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2017 (1) TMI 1264 - KERALA HIGH COURT

2017 (1) TMI 1264 - KERALA HIGH COURT - TMI - Revision u/s 264 in favor of assessee - scope of revisional power of the Commissioner under Section 264 - Held that:- A mere intimation does not amount to an order which could be revised under Section 264. In Parekh Brothers (1983 (8) TMI 17 - KERALA High Court ), the question which was considered was whether Section 264 can be invoked for the purpose of making a claim of deduction under Section 35B. - The argument that independent of the notice .....

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tained by the Commissioner under Section 264. Viewed in that angle, it is of the view that though not as a challenge to Section 143(1) notice, when the petitioner has filed a revised return and has sought for interference by the Commissioner, necessarily the claim has to be considered in accordance with law. - Thus taking cue from Parekh Brothers (supra), the Commissioner will be justified in considering the claim for deduction by the petitioner in accordance with law under Section 264 of th .....

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revision filed by the assessee. Petitioner also seeks for a direction to hear him and pass appropriate orders. 2. The short facts involved in the writ petition would disclose that the petitioner is a society registered under the Travancore Cochin Literary Scientific and Charitable Societies Registration Act, 1955. Return was filed for the assessment year 2013-14 on 26/12/2013 showing the taxable income of ₹ 3,03,183/-. Petitioner received an intimation under Section 143(1) of the Income T .....

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2/2015 for non payment of the outstanding amount of ₹ 2,85,190/-. Petitioner sent a reply requesting to consider his revised return. Since there was no response, he filed a revision petition under Section 264 of the Act (Ext.P12). It was heard by the Principal Commissioner of Income Tax Kochi on 23/3/2016 and by Ext.P1 order dated 28/3/2016, he declined to exercise the revisional authority. 3. The main contention urged by the petitioner is that revenue has assessed the petitioner to tax wi .....

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een cited which are dealt hereunder:- 5. In Parekh Brothers v. Commissioner of Income Tax [1983 (15) Taxman 539 (Kerala)], a Division Bench of this Court had occasion to consider a question regarding the scope of revisional power of the Commissioner under Section 264 of the Income Tax Act, 1961. After an evaluation of the various judgments, it was held that even though a mistake was committed by the assessee and it was detected by him after the order of assessment, and the order of assessment is .....

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o entertain a revision under Section 264. 6. In S.R.Koshti v. Commissioner of Income Tax [2005 (146) Taxman 335 (Guj.)], a Division Bench of the Gujarat High Court held that an intimation under Section 143(1) of the Act is not an order of assessment. However, regardless of whether revised return was filed or not, once an assessee is in a position to show that he had been over assessed under the provisions of the Act, regardless of whether the over assessment is a result of assessee's own mis .....

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1), or in pursuance of a notice issued under sub section (1) of Section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of assessment, whichever is earlier. It was held that the revised return submitted by the petitioner was within time and therefore he was entitled for refund of the TDS already deposited with the Department. 8. Yet another j .....

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y Gupta. v. Commissioner of Income Tax [2016 (238) Taxman 505 (Delhi)], held that intimation under Section 143(1) is regarded as an order for the purpose of Section 264 and therefore an application under Section 264 is maintainable against such an intimation. 10. In Larsen and Toubro Ltd v. Asst. Commissioner of Income Tax [2010 (190) Taxman 373 (Bombay)], it was held that rejection of an application under Section 197 amounts to an order and the expression order for the purpose of section 264 ha .....

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unts to an order of assessment. It is held that the expression assessment is clearly referrable to sections 143, 144 and 147 of the Act. A proceeding under Section 143(1)(a) does not result in an order of assessment. For the purpose of Sections 154, 246 and 264, proceeding under 143(1)(a) is treated as an order by the assessing authority. However, the intimation given under Section 143(1)(a) cannot be treated to be an order of assessment. It is only to be deemed as an order for the limited purpo .....

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nt, it is held that an intimation under 143(1)(a) is deemed to be an order for the limited purpose of Section 264 of the Act as well. 12. In Asst. Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers Private Ltd (2007 (291) ITR 500 SC), the Apex Court had occasion to consider the scope of Section 143(1) (a). It was observed that as a result of the insertion of Explanation to Section 143 by the Finance Act, 1991 from October 1st 1991 and subsequently with effect from 1st June, 1994 by the F .....

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le and sometimes the whole procedure laid down in the Act for imposing liability upon the tax payer . It is held that in the scheme of things, the intimation under Section 143(1)(a) cannot be treated to be an order of assessment. 13. Coming back to the facts, Ext.P7 is the intimation received by the petitioner under Section 143(1) of the Act. Pursuant to Ext.P7, petitioner submitted Ext.P8 reply on 11/12/2014 indicating that receipt of ₹ 7,63,800/- consists of voluntary contribution of  .....

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cordingly a rectified return had been furnished as Ext.P9. Ext.P12 dated 22/4/2015 is the revision filed before the Commissioner. The Commissioner in Ext.P1 observed that intimation under Section 143(1) is not an order of assessment for the purpose of Section 264 whereas it is deemed to be a notice of demand under Section 156 as held by the Karnataka High Court in Avasaraja Automation Ltd. v. Deputy Commissioner of Income Tax (2004 (269) ITR 163). 14. The power of the Commissioner of Income Tax .....

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n has been furnished or in response to a notice under Section 142(1), the assessing officer has reason to believe that any claim of loss exemption, deduction, allowance or relief made in the return is inadmissible, it is open for him to serve on the assessee a notice specifying particulars of such claim, loss, exemption, etc. and after conducting such enquiry in terms with sub section (2), the assessing officer can pass an order under Section 143(3). It is in the light of the aforesaid change in .....

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under Section 143(1) was deemed to be an order for the purpose of Section 264 at some point of time. This aspect of the matter has been explained by the Kerala High Court in K.V.Mankaram and Co (supra), wherein, it was held that a proceeding under Section 143(1)(a) is treated as an order by the assessing authority for the purpose of Section 264. The Division Bench was considering the question relating to assessment year 1995-96. The change in the statutory provision had been explained by the Ap .....

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errors in the return, accounts or documents accompanying the return, (ii) loss carried forward, deduction allowance or relief, which was prima facie admissible on the basis of information available in the return but not claimed in the return and similarly (iii) those claims which were on the basis of the information available in the return, prima facie inadmissible, were to be rectified/allowed/disallowed. What was permissible was correction of errors apparent on the basis of the documents accom .....

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otice 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 notwithstanding that no tax or refund was due from him after making such adjustments. With e .....

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the legislative intent is very clear from the use of the word intimation as substituted for assessment that two different concepts emerged. While making an assessment, the Assessing Officer is free to make any addition after grant of opportunity to the assessee. By making adjustments under the first proviso to section 143 (1)(a), no addition which is impermissible by the information given in the return could be made by the Assessing Officer. The reason is that under section 143(1)(a) no opportun .....

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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, to 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 d .....

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atutory provisions as they stood at different points of time. Under section 143 (I)(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 intent of the Legislature, i.e., to minimize the departm .....

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ther no sum is payable by the assessee, or (b) no refund is due to him. It is significant that the acknowledgment is not done by any Assessing Officer, but mostly by ministerial staff. Can it be said that any assessment is done by them? The reply is an emphatic no. The intimation under section 143(1)(a) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated .....

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