M.B.Sharma, J. - (1.) THE Rajasthan State Electricity Board (for short, "the RSEB"), the petitioner herein, has challenged the levy and imposition of additional tax under Section 143(1A)(a) of the Income-tax Act, 1961 (for short, "the Act"), and the consequent issuance of intimation dated February 12, 1992, amended on February 28, 1992, and the demand of Rs. 7,67,68,717, being illegal, unauthorised and in violation of the principles of natural justice, as null and void and has sought a writ of certiorari quashing the aforesaid demand.
(2.) THE RSEB submitted its return of income on December 30, 1991, for the financial year 1990-91 relevant to the assessment year 1991-92. In the said return, it has shown a loss of Rs. 4,27,39,32,972. For the aforesaid assessment year, the RSEB suffered a loss as per revenue account amounting to Rs. 1,68,39,37,000. It also claimed depreciation of Rs. 3,33,77,70,317 and, after disallowing inadmissible expenditure, the aforesaid total loss was shown in the return filed as aforesaid. An intimation under Section 143(1A)(a) of the Income-tax Act was issued to the RSEB by the Deputy Commissioner of Income tax (Assessment), Special Range II, Jaipur, dated February 12, 1992, in which the additional tax under Section 143(1A) was claimed amounting to Rs. 8,63,64,827. THE RSEB filed objections and thereafter the said order was revised and the additional tax was reduced to Rs. 7,67,68,717. An application under Section 154 of the Income-tax Act for rectification was filed by the RSEB and a revision petition under Section 264 of the Income-tax Act was also filed. But, according to the RSEB, they have not been disposed of. It has been submitted that the demand is illegal and cannot be sustained being without jurisdiction and, therefore, the present writ petition has been filed. The question primarily depends on the interpretation of Section 143(1) and (1A) of the Income-tax Act. It will be proper to read the aforesaid provision which is as under : "143.(1)(a) Where a return has been made under Section 139, or in response to a notice under Sub-section (1) of Section 142,-- (i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of Sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under Section 156 and all the provisions of this Act shall apply accordingly ; and (ii) if any refund is due on the basis of such return, it shall be granted to the assessee : Provided that in computing the tax or interest payable by, or refundable to, the assessee, the following adjustments shall be made in the income or loss declared in the return, namely :-- (i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified ; (ii) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, is prima facie admissible but which is not claimed in the return, shall be allowed ; (iii) any loss carried forward, deduction, allowance or relief claimed in the return, which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed : Provided further that where adjustments are made under the first proviso, an intimation shall be sent to the assessee, notwithstanding that no tax or interest is found due from him after making the said adjustments : Provided also that an intimation for any tax or interest due under this clause shall not be sent after the expiry of two years from the end of the assessment year in which the income was first assessable. (b) Where as a result of an order made under Sub-section (3) of this section or Section 144 or Section 147 or Section 154 or Section 155 or Section 250, or Section 254 or Section 260 or Section 262 or Section 263 or Section 264, or any order of settlement made under Sub-section (4) of Section 245D relating to any earlier assessment year and passed subsequent to the filing of the return referred to in Clause (a), there is any variation in the carry forward loss, deduction, allowance or relief claimed in the return, and as a result of which,-- (i) if any tax or interest is found due, an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under Section 156 and all the provisions of this Act shall apply accordingly, and (ii) if any refund is due, it shall be granted to the assessee : Provided that an intimation for any tax or interest due under this clause shall not be sent after the expiry of four years from the end of the financial year in which any such order was passed. (c) Where the assessee is a partner of a firm or a member of an association of persons or body of individuals and as a result of the adjustments made under the first proviso to Clause (a) of Sub-section (1) in the income or loss declared in the return made by the firm, association or body, as the case may be, or as a result of an order made under Sub-section (3) of this section or Section 144 or Section 147 or Section 154 or Section 155 or Sub-section (1) or Sub-section (2) or Sub-section (3) or Sub-section (5) of Section 185 or Sub-section (1) or Sub-section (2) of Section 186 or Section 250 or Section 254 or Section 260 or Section 262 or Section 263 or Section 264, or any order of settlement made under Sub-section (4) of Section 245D, passed subsequent to the filing of the return referred to in Clause (a) there is any variation in his share in the income or loss of the firm, association or body, as the case may be, or in the manner of inclusion of his share in the returned income, then,-- (i) if any tax or interest is found due, an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under Section 156 and all the provisions of this Act shall apply accordingly, and (ii) if any refund is due, it shall be granted to the assessee : Provided that an intimation for any tax or interest due under this clause shall not be sent after the expiry of four years from the end of the financial year in which any such adjustments were made or any such order was passed. (1A)(a) Where, in the case of any person, the total income, as a result of the adjustments made under the first proviso to Clause (a) of Sub-section (1), exceeds the total income declared in the return by any amount, the Assessing Officer shall,-- (i) further increase the amount of tax payable under Sub-section (1) by an additional income-tax calculated at the rate of twenty per cent. of the tax payable on such excess amount and specify the additional income-tax in the intimation to be sent under Sub-clause (i) of Clause (a) of Sub-section (1) ; (ii) where any refund is due under Sub-section (1), reduce the amount of such refund by an amount equivalent to the additional income tax calculated under sub Clause (i). (b) Where as a result of an order under Section 154 or Section 250 or Section 254 or Section 260 or Section 262 or Section 263 or Section 264, the amount on which additional income-tax is payable under Clause (a) has been increased or reduced, as the case may be, the additional income-tax shall be increased or reduced accordingly, and,-- (i) in a case where the additional income-tax is increased, the Assessing Officer shall serve on the assessee a notice of demand under Section 156 ; (ii) in a case where the additional income-tax is reduced, the excess amount paid, if any, shall be refunded. Explanation.--For the purposes of this sub-section, 'tax payable on such excess amount' means,-- (i) in any case where the amount of adjustments made under the first proviso to Clause (a) of Sub-section (1) exceed the total income, the tax that would have been chargeable had the amount of the adjustments been the total income ; (ii) in any other case, the difference between the tax on the total income and the tax that would have been chargeable had such total income been reduced by the amount of adjustments." An analysis of the aforesaid extracted provisions of Sub-sections (1) and (1A) of Section 143 of the Income-tax Act will show that before the amount of tax payable under Sub-section (1) is further increased by an additional income-tax calculated at the rate of twenty per cent. of the tax payable on the excess amount, if any, as a result of adjustments, it is necessary that a return should have been filed either under Section 139 or in response to a notice under Sub-section (1) of Section 142 of the Income-tax Act. Further, the adjustments must have been made under the first proviso to Clause (a) of Sub-section (1) and, as a result of such adjustments, the total income should exceed the total income declared in the return filed as aforesaid. It was contended by Mr. Ranka, learned counsel for the RSEB, that Sub-section (1A)(a) of Section 143 of the Income-tax Act will only be attracted in case, as a result of adjustments, the total income exceeds the one declared in the return and in case where, in the return filed, a loss has been shown which has been accepted, then it is not a case where it can be said that, as a result of adjustments, the total income has at all exceeded the income declared in the return and, therefore, no additional tax could have been levied and it is without authority of law and without jurisdiction. In other words, the contention of Mr. Ranka, learned counsel for the RSEB, is that in case, as a result of adjustments, there is reduction of loss, the aforesaid provision will not apply and no additional tax can be charged because, in that case, there will be no exceeding of the total income than the one declared in the return. In support of his contention, Mr. Ranka learned counsel for the RSEB, has relied on the case of Modi Cement Ltd. v. Union of India [1992] 193 ITR 91 (Delhi). In that case, a similar question had arisen and the learned judges of the Delhi High Court said (at page 94) : "A plain reading of Section 143(1A)(a) shows that the said provision would apply only where, as a result of the adjustments carried out as per the first proviso to Clause (a) of Sub-section (1), the total income which is declared is exceeded. In other words, the return must declare an income and not loss for the said sub-section to apply and secondly, as a result of the adjustments, there should not be any loss but there should be an income. To put it differently, it is only if the adjustment which is made results in the reduction of loss that Sub-section (1A)(a) of Section 143 will not apply. Where, however, income and not loss is returned and the income declared is increased as a result of adjustments or if a loss is returned but adjustments are carried out in accordance with the first proviso which result in an income then, in our opinion, on a correct interpretation of Sub-section (1A), the said provision would be applicable." The court looked into the provision of Sub-section (1A)(a)(i) of Section 143 which uses the expression "further increases the amount of tax payable" and said that the said provision clearly indicates that, as a result of the adjustments made, there should be a demand of tax and it is in addition to this tax that 20 per cent. of the tax payable on the excess amount is also chargeable. Mr. G.S. Bapna, learned counsel for the Revenue, contended that the aforesaid view of the Delhi High Court is not correct and the interpretation placed by that court on the aforesaid section is also not correct. It was contended by Mr. Bapna, learned counsel for the Revenue, that additional tax can be charged even in loss cases and learned counsel tried to draw an analogy from the provisions of Section 271(1)(c) of the Income-tax Act, wherein penalty can be levied for concealment of income even in a loss case. According to learned counsel for the Revenue, the additional tax has been charged legally. In my opinion, it is not correct to draw any analogy from the aforesaid provision of Section 271(1)(c) of the Income-tax Act in so far as the provisions of Section 143(1A)(a) of the Income-tax Act are concerned. To my mind, a bare reading of Section 143(1A)(a) of the Income-tax Act will show that not only in the return of income filed either under Section 139 or in response to a notice under Section 142(1) of the Income-tax Act, an income and not loss should be shown, but further, as a result of adjustments under the first proviso to Clause (a) of Sub-section (1) of Section 143, the income should further exceed and only to the extent of the income so further increased, the amount of tax payable under Sub-section (1) is to be increased by an additional amount of income-tax calculated at the rate of 20 per cent. of the tax payable on such excess amount. In my opinion, the interpretation put by the Delhi High Court on the aforesaid provision in the case of Modi Cement [1992] 193 ITR 91 is the correct interpretation and Sub-section (1A) of Section 143 admits of no ambiguity. In the present case, there is no dispute that not only the return showing loss was filed, but as a result of adjustments also the income has not further increased and there was no question of any additional tax being levied or charged.
(3.) CONSEQUENTLY, I hereby allow this writ petition and issue a writ of certiorari quashing the levy and imposition of additional tax under Sub-section (1A) of Section 143 of the Income-tax Act and also quashing the intimation dated February 12, 1992 (Annr. modified, vide annr. B-3, dated February 28, 1992). Costs made easy.;