EASTER INDUSTRIES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) Easter Industries Limited has filed the present writ petition impugning three adjustments made by the Assessing Officer under Section 143(1)(a) of the Income Tax Act, 1961 (for short, "the Act") in the return of income for the assessment year 1989-90. The three adjustments made by the order dated 15.3.1990 are as under:- <FRM>JUDGEMENT_1910_ILRDLH22_2012_1.html</FRM>

(2.) With regard to the third adjustment, we find that the assessee along with the return had filed details of statutory dues as on 31.3.1989. The assessee had also filed details of payments made thereafter from 1.4.1989 till the date of filing of the return on 28.12.1989. The assessee in the form of a chart had given details of payments made to provident fund trust and also the sales tax dues. The total amount paid between 1.4.1989 till the date of filing of the return is as under: <FRM>JUDGEMENT_1910_ILRDLH22_2012_2.html</FRM>

(3.) There was debate whether the third addition could have been made by the Assessing Officer under Section 143(1)(a), but we need not examine this aspect as the addition itself under Section 43B is not justified and cannot be sustained. Section 43B was inserted in the statute in 1.4.1984 and thereafter the first proviso was inserted by Finance Act, 1887 which came into force with effect from 1.4.1988. Subsequently, explanation (ii) added to the Finance Act, 1989 with retrospective effect from 1.4.1984. Examining the purport of the first proviso of Section 43 B in Allied Motors (P) Ltd. v. CIT, 1997 224 ITR 677, it has been held by the Supreme Court that the first proviso to Section 43B has to be treated as retrospective and should be read as a part of the Act with effect from 1.4.1984 itself. The Supreme Court observed that the amendment would not serve its objective unless it is construed as retrospective. Without first proviso, and explanation 2 would not obviate the hardship of Section 43B. The proviso supplies an obvious omission.