Judgment:
1. The appeal has been filed by the Revenue and the cross objection is taken by the assessee. The dispute relates to the adjustments made under Section 143(1)(a) of Rs. 5,70,12,385.
2. The details are available in para. 2 of the order of the Commissioner of 2 Income-tax (Appeals) which are reproduced below : (Provided not paid) 70,000(b) EPL, DIT insurance and Employers contribution to 7,055 provident fund (i) IDBI 3,59,51,611 (ii) SIDBI 2,09,83,719 5,69,35,330 ------------------------------ 3. The Authorised Representative points out that the amount at item (b) above was paid on April 15, 1997, for which reason in the regular assessment there is no disallowance for the same. In respect of item at (a) above, in the regular assessment the disallowance has been kept at Rs. 8,534 only. That in respect of item at (c) (i) (interest to IDBI), in the scrutiny assessment there is no disallowance. That large payments were made to IDBI within the time mentioned in Section 139(1).
In the regular assessment the disallowance under Section 43B in respect of interest payable to SIDBI has been retained at Rs. 2,09,83,719 as in the adjustment under Section 143(l)(a).
4. The Departmental Representative referred to clause (iii) of Section 143(1)(a). That the deduction for expenditure by way of interest is prima facie inadmissible in view of the provisions of Section 43B.5. The Authorised Representative of the assessee has referred to a decision of the Karnataka High Court in God Granites v. CBDT [1996] 218 ITR 298. The assessment year involved was 1993-94, and the matter related to the deduction under Section 80HHC. The High Court had noticed that the prima facie adjustment is to be made on the basis of information available in the return including the accounts and documents accompanying it. In the opinion of the High Court, inadmissibility of the claim under Section 80HHC, may not be clear and evident from such papers. In the opinion of the High Court, the matter was a debatable one and, therefore, the adjustment could not have been made under Section 143(1) (a). Thus, we notice that the ratio of the said decision of the Karnataka High Court is not quite applicable in the facts of the assessee's case. There is nothing debatable about the unpaid interest to the SIDBI, etc., being hit by the provisions of Section 43B. SIDBI is a financial institution as notified by the Central Government vide S. O. 182(E), dated December 2, 1991, and thus it falls under clause (d) of Section 43B. In our opinion, the Assessing Officer is entitled to make adjustment under Section 143(1) (a) to give effect to the provisions of Section 43B. We add that if for any reason the assessee had not filed the necessary evidences regarding the payments along with the return, the assessee can file it thereafter and the appellate authorities can allow relief as per the procedure laid down in the Act.
6. In view of the foregoing discussions, the disallowances under Section 43B are as under : (i) Bonus 8,534 (ii) Interest claimed in respect of loan from SIDBI 2,09,83,719 7. The assessee vide its cross-objection has supported the order of the Commissioner of Income-tax (Appeals). Accordingly, the orders of the lower authorities are modified.
8. In the result, both the departmental appeal and the cross objection are partly allowed.
9. The assessee filed its return for the assessment year 1994-95 on November 25, 1994, claiming total loss of Rs. 7,88,35,460. The return was processed under Section 143(1)(a) of the Income-tax Act, 1961 (in short "the Act") and disallowance to the tune of Rs. 70,000 towards bonus, Rs. 7,055 towards EPL, DIT insurance and employer's contribution to provident fund Rs. 3,59,51,611 towards interest accrued to IDBI and to the tune of Rs. 2,09,83,719 towards interest accrued to SIDBI, were made and an additional tax to the tune of Rs. 65,56,424 was levied on the assessee. The said order was assailed before the Commissioner (Appeals), who granted the appeal vide his order dated September 5, 2000. Now the Revenue seeks indulgence of this Tribunal by way of second appeal under the provisions of Section 253 of the Act, claiming that the Commissioner (Appeals) has erred in deleting the disallowance of Rs. 5,70,12,385 made by the Assessing Officer by way of prima facie adjustments.
10. The scope of prima facie adjustments under the provisions of Section 143(1) (a) of the Act has been canvassed before us. A bare perusal of Section 143(1) (a) of the Act shows that the Assessing Officer has to accept the return as it is and in the proviso three exceptions has been given conferring jurisdiction on him for making adjustment. The action under this section cannot be taken beyond the power permitted by these three exceptions. Under clause (ii) of the proviso, any loss carried forward, deduction, allowance or relief has to be allowed on the basis of the information available in such return, accounts or documents accompanying it. Similarly clause (iii) provides that any loss carried forward, deduction, allowance or relief claimed in the return which, on the basis of the information in such return, accounts or documents, is prima facie inadmissible, shall be disallowed. This clause contemplates that power could be exercised only : (a)(i) in respect of loss carried forward, (ii) deductions, or (iii) allowances, or (iv) relief claimed; (b) the power in respect of above 4 items should be on the basis of information available in the return, accounts or documents; (c) that these items are prima facie inadmissible. The Assessing Officer, therefore, has no power to go beyond or behind the return, accounts or documents, either in allowing or disallowing any such deduction, allowances or return.
11. Under clause (iii) to the proviso, unless the return or the accompanying documents or accounts show that the deduction claimed is prima facie inadmissible, such deduction cannot be disallowed at the intimation stage. If the Assessing Officer is not satisfied with the claim or deduction, or if he requires any further information or any further evidence in that connection, he is bound to follow the procedure prescribed under subsection (2) of Section 143 of the Act, by giving a notice to the assessee. It is not open to him to disallow such a claim under Section 143(1)(a) of the Act. Law to this effect was laid in the judgments in S. R. F. Charitable Trust v. Union of India [1992] 193 ITR 95 (Delhi) ; Khatau Junkar Ltd. v. K. S. Pathania [1992] 196 ITR 55 (Bom); JKS Employees' Welfare Fund v. ITO [1993] 199 ITR 765 (Raj); Coates of India Ltd. v. Deputy CIT (No. 1) [1995] 214 ITR 498 (Cal); God Granites v. Under Secretary, Central Board of Direct Taxes [1996] 218 ITR 298 (Karn) ; Modern Fibotex India Ltd. v. Deputy CIT [1995] 212 ITR 496 (Cal) ; Pradeep Kumar Har Saran Lal v. Assessing Officer [1998] 229 ITR 46 (All) ; CIT v. Hindustan Electro Graphites Ltd. [2000] 243 ITR 48 (SC) and CIT v. K. V. Mankaram and Co. [2000] 245 ITR 353 (Ker).
12. No power lies with the Assessing Officer to disallow a claim on the ground that there is no proof in respect of the claim made by the assessee. Clause (iii) of the proviso is analogous to Section 154 of the Act where it is evident from the return as filed, along with the documents in support thereof that a claim of the assessee is inadmissible, only then an adjustment under the said proviso can be made. If proof in support of the claim is not furnished by the assessee, then for lack of proof, no disallowance or adjustment can be made. The only option open to the Assessing Officer in such a case is that he can require the assessee to furnish particulars, in which case he will have to issue a notice under sub-section (2) of Section 143 of the Act.
13. At the intimation stage an assessee has no opportunity to produce evidence before the Assessing Officer in support of his claim. He cannot do so in the rectification application which he may file from an intimation because, under Section 154 of the Act it is not open to an assessee to produce new evidence. When an Income-tax Officer disallows any claim on the ground of absence of evidence, which an assessee is ultimately entitled, the assessee would not be able to establish his claim in any subsequent application pertaining to intimation such as rectification application moved under Section 154 or a revision from it under Section 264 of the Act. Clearly, therefore, such disallowances are not contemplated at intimation stage. Reference can be made to the judgment in Khatau Junkar Ltd. [1992] 196 ITR 55 (Bom).
14. While recording his order the learned Accountant Member refers that a sum of Rs. 7,055 was paid by the assessee on April 15, 1997 towards, EPL, DIT insurance and employer's contribution to provident fund, for which reason no disallowance was made in the regular assessment on that count. He further notes that during the course of regular assessment disallowance towards bonus, under the provisions of Section 43B of the Act, was kept at Rs. 8,534 only. He details that there was no disallowance to the tune of Rs. 3,59,51,611 (under the head interest to IDBI) in the regular assessment. He concludes that if for any reason the assessee has not filed the necessary evidence regarding the payment along with the return, the assessee can file it thereafter and the appellate authorities can allow relief as per the procedure laid down in the Act. He maintains disallowance to the tune of Rs. 8,534 under the head bonus, to the tune of Rs. 2,09,83, 719 under the head interest claimed in respect of loan from SIDBI and discards the other disallowances. The question for consideration comes as to what are the powers of the Tribunal, while hearing an appeal against the order of Commissioner (Appeals), in respect of an intimation sent under the provisions of Section 143(1)(a) of the Act. In deciding an appeal preferred before the Tribunal, it is virtually in the same position as an Assessing Officer subject to the limitation, if any, placed of its jurisdiction by the Act, The Tribunal is expected to exercise the statutory authority and statutory duty which it is bound to carry out.
The right of an appeal is a substantive right and questions of fact and law are at large and are open to review by the Appellate Tribunal but in approaching to those questions of fact and law, the Tribunal shall virtually place it in the same position as that of an Assessing Officer. Law to this effect was laid in State of Orissa v. Babu Lal Chappolia 15. Terminus ad quern of the powers of the Income-tax Appellate Tribunal 15 is not based in an extended horizons. It is co-terminus with the powers of the Assessing Officer. An appellate court cannot exercise the jurisdiction which does not vest in an Assessing Officer.
It can correct the wrongs committed by the Assessing Officer which means that it can do the things which ought to have been done by the Assessing Officer. But it cannot assume jurisdiction which does not vest in an Assessing Office Applying the above ratio, it is clear that the Appellate Tribunal can correct the wrongs committed by the Assessing Officer or the Commissioner (Appeals) in the matter of processing a return under the provisions of Section 143(1)(a) of the Act. But while doing so the Tribunal has no power to go beyond or behind the return, accounts or documents, either in allowing or disallowing any such deduction, allowance or relief. Here, in the instant case, the learned Accountant Member had gone a step ahead and assumed the jurisdiction which was not vesting in the Assessing Officer. Keeping the disallowance at Rs. 8,534 under the head bonus, deleting the disallowance of Rs. 7,055 under the head EPL, DIT insurance and employer's contribution to provident fund and Rs. 3,59,51,611 under the head interest accrued to IDBI, the learned Accountant Member had assumed the jurisdiction which was vesting in the Assessing Officer in a regular assessment, carried out under the provisions of sub-section (3) of Section 143 of the Act. Thus, it is clear that the jurisdiction which the learned Accountant Member wants to assume does not vest with the Tribunal.
16. Whether an intimation survives a regular assessment, is a question 16 which confronts me while adjudicating the issue. Since I was of the view that the order of the Commissioner (Appeals) is in consonance with the provisions of law, for that the Assessing Officer had transgressed its power while making adjustment, the parties were not called upon to advance arguments on the proposition referred to above. When the Accountant Member tried to keep the disallowance under the head bonus at Rs. 8,534 and allowed deletion of Rs. 7,055 towards EPL, DIT insurance and employer's contribution to provident fund and Rs. 3,59,51,611 towards interest accrued to IDBI, the aforesaid proposition cropped up. Since the parties were not heard on that issue, it would not be expedient to record a finding, for it will result in denial of an opportunity of being heard. Therefore, the aforesaid issue is left open.
17. From the factum of certain allowances granted during the course of 17 regular assessment, it surfaced over the record that there were two opinions possible on those items. Circular No. 689 dated August 24,1994 (see [1994] 209 ITR (St.) 75), issued by the Central Board of Direct Taxes makes it clear that no disallowance should be made of the items of which two opinions are possible. In view of these situations, I would conclude that the order of the Commissioner (Appeals) is liable to be confirmed.
18. Since we differ in our views in the case, the hon'ble President is requested to refer the question detailed below to the Third Member for adjudication : "Whether, the Tribunal has power to go beyond or behind the return, accounts or documents, either in allowing or disallowing any such deduction, allowance or relief, while hearing an appeal against an intimation sent under the provisions of Section 143(1) (a) of the Act ?" 19. The appeal of the Revenue and the cross-objection filed by the assessee against the order dated September 5, 2000 of the Commissioner Income-tax (Appeals)-II, Patna, was heard by the Division Bench of the Income-tax Appellate Tribunal, Patna. Since there was a difference of opinion between the Members of the Bench, I was nominated by the hon'ble President as Third Member for disposal of the appeal and the cross-objection in regard to the point of difference.
20. The hearing of the appeal was fixed at Kolkata at the convenience of the assessee as well as that of the Department. However, on the date of hearing, none appeared on behalf of the assessee. I have, accordingly, proceeded ex parte qua the assessee.
21. Standing counsel for the Department appeared. He was heard on November 18, as well as on November 19, 2003. On perusal of the records including the dissenting orders of the learned Members and the contentions advanced on behalf of the Revenue, I proceed to dispose of the points of difference arising in this appeal and the cross-objection.
22. The relevant facts briefly stated are that the assessee had filed return of income on November 25, 1994, claiming a loss of Rs. 7,88,35,461. The Assessing Officer processed the return under Section 143(1) (a) and made a disallowance of Rs. 5,70,12,385 in respect of the following amounts claimed as deduction :"(a) Under Section 43B-Bonus (Provided not paid) 70,000 (b) EPL, DIT insurance and Employer's contribution to 7,055 provident fund (i) IDBI 3,59,51,611 (ii)SIDBI 2,09,83,719 5,69,35,330 ------------- 23. The assessee appealed to the Commissioner of Income-tax (Appeals) 23 and the latter held that the adjustment made by the Assessing Officer under Section 143(1)(a) of the Income-tax Act, 1961 was without jurisdiction. He, accordingly, deleted the adjustment made of Rs. 5,70,12,385 and also deleted the consequential additional tax. The Revenue appealed to the Tribunal on the following ground : "Whether, on the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals) erred in deleting the disallowance of Rs. 5,70,12,385 made by the Assessing Officer by way of prima facie adjustment under Section 143(1) (a) without appreciating the facts in correct perspective and without assigning any cogent reasons." 24. The appeal was heard by the Patna Division Bench of the Tribunal.
The learned Accountant Member proposed an order restoring the addition of Rs. 2,09,83,719 on account of interest in respect of loans from SIDBI and Rs. 8,534 on account of bonus. The learned Accountant Member in his order referred to the decision of the Karnataka High Court in the case of God Granites v. Under Secretary, CBDT [1996] 218 ITR 298 which was cited on behalf of the assessee and pointed out that the decision was inapplicable to the facts of this case. It has been pointed out by the learned Accountant Member that on the basis of the statement of accounts attached to the return, it was evident that the interest claimed by the assessee as a deduction was outstanding as on the close of the previous year and the assessee had not furnished any evidence along with the return to establish that the payments had been made before the time allowed for filing of the return. The learned Accountant Member has pointed out that SIDBI is a financial institution as notified by the Central Government vide S.O. 182 (E) dated December 2, 1991, and, therefore, it falls within Section 43B (clause (d)). The learned Accountant Member took cognizance of the fact that in respect of payment of interest to IDBI of Rs. 3,59,51,611 on making assessment under Section 143(3), the Assessing Officer has found that the payment of interest was made by the assessee before the time allowed for filing of the return and, therefore, the addition was to be deleted, The learned Accountant Member has opined that the appellate authority is entitled to allow relief on the basis of evidence in respect of the payments made by the assessee falling within the ambit of proviso to Section 43B of the Act.
25. The learned Judicial Member, on the other hand, has questioned the view expressed by the learned Accountant Member about the powers of the appellate authority. So, however, he has ultimately not expressed any firm opinion about the view insofar as the parties were not heard on that issue and in view of his decision of upholding the order of the Commissioner of Income-tax (Appeals) on the other grounds, such a discussion according to him was inconsequential.
26. The learned Members after passing a dissenting order made a reference to the hon'ble President identifying the point of difference separately as under : "Whether, the Tribunal has power to go beyond or behind the return, accounts or documents, either in allowing or disallowing any such deduction, allowance or relief, while hearing an appeal against an intimation sent under the provisions of Section 143(1) (a) of the Act?" "Where disallowance by way of adjustment under Section 143(1) (a) was made on account of the provisions of Section 43B on the basis that evidence regarding payments had not been enclosed with the return of income, can the appellate authorities allow relief to the assessee on the basis of evidence of payment subsequently filed ?" 29. In my considered view, the identification of the point of difference does not seem to be in order. The real point of dispute between the Accountant Member and the Judicial Member is as to whether the Assessing Officer was justified in making the adjustment in respect of interest on loans from SIDBI of Rs. 2,09,83,719 and Rs. 8,534 in respect of bonus.
30. In order to appreciate the validity of adjustment made by the Assessing Officer under Section 143(1) (a) in this case, it will be useful to refer to Section 143(1)(a). The section reads as under : "143(l)(a). Where a return has been made under Section 139, the Assessing Officer may, without requiring the presence of the assessee or the production by him of any evidence in support of the return, make an assessment of the total income or loss of the assessee after making such adjustments to the income or loss declared in the return as are required to be made under clause (b), with reference to the return and the accounts and documents, if any, accompanying it, and for the purposes of the adjustments referred to in sub-clause, (iv) of clause (b), also with reference to the record of the assessments, if any, of past years, and determine the sum payable by the assessee or refundable to him on the basis of such assessment." 31. The Central Board of Direct Taxes in its Circular No. 689 dated August 31 24, 1994 (see [1.994] 209 ITR (St.) 75), explained the scope of prima facie disallowance under Section 143(1)(a) of the Income-tax Act. The relevant portion of the circular is reproduced hereunder : "Section 143(1)(a) authorises, with effect from the assessment year 1989-90, inter alia, disallowance of any loss carried forward, deduction, allowance or relief claimed which, on the basis of information available in the return or the accompanying accounts or documents, is prima facie inadmissible. The earlier instructions of the Board were to the effect that no disallowance should be made of items on which two opinions are possible. The matter has been further considered by the Board in the light of the recommendations of the Tax Reforms Committee (see [1992] 197 ITR (St.) 177) headed by Prof. Raja J. Chelliah and it has been decided that prima facie disallowances shall be made only in respect of the following types of claims : (a) an incorrect claim, if such incorrect claim is apparent from the existence of other information in the return or the accompanying accounts or documents...
(b) any claim in respect of which there is an omission of information which is required, under the specific provisions of the Act or the Rules, to be furnished along with the return to substantiate such claim.
If the audit report specified under Section 80HHC(4), which is required to be filed along with the return of income is not so filed, the deduction claimed under that section can be disallowed as a prima facie adjustment. Some more examples in this regard are the non- filing of audit reports or other evidence along with the return of income as required under Sections 12A(b), 33AB(2), 35E(6), 43B (first proviso), 54(2), 54B(2), 54D(2), 54F(4)/ 54G(2). 80HH(5), 80HHA(4), 80HHB(3), 80HHD(6), 80HHE(4), 80-I(7), 80-IA(8) and the like. But if evidence is subsequently furnished, rectification under Section 154 should be carried out to the extent permitted by the Board's Circular No. 669 dated October 25, 1993 (see [1993] 204 ITR (St.) 105). No prima facie disallowance shall, however, be made, if any evidence, required to be filed along with the return of income only in pursuance of the non-statutory guidance notes for filing in the return of income, is not so filed ....
4. The above procedure applies to all returns pending processing under Section 143(1) on the date of issue of this circular." 32. The question in this case is as to whether the adjustment made by the Assessing Officer under Section 143(1) (a) was within his powers under the said section. Reading Section 143(1)(a) in conjunction with the circular of the Central Board of Direct Taxes referred to above, it is evident that the Assessing Officer can make adjustment in respect of any deduction which on the basis of the return of income and accompanying records is prima facie inadmissible. It is not disputed in this case that the return of income was accompanied by the profit and loss account, balance sheet and other statements. In the profit and loss account which is placed on record, the assessee had claimed a deduction on account of interest on loan from IDBI and interest on loan from SIDBI as under : Interest on loan from IDBI 4,21,53,326.23 Interest on loan from SIDBI 2,35,38,791.00 33. From the profit and loss account it is evident that deduction of the above amounts was claimed by the assessee. Now the issue for determination is as to whether on the basis of evidence on record, the Assessing Officer could come to a firm conclusion that the deduction claimed or part of it was inadmissible. In this connection it will be necessary to refer to the balance sheet of the assessee which is placed at page 2 of the paper book. Against the unsecured loans the interest accrued and due on IDBI refinance and SIDBI is disclosed as under : In the profit and loss account the total claim of interest is detailed as under: IDBI 4,21,53,326.23 3,75,40,555 SIDBI 2,35,38,791.00 2,04,84,899 34. It is evident from the facts stated above that out of the claim of interest made by the assessee in the case of IDBI a sum of Rs. 3,59,51,611 (Rs. 4,08,03,419-Rs, 48,51,808) was outstanding as on the end of the previous year and in the case of SIDBI, the total claim of interest outstanding as on the end of the previous year was Rs. 2,09,83,719. From the profit and loss account and the balance sheet it is evident that the above interest payable to IDB1 and SIDBI remained unpaid as on the end of the previous year. It will be relevant to ascertain as to whether such interest was patently disallowable under the provisions of Section 43B. It would, therefore, be necessary to refer to relevant portion of Section 43B as under : "43B. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of- ...
(c) any sum referred to in clause (ii) of sub-section (1) of Section 36, or (d) any sum payable by the assessee as interest on any loan or borrowing from any public financial institution or a State Financial Corporation or a State Industrial Investment Corporation, in accordance with the terms and conditions of the agreement governing such loan or borrowing or ....
shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in Section 28 of that previous year in which such sum is actually paid by him : Provided that nothing contained in this section shall apply in relation to any sum referred to in clause (a) or clause (c)-or clause (d) or clause (e) or clause (f) which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of Section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return." 35. It is not disputed that the payment to IDBI is a payment to the public financial institution. The learned Accountant Member has also pointed out in his order that SIDBI is a financial institution notified by the Central Government vide S.O. No. 182(E) dated December 2, 1991.
Therefore, interest payments to the above institutions clearly fall within the ambit of Section 43B(d). As already pointed out, the claim of interest made by the assessee to the extent it was not paid by the end of the previous year was outstanding in the balance sheet. There is no scope for any debate or argument in regard to the applicability of the provisions of Section 43B in respect of unpaid interest out of the interest debited to the profit and loss account. The assessee having claimed deduction on the basis of the accrual, the disallowance under Section 43B is clearly warranted. The deduction claimed by the assessee is prima facie inadmissible. In applying Section 43B, we have not to overlook the proviso to Section 43B. The said proviso has been quoted above. The effect of the proviso is to exclude such amounts of payments from the operation of the main provisions of Section 43B which are made before the time allowed for filing of the return of income for the relevant previous year. This is subject to a condition that the evidence of such payment is furnished by the assessee along with the return. So, the proviso to Section 43B would be attracted if two conditions are satisfied. One is that the amount which was outstanding as on the end of the previous year has been paid before the time allowed for filing of the return of income. The second condition to be satisfied for applicability of the proviso to Section 43B is that the evidence of such payments is furnished by the assessee along with the return. Presently it is nobody's case that the assessee had furnished any evidence along with the return evidencing the payments made out of the interest that remained unpaid as at the end of the previous year.
36. Now it will be easy to appreciate as to whether the Assessing Officer was empowered to make an adjustment under Section 143(1)(a). I have quoted Section 143(1) (a) as well as the Central Board of Direct Taxes Circular No. 689 (see [1994] 209 ITR (St.) 75), elsewhere in this order. The assessee had made the claim of deduction in the profit and loss account in contravention of the provisions of Section 43B. The incorrectness of the claim was evident from the information in the return and the accompanying accounts in documents. The adjustment under Section 143(1) (a) was thus permissible. As per the Central Board of Direct Taxes circular in respect of claims under Section 43B, etc., if the requisite evidence is not attached to the return of income the Board has expressed the view that a prima facie adjustment would be admissible. It has, however, been pointed out as per the earlier Circular No. 669, dated October 25, 1993 (see [1993] 204 ITR (St.) 105), in case the evidence is furnished by the assessee subsequently, the Assessing Officer shall rectify the intimation and allow relief to the assessee. Thus when Section 43B is read in conjunction with Section 143(1)(a) and the Central Board of Direct Taxes circular referred to above, it becomes abundantly clear that in case the assessee does not furnish evidence along with the return in regard to the payments made, if any, before the due date of filing of the return out of the unpaid interest, bonus, etc., the assessee shall not be entitled to the benefit of the proviso to Section 43B. The Assessing Officer was thus right in law to make the adjustments by invoking the provisions of Section 43B. I do not agree with the learned Judicial Member that the issue as to whether the provisions of Section 43B were attracted in this case or not was debatable. The decisions relied upon by the learned Judicial Member are applicable in such cases where the allowability of the claim made by the assessee is itself debatable or is dependent on further enquiry which the Assessing Officer is required to make in regard to such a deduction. In this case Section 43B was clearly attracted and there was no evidence on record to allow the benefit of the proviso to Section 43B to the assessee. Therefore, the Assessing Officer was within his powers to make the adjustments.
Subsequently assessment under Section 143(3) has been made in this case and the assessee has furnished evidence in regard to the payments of interest to IDBI. On verification of the claim of the assessee, the disallowance in regard to the interest payment to IDBI has not been made in the assessment under Section 143(3). As per the Central Board of Direct Taxes Circular No. 689 (see [1994] 209 ITR (St.) 75) referred to elsewhere in this order, where reference has been made to a Circular No. 669 (see [1993] 204 ITR (St.) 105) by which the Assessing Officer is required to modify the intimation on furnishing of evidence of the payments falling within the ambit of the provisions of Section 43B. The learned Judicial Member has questioned the action of the learned Accountant Member of allowing relief to the assessee in regard to the payments verified by the Assessing Officer during the course of the proceedings under Section 143(3). In my considered view whether the appellate authority had power or not in entertaining fresh evidence is an area which need not be explored for the purpose of the present controversy. The learned Judicial Member has himself pointed out in his order that the appellate authority can do what the Assessing Officer can do. To that extent the power of the appellate authority has been recognized by the learned Judicial Member. Since in this case the Assessing Officer was required to rectify the adjustment/intimation under Section 143(1) (a) on production of evidence before him, the Commissioner of Income-tax (Appeals) or the Appellate Tribunal cannot be said to have exceeded the powers when such a power could be exercised by the Assessing Officer himself. There is nothing wrong in my view in giving relief to the assessee in respect of the payments falling within the proviso to Section 43B by the Tribunal on the basis of the order under Section 143(3). It may also be pertinent to mention that before its omission with effect from June 1, 1999, Section 143(1A) also provided for adjustment of additional tax on the basis of any order under Sections 143(3), 154, 250, etc. Therefore, I do not agree with the learned Judicial Member that the learned Accountant Member had exceeded his jurisdiction by deleting the adjustment in respect of the payments covered under proviso to Section 43B on the basis of evidence produced by the assessee subsequently in assessment under Section 143(3).
37. In regard to the interest debited in the profit and loss account as payable to SIDBI, the assessee has neither made any payment before the end of the previous year nor before the due date of filing of the return for the respective assessment year. I am, therefore, of the considered view that the disallowance of interest debited in the profit and loss account of Rs. 2,09,83,719 as payable to SIDBI was a claim made by the assessee which was clearly disallowable. The inadmissibility of the claim was apparent from record and free from any doubt or debate. Similarly, in regard to the payment of bonus the claim was inadmissible on the basis of the statement of accounts and since part of the payment was found to have been made within the due date of filing of the return, the learned Accountant Member was justified to retain the adjustment to the extent of Rs. 8,534 only out of the adjustment of Rs. 70,000 made by the Assessing Officer.
38. I, therefore, concur with the view expressed by the learned Accountant Member and as per this order, the adjustment of Rs. 2,09,83,719 on account of unpaid interest to SIDBI and Rs. 8,534 on account of unpaid bonus are restored. As a result of this order, the order of the Commissioner of Income-tax (Appeals) shall be modified accordingly.
39. Let the matter be placed before the regular Bench for passing the consequential order in accordance with the majority view.