Income-tax---

----Assessment---Adjustment under S. 143(1)(a), Indian Income Tax Act, 1961---Scope of---Delay in completion of sale---Compensation paid by vendor to assessee cannot be added to income of assessee under S.143(1)(a)---Indian Income Tax Act, 1961, S.143(1)(a)----Constitution of India, Art.226.

The Assessing Officer had issued an intimation under section 143(1)(a) of the Income Tax Act, 1961, to the assessee in respect of the assessment year 1990-91 adding a sum of Rs.2,25,000. This sum represented the compensation received by the assessee from the vendor for delay in completing the sale of office premises by the vendor. On a writ petition against the intimation:

Held, that, under section 143(1)(a), proviso, clause (iii), in computing tax payable by, or refundable to, the assessee, 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. The present adjustment did not fall within the parameters of this proviso. The intimation and the consequent claim for additional tax were not valid and were liable to be quashed.

Khatau Junkar Ltd. v. K.S. Pathania (1992) 196 TTR 55 (Bom.) fol.

N.A. DaM with B.D. Damodar instructed by Messrs Kanga & Co. for Petitioners.

G.S. Jetly with P.S. Jetly and Mrs. Manjela Singh for Respondents.

JUDGMENT

MRS. SUJATA MANOHAR, J.---This petition challenges the validity of an intimation dated February, 20, 1991, issued under section 143(1)(a) of the Income Tax Act, 1961. The relevant assessment year is 1990-91. By this intimation, the first respondent has adjusted the total income returned by the petitioners by adding a sum of Rs.2,25,000.

In January, 1989, the petitioners had entered into an agreement with one Jayantilal Mohanlal Shah for purchase of office premises at Nariman Bhavan for a consideration of Rs.1,75,00,000. Under the terms of the agreement, the sale was to be completed, in any event, not later than April 30, 1989. The sale, however, was completed on November 15, 1989. In respect of this delay in completion of the sale, by an agreement between the parties, the petitioners were paid by the vendor a sum of Rs.2,25,000. The first respondent has sought to add the sum of Rs.2,25,000 to the income of the petitioners for the assessment year 1990-91.

Under section 143(1)(a), proviso, clause '(iii), in computing the tax payable by, or refundable to the assessee, 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. The present adjustment does not fall within the parameters of this proviso. (See in this connection a decision by a Division Bench of this Court to which one of us (Mrs. Sujata Manobar, J.) was a party in the case of Khatau Junkar Ltd. v. K.S. Pathania (1992) 196 ITR 55. The first respondent, therefore, had no jurisdiction to adjust the sum of Rs.2,25,000 at the stage of intimation under section 143(1)(a) of the Income Tax Act, 1961. The intimation dated February 20, 1991, is, therefore, set aside. The claim for additional tax under section 143(1A) is also set aside and the respondents are directed to send a fresh intimation under section 143(1)(a) in accordance with law and in the light of the ratio of the above judgment.

Rule is made absolute accordingly.

M.B.A:/204/T.F.Rule made absolute.