TARUN AGARWALA, J. - (1.) THE assessee filed the return of income for the assessment year 1990 -91, which was processed under Section 143(1)(a) of the Income Tax Act, 1961 (hereinafter referred to as the Act). The Assessing Officer, while processing the return of income, made various adjustments including computation of book profits under Section 115 -J of the Act. The adjustment so made was as under: a. Difference in income and deduction Rs.8,569/ -. b. Travelling expenses incurred in excess Rs.2,16,696/ - of rule 6 -D of I.T. Rules -62 c. Investment allowance on distillery unit Rs.10,26,678/ - d. Disallowance u/s 43 -B of the IT Act Rs.2,54,829/ - e. Loss of sale of asset Rs.10,156/ - f. Adjustment on account of depreciation claimed by the assessee on Tube Well Rs.19,831/ -
(2.) AS a result of the aforesaid adjustment, additional tax as well as a demand under Section 115 -J of the Act was created. The assessee, being aggrieved, filed an application under Section 154 of the Act for rectification objecting to the various adjustments made by the Assessing Officer and also against the tax demanded from the assessee. The Assessing Officer, by its order dated 27th August, 1992 rejected the majority of the objections raised by the assessee. The income was revised on the total adjusted income of Rs. Nil and tax was levied on an income of Rs.18,26,602/ - as computed under Section 115 -J of the Act. Additional Tax under Section 143(1A) of the Act was computed on the amount of Rs.15,36,858/ - added by way of adjustment. The assessee, being aggrieved, filed an appeal, which was partly allowed. The appellate authority on merits found that the expenses made towards travelling, investment allowance on distillery unit, loss on sale of fixed assets and adjustments on account of depreciation claimed by the assessee on tube well was incorrect and that there was no justification for the Assessing Authority to make any disallowance by way of adjustment while processing the return under Section 143(1)(a) of the Act. The appellate authority, accordingly, held that the adjustment so made was liable to be rectified under Section 154 of the Act. The appellate authority however, found that the disallowance under Section 43 -B of the Act was justifiable in view of the fact that the conditions laid down under Section 43 -B of the Act was not satisfied by the appellant.
(3.) THE appellate authority further found that the additional tax was incorrectly charged by the Assessing Officer holding that no additional tax was chargeable where the net result of adjustment was a negative figure. This view of the appellate authority was made by relying upon a judgment of the Allahabad High Court in Indo Gulf Fertilizers and Chemicals Corporation Ltd. Vs. Union of India and another, 195 ITR 485. The revenue, being aggrieved, by the order of the appellate authority filed an appeal before the Tribunal, which was dismissed. The revenue, being aggrieved by the order of the Tribunal, has filed the present appeal under Section 260 -A of the Income Tax Act, which was admitted on the following questions of law: - "(i) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the order of the C.I.T. (A) directing the A.O. To modify the order u/s 154 of the Act and to delete the additional tax in view of the jurisdictional High Court decision report in 195 ITR 485? (ii) Whether on the facts and in the circumstances of the case, additional tax charged u/s 143(1A) could be deleted in proceedings u/s 154 - ;