SHIV KUMAR SHARMA, J. - (1.) SPECIAL Appeal No. 837 of 1993 arises from the judgment dated January 19, 1993, of the learned single judge on a writ petition. The writ petition was made absolute and the Revenue is in appeal. In D.B. Writ Petition No. 1503 of 1995, the assessee challenged the constitutional validity of Section 143(1A) of the Income -tax Act, 1961 (for short 'the I. T. Act').
(2.) THE writ petitioner -assessee had returned a net loss. After adjustments had been made by the taxing authorities under the provisions of Section 143(1)(a) the assessment of loss stood reduced. The taxing authorities under the provisions of Section 143(1A) sought to levy additional tax upon the assessee in this behalf and this was challenged in the writ petition. Section 143(1)(a), (1A) of the Income -tax Act (retrospectively amended in 1993) reads 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 purpose of this sub -section 'tax payable on such excess amount' means, - (i) in an)' 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.
(3.) A look at the substituted Sub -section (1A) demonstrates that even where the loss declared by an assessee had been reduced by reason of adjustments made under Sub -section (1)(a) the provisions of Sub -section (1A) would apply. Preliminary objection:;