TMI Blog2007 (12) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, "the Act"), has referred the following question of law, which is claimed to have arisen from the order dated April 12, 1994, passed in I.T.A. No. 527(ASR)/1993, in respect of the assessment year 1989-90 "Whether, on the facts and in the circumstances of the case, the Tribunal is right in cancelling the order under section 263 passed by the Commissioner of Income-tax on March 10, 1993, ignoring the provisions of section 143 of the Income-tax Act relating to the assessment procedure ?" 3. The assessee is a private limited company deriving income from contract work. It had filed its return on October 4, 1990, declaring an income of Rs. 35,470. As per the statement of case, the assessment was completed by the Assessing Officer under section 143(1) (a) of the Act on December 12, 1990. Subsequently, the Commissioner of Income-tax noticed that the assessee was not maintaining day-to-day record of consumption of raw material and work-in-progress, etc. He, therefore, observed that the provisions of section 145(1) of the Act were attracted in the case of the assessee and the income was liable to be computed by applying the net profit rate of 10 per cent. on the total receipts witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regular assessment. Learned counsel has insisted that the only requirement of section 263 of the Act is that the proceedings before the Assessing Officer must be prejudicial to the interests of the Revenue and any conclusion in the form of order or otherwise must be erroneous. He has further submitted that in any case an order made in the proceedings without even attempting to assess the income would still be an order made in the assessment proceedings, inasmuch as, the intimation that a certain amount is found due and payable by the assessee or the assessee was entitled to return of certain amount paid as tax would definitely be an order under which the tax demand is quantified or the amount of the tax to be determined. In such a case, no further proceedings would be necessary and the return is to be accepted under section 143(1)(a) of the Act. The issuance of intimation also partakes of the character of a decision, inasmuch as, the return filed is accepted and no amount of tax is recoverable or refundable or vice versa. According to learned counsel, such an intimation and acknowledgment are definitely an order. Mr. Sanjiv Bansal, learned counsel for the Revenue, wanted us to rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpression "erroneous". He has also highlighted that section 263 of the Act contemplates that an order sought to be revised by the Commissioner should have been passed in any proceedings under the Act. The expression "proceedings" has also not been defined. Learned counsel has pointed out that the word "order" in a common parlance means"a direction or command at the instance of an authority, court or tribunal". It is a formal expression of adjudication resulting in a decision at the hands of an Assessing Officer. According to Shorter Oxford Dictionary , the word "proceeding" means "the formal manner in which legal proceedings are conducted". Likewise, in Black's Law Dictionary (with pronunciations) Sixth edition, the expression "proceeding" has been defined to mean "any action, hearing, investigation, inquest, or inquiry (whether conducted by a court, administrative agency, hearing officer, arbitrator, legislative body, or any other person authorised by law) in which, pursuant to law, testimony can be compelled to be given". If there is no proceeding then there cannot be any order. He has insisted that once there is no order then the act of issuing intimation must be construe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 263 of the Act. On the basis of his submission, learned counsel has submitted that the view taken by the Bombay High Court in the cases of Anderson Marine and Sons P. Ltd . [2006] 266 ITR 694 and Rajkumar Dip chand Phade [2001] 249 ITR 520 as well as that of the Madras High Court in the cases of Smt. R. G. Umaranee [2003] 262 ITR 507 (Mad) and Chidambaram Construction Co . [2003] 261 ITR 754, is not correct view on principles and precedents. 7. We have thoughtfully considered the submissions made by learned counsel for the parties and are of the view that the question of law referred to for our opinion has to be answered in favour of the assessee and against the Revenue. We are of the considered view that the omission of the expression "intimation" from section 263 of the Act establishes the intention of Parliament to limit the power of revision of a Commissioner of Income-tax only to cases where an order has been passed. A plain reading of section 263 of the Act would alone be sufficient to reach the aforementioned conclusion. A perusal of section 263 of the Act brings out that the Legislature never intended to clothe the Commissioner with the powers of revision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Assessing Officer proceeds on his opinion on the basis of the return filed by the assessee. The very fact that no opportunity of being heard is given under section 143(1) (a) indicates that the Assessing Officer has to proceed accepting the return and making the permissible adjustments only. As a result of insertion of the Explanation to section 143 by the Finance (No. 2) Act of 1991 with effect from October 1, 1991, and subsequently with effect from June 1, 1994, by the Finance Act, 1994, and ultimately omitted with effect from June 1, 1999, by the Explanation as introduced by the Finance (No. 2) Act of 1991 an intimation sent to the assessee under section 143(1)(a) was deemed to be an order for the purposes of section 246 between June 1, 1994, and May 31, 1999, and under section 264 between October 1, 1991, and May 31, 1999. It is to be noted that the expressions 'intimation' and 'assessment order' have been used at different places. The contextual difference between the two expressions has to be understood in the context the expressions are used. Assessment is used as meaning sometimes 'the computation of income', sometimes 'the determination of the amount of tax pay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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