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Issues Involved:
The issues involved in the judgment are the challenge to notices issued by income tax authorities under section 143(2) of the Income-tax Act, the interpretation of section 143(1)(a)(i) regarding assessment procedures, the implications of an intimation deemed as a notice of demand under section 156, and the legality of the provisions of section 143(1)(a)(i) in relation to natural justice principles. Interpretation of Section 143(1)(a)(i): The petitioners challenged the notices issued under section 143(2) of the Income-tax Act, arguing that the intimation sent to them under section 143(1)(a)(i) after due assessment based on their returns should preclude further proceedings akin to reassessment under sections 147 and 148. However, the court held that the provision of section 143(1)(a)(i) is "Without prejudice" to subsection (2), preserving the authority's right to proceed with assessment under section 143(2) despite the intimation of tax payable. The court emphasized that the purpose of deeming the intimation as a notice of demand under section 156 is to apply the machinery provision of tax recovery, without limiting the authority's power to conduct assessments under section 143(2). Implications of Deemed Notice of Demand: The court rejected the argument that the intimation under section 143(1)(a)(i) should conclude assessment proceedings, subject only to reopening under section 147, emphasizing that the intimation being deemed as a notice of demand under section 156 does not restrict the authority from proceeding under section 143(2) for a regular assessment. The court clarified that the intimation's purpose is to make tax recovery provisions applicable and does not limit the authority's assessment powers. Legality of Section 143(1)(a)(i) in Relation to Natural Justice: Regarding the contention that section 143(1)(a)(i) is ultra vires due to contravening natural justice principles by not providing an opportunity to address adverse consequences before issuing the intimation, the court reasoned that the intimation is based on the assessee's own return. Only apparent arithmetical errors or clear adjustments can be made at this stage, without adjudicating on debatable issues. The court dismissed this argument, stating that the intimation process does not violate natural justice principles as it is limited to correcting evident errors based on the information accompanying the return. In conclusion, the court dismissed the petition based on the above interpretations and reasoning, upholding the authority's right to proceed with assessments under section 143(2) despite the intimation of tax payable under section 143(1)(a)(i).
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