HIGH COURT OF KERALA
P.P. Abdul Khader & Co.
Commissioner of Income-tax, Calicut
WP(C) NO. 14272 OF 2005
Date of Pronouncement – 17.01.2013
1. Heard the learned counsel for the petitioner and the learned standing counsel for the respondents.
2. Petitioner is a partnership firm of four partners engaged in civil and electrical contract works. Concerning the assessment year 1995-96, return was filed by the firm on 28/9/95. The return was processed under Section 144 of the Income Tax Act and the taxable income was determined at Rs. 35,930/-. Subsequently, they were issued Ext.P4 notice dated 11/9/96 under Section 143(2) of the Act requiring them to attend the office of the assessing officer to clarify the points mentioned therein.
3. Accordingly, the petitioner appeared and was also heard. Petitioner says that in pursuance to Ext.P4, Ext.P5 rectified assessment order was passed determining total income at Rs. 1,36,500/-. In this order, interest paid by them on capital deposit and remuneration paid to the partners were disallowed. They filed an appeal against Ext.P5 which was allowed by Ext.P6 order of the appellate authority.
4. It is stated that subsequently they were issued Ext.P7 notice requiring them to produce the chalans evidencing payment of tax due as per Exts.P5 and P6. However, without any further notice, by Ext.P8 order, the assessing officer completed the assessment under Section 144 of the Act determining the total taxable income at Rs. 1,36,500/-. Consequently, Ext.P9 order was passed under Section 154 and Ext.P10 order was also passed by the 2nd respondent giving effect to Ext.P6.
5. Aggrieved by Exts.P8 and P9, petitioner filed Ext.P11 revision under Section 264 of the Income Tax Act with an application to condone the delay. That revision was dismissed by Ext.P12 order. In Ext.P12 order, it is held that the assessment evidenced by Ext.P8 is the scrutiny assessment order under Section 144, which according to the revisional authority is independent of the previous assessment under Section 143(1)(a). The disallowance of the interest paid on capital deposit and the remuneration paid to the partners is also sustained by the revisional authority relying on Section 184(5) which states that, if a firm is assessed as an Association of Person, interest on capital and salary to partners cannot be allowed as deduction. In this writ petition, petitioner challenges Exts.P8, P10 and P12.
6. The contention raised by the counsel for the petitioner are mainly three fold. First contention is that no notice under Section 143(2) was issued to the petitioner before completing the scrutiny assessment as per Ext.P8. It is also contended that Ext.P8 assessment under Section 144 could have been completed only if the circumstances specified in Section 144(1) (a) to (c) are present. According to the learned counsel, these circumstances are absent in this case and therefore also the assessment could not have been completed under Section 144. Yet another contention raised by the learned counsel for the petitioner is that, even if it is permissible to initiate assessment under Section 144, such an assessment could have been completed only by issuing a notice as provided under the proviso to Section 144(1). Counsel submits that this notice was also not issued to the petitioner.
7. Having heard the learned counsel for the petitioner and also the learned standing counsel appearing for the Revenue, I am not satisfied that the petitioner is entitled to succeed. In so far as the absence of notices under Section 143(2) and the proviso to Section 144(1) which is canvassed before this Court are concerned, a reading of Ext.P12 order passed by the Revisional Authority shows that such a contention was never urged by the petitioner before the revisional authority. Similarly the inapplicability of Section 144 for want of the circumstances specified in Section 144(1) (a) to (c) which is also canvassed before this Court is also not seen urged before the revisional authority. Therefore, these contentions are urged before this Court for the first time. A contention which was not urged before the statutory authorities and which the authority had no occasion to deal with, cannot be allowed to be raised for the first time before this Court. Therefore, I am not inclined to take cognizance of these arguments raised by the learned counsel for the petitioner and invalidate the impugned proceedings.
8. Moreover, on facts, it is also seen that by Ext.P4 notice, the petitioner was informed that there are certain points to be clarified in connection with the returns filed by them. Accordingly, they were required to attend the office of the assessing officer with documents, accounts and other evidence to support the return filed. This notice is a notice under Section 143(2). In so far as the proviso to Section 144(1) is concerned, Ext.P7 notice shows that the petitioner was informed that the assessment is posted for hearing to 11/2/97. Therefore, Ext.P4 is a notice under Section 143(2) and Ext.P7 is a notice under the proviso to Section 144(1). Therefore, the absence of the statutory notices canvassed by the learned counsel for the petitioner is clearly erroneous.
9. For these reasons, I am not satisfied that the petitioner has made out a case justifying interference.
Writ petition fails and is dismissed.