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Issues involved: Challenge to intimation received u/s 143(1)(a) of the Income-tax Act, 1961 regarding payment demand of Rs. 20,243. Interpretation of provisions of sections 143(1)(a) and 167B of the Act.
Judgment Details: Challenge to Intimation u/s 143(1)(a): The petitioners challenged the intimation received u/s 143(1)(a) of the Income-tax Act, arguing that the Income-tax Officer exceeded jurisdiction by varying the rate of tax beyond the limits set by the section. The Department defended the assessment, stating that the application of the maximum marginal rate was justified due to unknown shares of members in the assessee's case, as per section 167B of the Act. The Department also pointed out the availability of an alternative remedy u/s 154 of the Act for the petitioner. Interpretation of Section 143(1)(a): Section 143(1)(a) allows for adjustments based on the return filed, with specific exceptions granting jurisdiction to the Income-tax Officer. The third exception permits disallowance of items prima facie inadmissible, such as loss carried forward, deductions, allowances, or relief claimed. The application of a different tax rate does not fall under these categories, raising questions on whether it constitutes "relief claimed in the return." The term "prima facie" implies indisputable items, excluding matters open to debate. The judgment highlighted the need for clear reasons and opportunities for the assessee when applying provisions like section 167B. Conclusion: The Court quashed the intimation sent by the Income-tax Officer, directing a proper assessment u/s 143(3) after providing the assessee with an opportunity. The judgment emphasized the restricted powers of the Income-tax Officer under section 143(1)(a) and the importance of adhering to the statutory provisions for fair assessments and minimizing disputes. Outcome: The writ petition was allowed without costs.
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