TMI Blog2001 (2) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... n February 28, 1991. The assessee submitted its reply on March 21, 1991, taking the stand that there was no scope for taking any action under section 154. On March 27, 1991, a revised return was filed by the assessee. Rejecting the assessee's plea that after issuance of notice under section 143(2) of the Act, as well as on the facts, there was no case for resorting to section 154, an order under section 154 was passed. In the order under section 154, the Income-tax Officer decided the question as to how profits under section 115J of the Act was to be undertaken and passed an order determining the taxable book profit of Rs. 8,58,21,204. It was held that there was a mistake which was apparent from the record and rectifiable under section 154. The assessee filed an appeal before the Commissioner of Income-tax (Appeals) (in short, the CIT(A)). The said authority held that the matter was not one which involved any interpretation of law but one of inclusion or non inclusion of certain items for calculating the book profit under section 115J. As the language of section 115J is very clear, regarding the items to be included and not to be included for working out the book profit, when a par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the book profit under section 154/143(1)(a) for the purpose of section 115J in the light of the fact that notice under section 143(2) had already been issued ? (g) Whether the Income-tax Appellate Tribunal is correct in law in holding that once notice under section 143(2) has been issued, recourse to section 154 is not warranted ? (h) Whether sections 154 and 143(2) ire mutually exclusive or not ? (i) Whether the interpretation put forward by the Assessing Officer with reference to computation of book profits under section 115J is correct ? (j) Whether principles of natural justice are violated if recourse to section 154 is taken and to rectify intimation under section 143(1)(a) when proceedings under section 143(2) are going on ? According to learned counsel for the Revenue, the Tribunal fell into grave error in holding that after notice under section 143(2) has been issued, there was no scope for rectifying the intimation under section 143(1) of the Act. Section 143(1) as it stood before and after amendment with effect from June 1, 1999, read as follows : After amendment : "143. Assessment.--- (1) Where a return has been made under section 139, or in response to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment. (4) Where a regular assessment under sub-section (3) of this section or section 144 is made, --- (a) any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessment ; (b) if no refund is due on regular assessment or the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly." Before amendment : Section 143(1) as it stood at the point of time when the intimation was given under the said provision, under section 139, or in response to a notice under sub-section (1) so far as relevant, read as follows : "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 254D, passed subsequent to the filing of the return referred to in cause (a), there is any variation in his share in the income or loss of the firm, association or body, 4s 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer shall, if he considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not underpaid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return : Provided that no notice under this sub-section shall be served on the assessee after the expiry of the financial year in which the return is furnished or the expiry of six months from the end of the month in which the return is furnished, whichever is later. (3) on the day specified in the notice issued under sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing officer shall, by an order in writing, make an assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... They were as follows : (b) an arithmetical errors in the return, accounts and documents accompanying it were to be rectified ; (c) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, was prima facie admissible, but which was not claimed in the return, was to be allowed ; (d) any loss carried forward, relief claimed in the return, which, on the basis of the information as available in such return, accounts or documents were prima facie inadmissible, was to be disallowed. One thing further to be noticed is that intimation under section 143(1)(a) is given without prejudice to the provisions of section 143(2). Though technically the intimation issued was deemed to be a demand notice issued under section 156, that did not per se preclude the right of the Assessing Officer to proceed under section 143(2). That right is preserved and is not taken away. Between the period from April 1, 1989, to March 31, 1998, the second proviso to section 143(1)(a), required that where adjustments were made under the first proviso to section 143(1)(a), an intimation had to be sent to the assessee, notwith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yer". In the scheme of things, as noted above, the intimation under section 143(1)(a) cannot be treated to be an order of assessment. The distinction is also well brought out by the statutory provisions as they stood at different points of time. Under section 143(1)(a) as it stood prior to April 1, 1989, the Assessing Officer had to pass an assessment order if he decided to accept the return, but under the amended provision, the requirement of passing of an assessment order has been dispensed with and instead an intimation is required to be sent. Various circulars sent by the Central Board of Direct Taxes spell out the intents of the Legislature, i.e., to minimize the Departmental work to scrutinize each and every return and to concentrate on selective scrutiny of returns. These aspects were highlighted by one of us (D. K. Jain J.) in the case of Apogee International Ltd. v. Union of India [1996] 220 ITR 248 by this court. It may be noted that under the first proviso to the newly substituted section 143(1), with effect from June 1, 1999, except as provided in the provision itself, the acknowledgment of the return shall be deemed to be intimation under section 143(1) where (a) eithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat makes the position clear that even when intimation under section 143(1) has been given yet proceedings for assessment under section 143(3) can be initiated by issuance of notice under section 143(2). The order under section 154 of the Act was passed after issuance of notice under section 143(2) and during the pendency of the proceedings for assessment under section 143(3). The order under section 154 was passed on March 9, 1992, while the order under section 143(3) was passed on March 27, 1992. We have made distinction between an intimation under section 143(1) and an order issued under section 143(3) . The above being the position, if any change is permissible to be effected, the same can be done in the assessment under section 143 of the act and not by exercising power under section 154 of the Act. We do not think it necessary to go into the question whether rectification that was done by the Assessing Officer could be termed to be a mistake apparent from the record. The scope and ambit of section 154 has been examined in several cases. We may just note that the Commissioner of Income-tax (Appeals) himself was not very sure as to whether the so-called mistake was one which co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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