AMIT BAJAJ ADVOCATE

There has been a lot of dispute on the issue whether the Petroleum products dealers should reverse the Input Tax Credit on the evaporation of petrol, diesel and other petroleum products as Rule 21(1) of Punjab VAT Rules, 2005 provides for disallowance of Input tax credit for tax paid on purchase of those goods which have been lost or damaged or destroyed beyond repair because of any theft, fire or natural clamity (please note the words because of any theft, fire or natural clamity have been removed from Rule 21(1) w.e.f 06-11-2008)
 
The Punjab & Haryana High Court in Bharat Petroleum Corporation Limited Vs. State of Punjab [(2009) 12 STM 463 (HC-P&H)] decided the above issue on merits in favour of the revenue and also at the same time dismissed the petition stating that the petitioner has the alternative statutory remedy of filing the appeal before lower appellate authorities.

I was once again to an ICC barrier today for a case regarding section 51 of Punjab VAT Act, 2005. This inspires me again to share some views on  levy of penalty u/s 51. I am re-sharing my earlier article on section 51 herebelow for the readers of my blog who might not have read it, this article was also published in Punjab & Haryana Taxes Law journal.

ITAT mumbai has held in an important case namely  DCIT Versus Housing Development Finance Corporation Ltd. that if the intimation u/s 143(1)(a) has been issued after the issue of notice u/s 143(2) of Income Tax Act then intimation issued u/s 143(1)(a) will be illegal, relying upon the Judgement of Supreme Court in  CIT v. Gujarat Electricity Board, 260 ITR 84 (SC) and further also held that no appeal will lie against intimation issued u/s 143(1)(a) after the amendment of 01/06/1999. The right cource is to file a ractification application u/s 154 of Income Tax Act.


Facts: The assessee is a company. It filed a return of income for assessment year 2006-07 on20/10/2006 declaring an income of Rs. 8,06,501,48,149. A notice under section 143(2) of the income-tax Act, 1961 (the Act) dated10/9/2007 was issued by the AO and served on the assessee on September, 2007. This is a notice for making a regular assessment u/s. 143(3) of the Act. The AO issued an intimation under section 143(1) of the Act, dated23/11/2007. This was later served on the assessee, only on5/2/2008. As against the above returned income of Rs. 8,06,01,48,145 a sum of Rs. 8,64,11,91,630 was shown as assessed income in the intimation under section 143(1) of the Act, without giving any basis for the same. A consequential interest of Rs. 99,39,417 under section 234C of the Act was also charged, without providing any basis for the levy of the same. As a result of the change in returned income and assessed income, the refund claimed by the Assessee was also allowed at a lesser figure than what was claimed by the Assessee.


Aggrieved by the aforesaid intimation under section 143(1) dated 23/11/2007 the assessee preferred appeal before CIT(A). The main contention of the assessee before CIT(A) was that pursuant to the return of income filed by the assessee on 20/10/2006 a notice under section 143(2) of the Act, dated 10/9/2007 was issued and served on the assessee an 14/9/2007 for making a regular assessment under section 143(3) of the Act. According to the assessee the intimation under section 143(1) dated 31/11/2007 could not have been issued by the Assessing Officer because a notice under section 143(2) has already been issued prior to the issue of intimation under section 143(1) of the Act. The assessee relied on the decision of the Hon’ble Supreme Court in the case of CIT v. Gujarat Electricity Board, 260 ITR 84 (SC) and Gujarat Poly-AVX Electronics Ltd. v. DCIT, 222 ITR 140 (Guj.), wherein it was held that it would not open to the revenue to issue an intimation under section 143(1)(a) of the Act after notice for regular assessment issued under section 143(2) of the Act. The CIT(A) accepting the plea of the assessee cancelled intimation u/s. 143(1) of the Act as illegal.
 
 Held:  In CIT v. Gujarat Electricity Board [2003] 260 ITR 84, the Supreme Court held that it was not open to the Revenue to issue intimation under section 143(1)(a) after notice for regular assessment is issued under section 143(2). Their Lordships said :




“The provisions of section 143(1)(a)(i) indicate that the intimation sent under section 143(1)(a) shall be without prejudice to the provisions of sub-section (2). The Legislature, therefore, intended that, where the summary procedure under sub-section (1) has been adopted there should be scope for the Revenue, either suo motu or at the instance of the assessee, to make a regular assessment under sub-section (2) of section 143. The converse is not available ; a regular assessment having been commenced under section section 143 (2), there is no need for summary proceedings under section 143(1)(a)”.


 As rightly contended on behalf of the Revenue, the aforesaid decision of the Hon’ble Supreme Court was rendered in the context of the law as it stood prior to1/6/1999. The law laid down in the said decision will apply to the present assessment year also and to this extent we agree with the submissions of the ld. Counsel for the assessee. Since the appeal before the CIT(A) was not maintainable this decision could not have been relied upon by the CIT(A). The assessee is at liberty to seek appropriate remedy in accordance with law. In the given facts and circumstances of the case we are of the view that the appeal before CIT(A) by the assessee was not maintainable and the objection of the revenue in this regard found to be justified. In our view the grounds raised by the revenue are broad enough to cover even the objection regarding maintainability of the appeal by the assessee before the CIT(A). The ld. D.R in the course of his arguments submitted that if the assessee is aggrieved by the intimation under section 143(1) of the Act he would have field an application under section 154 of the Act and thereafter would have carried the matter further in appeal. We find that the period of four years for passing an order under section 154 of the Act from the end of the Financial Year in which the order sought to be amended was passed was still available. It is for the assessee to work out its rights in accordance with law. We, therefore, uphold the plea of ld. D.R and hold that the appeal before the CIT(A) was not maintainable. With the aforesaid observations we allow this appeal by the revenue.


 In the result, the appeal of the revenue is allowed.




Full Judgement can be downloaded herebelow:

DCIT Versus Housing Development Finance Corporation Ltd.

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