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Issues Involved:
1. Whether the AAC was justified in admitting the appeal against the assessment order under section 143(1). 2. Whether the ITO's adjustments under section 143(1) were permissible. 3. Whether the ITO's action of taking the status as AOP with unspecified shares was permissible under section 143(1). 4. Whether the AAC was justified in directing the ITO to charge tax under sections 161/166. Detailed Analysis: 1. Admissibility of Appeal Against Assessment Order under Section 143(1) The primary issue was whether the AAC was justified in admitting the appeal against the assessment order under section 143(1). The AAC held that the appeal was maintainable based on several legal provisions and decisions, including the Supreme Court's decision in CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225. The AAC reasoned that the order is appealable when the assessee denies liability to be assessed to tax. However, the Tribunal majority opinion, led by the Accountant Member, disagreed, stating that no appeal lies against an order under section 143(1) as per section 246 of the IT Act, 1961. The Tribunal emphasized that the correct remedy for the assessee was to file an objection under section 143(2) within one month from the date of service of the notice of demand. 2. Permissibility of ITO's Adjustments under Section 143(1) The AAC held that the jurisdiction of the ITO under section 143(1) is very limited, and adjustments are confined to those specified in section 143(1)(b). The ITO's action of making adjustments beyond this scope, including changing the status to AOP with unspecified shares, was deemed impermissible. The Tribunal majority opinion concurred that the ITO exceeded his jurisdiction by making adjustments not specified in section 143(1)(b). The Tribunal noted that such actions should have been addressed through the objection process under section 143(2). 3. Status as AOP with Unspecified Shares The AAC found that the ITO's action of taking the status as AOP with unspecified shares was not permissible under section 143(1). The Tribunal majority opinion supported this view, emphasizing that the ITO's jurisdiction under section 143(1) is limited to specific adjustments and does not include changing the status of the assessee. The Tribunal concluded that the ITO's actions were beyond the scope of section 143(1) and should have been contested through the appropriate procedural channels. 4. Direction to Charge Tax under Sections 161/166 The AAC directed the ITO to charge tax according to the provisions of sections 161 and 166, as claimed by the appellant. The Tribunal majority opinion found this directive inappropriate, given that the appeal itself was not maintainable. The Tribunal held that the AAC should not have entertained the appeal and that the correct procedure was for the assessee to file an objection under section 143(2). Separate Judgment by Judicial Member The Judicial Member dissented, arguing that any assessment order exceeding the adjustments specified in section 143(1)(b) is not an assessment under section 143(1) and is therefore appealable. The Judicial Member emphasized that such orders violate natural justice principles and are appealable under clause (c) of section 246(1). The Judicial Member upheld the AAC's decision, asserting that the ITO's actions were beyond the permissible scope and that the assessment order was rightly appealable. Third Member's Opinion The Third Member agreed with the Judicial Member, stating that the ITO's actions, which included changing the status and applying different tax provisions, were beyond the jurisdiction conferred by section 143(1). The Third Member concluded that the assessment was not made under section 143(1) and was therefore appealable. The matter was referred back to the regular Bench for decision according to the majority opinion. Conclusion The Tribunal majority opinion vacated the AAC's order, ruling that the appeal against the assessment order under section 143(1) was not maintainable. The Judicial Member's dissent and the Third Member's concurrence highlighted the limitations of the ITO's jurisdiction under section 143(1) and supported the appeal's maintainability. The final decision was to refer the matter back to the regular Bench for resolution based on the majority opinion.
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