- (1.) This order will dispose of four appeals bearing Nos. 272 to 275 of 2005. The facts are being taken from IT Appeal No. 272 of 2005.
(2.) This is an appeal filed by the assessee raising following substantial question of law, arising out of common order passed by the Income-tax Appellate Tribunal, Chandigarh Bench 'A' (for short 'the Tribunal') in ITA Nos. 717/Chd/2000 and 718/Chd/2000, dt. 21st Feb., 2003, for the asst. yrs. 199798 and 1998-99, respectively: Whether the Tribunal was right in law in holding that the law on the date of passing the order under Section 143(1)(a) will apply and not the law on the date of filing the return of income as held by Hon'ble Supreme Court in CIT v. Hindustan Electro Graphites Ltd.
(3.) Brief facts of the case are that the assessee filed its return of income, which was processed by the AO under Section 143(1)(a) of the IT Act, 1961 (for short 'the Act') and keeping in view the legal position on the subject, undisputed facts and information on record, deduction claimed by the assessee under Section 80P(2)(a)(iii) of the Act was disallowed. Against the order passed by the AO, the assessee went in appeal before the Income-tax Commr. (Appeals) [for short 'the CIT(A)'], inter alia, raising grounds that the disallowance of deduction claimed by the assessee under Section 80P(2)(a)(iii) of the Act was not a kind of prima facie adjustment. In fact the same was debatable issue and regular assessment under Section 143 (3) of the Act should have been framed for the purpose. Having failed in appeal, the assessee further went in appeal before the Tribunal where also the assessee could not succeed. The relevant findings of the Tribunal on the issue raised by the assessee are as under: 2.4 We have considered the rival submissions of both the parties, perused the material on record as well as the legal luminaries relied upon by the leaned Tribunal. We find that there is no dispute that when the AO processed the return under Section 143(1)(a), Section 80P(2)(a)(iii) has been amended with retrospective effect w.e.f. 1st April, 1968 by which deduction was restricted only in respect of income earned for marketing of the agricultural produce grown by the members of the assessee-society. Learned Authorised Representative was also fair enough that in view of this amendment, the assessee is not entitled for the deduction but contended that the issue was debatable as the law on the date of filing of return allowed for the deduction and retrospective amendment was challenged before the Hon'ble Supreme Court. Section 143(1)(a) empowers the AO to disallow the deduction claimed by the assessee where the assessee is (sic-not) entitled for the same on the face of return. The AO, in our opinion, while processing the return has to apply the law which was in existence at the time of processing the return and was applicable to the assessment year in respect of which the return has been processed by the AO. The law has been amended with retrospective effect and the amended law was applicable to the assessment year under consideration. There cannot be any interpretation to the amended law taken by the AO. Merely that retrospective operation of the law has been challenged before the Hon'ble Supreme Court does not mean that there may be two interpretations in the law laid down or the interpretation taken by the AO was debatable. Learned Authorised Representative contended that it is the only retrospective operation of the law which has been challenged. There is no plea advanced by the Authorised Representative that the interpretation taken by the AO was not correct in law or there cannot be two interpretations of the section. Thus, in our opinion, the AO has correctly made the prima facie adjustment under Section 143(1)(a) and Section 143(1)(a) authorises the AO to make such prima facie adjustment because the claim of the assessee was not allowable on the face of the return on the basis of the amended law and the law as in existence at the time of processing the return was applicable to the assessment year under consideration. We have gone through the judgment of the Hon'ble Supreme Court in the case of CIT v. Hindustan Electro Graphites Ltd. as well as the judgment of the Hon'ble Punjab & Haryana High Court in the case of CIT v. Gian Talkies (1982) 31 CTR (P&H) 93 relied upon by the learned Authorised Representative and we find that these citations will not help the assessee. The issue involved in this case was only charging additional tax. There was retrospective amendment under Section 28 by which Clause (iiib) was inserted with retrospective effect and due to this retrospective effect, cash assistance received by the assessee becomes the income of the assessee. The AO made the prima facie adjustment while processing the return in respect of cash compensatory (support) and imposed additional tax on the assessee under Section 143(1)(a). Neither the appellate authority nor the Hon'ble High Court or the Hon'ble Supreme Court has held in this case that no prima facie adjustment under Section 143(1)(a) can be made where the retrospective amendment was made. Thus, we find no merit in the first ground of appeals of the assessee and accordingly, we dismiss the first ground of the appeals in both the assessment years i.e., 1997-98 and 1998-99.;