K.J.SENGUPTA, J. - (1.) THE instant appeal has been preferred against the judgment and order dated 28th February, 2003 of the learned Tribunal for the assessment years 1995 -96 to 1998 -99. The above appeal was admitted by an order of this Court dated 17th November, 2003 on the following substantial questions of law: - (i) Whether the Tribunal was justified in law in dismissing the appellant's appeal for the assessment years 1995 -96 to 1998 - 99 without affording to it reasonable opportunity of being heard ? (ii) Whether the Tribunal was justified in law in upholding the orders of rectification under Section 154 rejecting the appellant's contention that the issue relating to interpretation of Section 40(b)(v) and explanation 3 thereto was a debatable one and the proceedings under Section 154 were without jurisdiction ? (iii) Whether and in any event, on a proper construction of the provisions of Section 40(b)(v) and explanation 3 thereto, book profit comprises the entire net profit as shown in the profit and loss account or only profit and gains of business assessed under Chapter IV -D ? The short fact of this case leading to preferring the instant appeal is as follows: -
(2.) THE assessee -appellant is a partnership firm within the meaning of Indian Partnership Act, 1932 and is regularly assessed to tax under the Income Tax Act, 1961 (hereinafter referred to as the said Act). The appellant -assessee had filed the returns for the previous years relevant to assessment years 1995 -96 to 1998 -99. The returns filed for the assessment year 1995 -96 was accepted as such under Section 143(1)(a) of the Act by issue of intimation dated September 24, 1996. The said intimation was rectified on January 27, 1997 by granting interest under Section 244A. The returns filed for the assessment years 1996 -97 was also similarly accepted by issuing a notice under Section 143(1)(a) of the Act on January 14, 1998 with a marginal increase of the returned income by making a prima facie adjustment with reference to provisions of Section 43B. The returns filed by the appellant -assessee for the year 1997 -98 was also accepted by issue of intimation under Section 143(1) (a) of the Act on March 10, 1999. The returns filed for the assessment year 1998 -99 by the petitioners was accepted by issue of intimation dated March 9, 1999 under Section 143(1)(a) of the Act. On 3rd January, 2001, the Assessing Officer after issuing the said intimation under Section 143(1) (a) of the Act in relation to the return of the aforesaid assessment years, issued notices under Section 154 for all the four years alleging that appellants had claimed excessive deduction on account of partners' remuneration which has been wrongly allowed by the intimations under Section 143(1)(a) and orders under Section 154. It was alleged in the said notice under Section 154 that income by way of consultancy fees, interest on bank deposit, profit on disposal of assets and interest on advance tax which has been shown as income under the head 'other sources' could not be considered as part of the book profit for the purpose of computation of allowable partners' remuneration. Hence the Assessing Officer proposed to rectify the said alleged mistake under Section 154 of the Act by adding back the deduction allowed in excess. The appellant -assessee duly replied to the said notice and objected to reopening of the same raising the question of jurisdiction as the point raised in the notice under Section 154 was debatable and arguable. The Assessing Officer however, did not accept the appellant's contention and passed orders rectifying the intimations under Section 143(1)(a) for each of the years. The appellant thence preferred appeal against the aforesaid order of rectification before the Commissioner of Income Tax (Appeals) who by consolidated order dated 29th January, 2002 which apart from the aforesaid four years also for assessment year 1995 -96 rejected all the appeals. Thereafter the petitioner took the matter to the learned Tribunal and preferred appeal once again in connection with the assessment years 1994 -95 - 1996 -98 to 1999. It is alleged that no notice was served before the said appeals were taken up for hearing by the learned Tribunal and the petitioners' authorized representative duly appeared and submitted on the date of hearing on 31st of January. It is alleged learned Tribunal however assured the authorized representative of the appellants the appeals preferred by the appellants for the assessment year 1995 -96 to 1998 -99 which arose out of rectification of intimation issued under Section 143(1)(a) could be allowed in the appellants favour and as such he did not make any submission. As far as the appeal in relation to assessment year 1994 -95 with reference to assessment made under Section 143(3) was adjourned till 24th March, 2003. Subsequently it was discovered instead of allowing appeal of the petitioners the same was dismissed by impugned order dated 28th February, 2003. Thus without giving any reasonable opportunity of being heard the said appeal was dismissed.
(3.) MR . Khaitan, learned Senior Counsel appearing for the appellants submits that since it is an old appeal this Court instead of remanding the matter for fresh hearing by the learned Tribunal on the ground of not giving opportunity of hearing should be decided by this Court on its merit. He submits that for the purpose of Explanation 3 to Section 40(b)(v) the appellant took into consideration its net profit as shown in the profit and loss account which included granting consultancy fees, interest on bank and company deposit, profit on disposal of cars used in the business and interest on advance tax and those items of incomes were shown in the return under heading 'income from other sources'.;