favour of the Assessee. We make it clear that though the question of levy of minimum alternative tax is a part of question no. (i) above, this order is not to be construed as having rendered any decision in respect of question no.(i). Admit. The following question of law is framed for our consideration. ?Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the levy of Minimum Alternative Tax is permissible Page 2 of 3 while issuing intimation to the assessee under Section 143 (1) (a)?? Paper books be filed in accordance with the High Court Rules. IA No. 5428/2005 (stay) Learned counsel for the Appellant points out that the regular assessment has already been made in respect of the Assessee under Section 143 (3) of the Income Tax Act and an appeal is pending before the Income Tax Appellate Tribunal and tax has already been recovered by the Revenue. By the impugned order, the matter has been sent back to the Assessing Officer with the direction to recompute the deemed income and directing an opportunity of hearing to the Assessee before passing an order. In view of the fact that a regular assessment has already been made and the assessee has already deposited the tax we stay the further proceedings before the Assessing Officer pursuant to the order passed by the Tribunal. The application is disposed off. . . MADAN B. LOKUR, J . . . VIPIN SANGHI, J AUGUST 31, 2006 ak Page 3 of 3