TMI Blog2006 (4) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... f the court was delivered by A. K. PATNAIK C. J.-This is an appeal under section 260A of the Income-tax Act, 1961 (for short "Act"), filed by the Commissioner of Income-tax, Bhopal, against the order dated May 9, 2000, of the Incometax Appellate Tribunal, Indore Bench, Indore, in I. T. A. No. 88/lnd./1998. The facts briefly are that the respondent/assessee filed income-tax return for the assessment year 1994-95 on July 29,1994, in Ward-1, Ujjain, showing a loss of Rs. 2,77,300. The return was processed and an intimation dated October 17, 1994, was sent to the respondent under section 143(1)(a) of the Act. Thereafter, the respondent filed a revised return of income on August 31, 1995, showing a total income of Rs. 33,650. In the revised return, the respondent disclosed income from capital gains from the land used for the construction of Bagria Towers, which he had not shown in the original return. In the original return, the respondent had claimed house tax, but in the revised return he withdrew the said claim towards payment of house tax as the same had not been paid. In the revised return, the value of Bagria Towers (land and structure) as on March 31, 1994, was shown at Rs. 14, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d May 9, 2000, the Tribunal held that the assessment made by the Assessing Officer on the revised return was invalid and void ab initio. In the impugned order, the Tribunal also held that the valuation report made by the District Valuation Officer, Bhopal, was not in accordance with the terms of reference of the commission and cannot be used as a piece of evidence against the respondent and no cognizance of the valuation report prepared by the District Valuation Officer beyond the period of limitation can be taken. Aggrieved, the appellant has filed this appeal. On July 14, 2004, this court while admitting the appeal against the impugned order of the Tribunal, formulated two substantial questions of law: "(1) Whether the Income-tax Appellate Tribunal Was justified in holding that assessment made by the Income-tax Officer, (i.e., the Assessing Officer) on the strength of a revised return submitted by the assessee is non est? (2) Whether the Income-tax Appellate Tribunal was justified in holding that the Assessing Officer had no jurisdiction to take into account and rely upon the valuation submitted by the District Valuation Officer in respect of the house property belonging to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier. It means, in the instant case the revised return could only be filed before August 1, 1995, the day on which the intimation issued under section 143(1)(a) of the Act partook of the character of an assessment order in the absence of issuance of any notice under section 143(2) of the Act. We are, therefore, of the view that the revised return in the instant case was not filed within the period prescribed under section 139(5) of the Act. Para. 10 : We have carefully perused the judgments referred to by the parties specifically the judgment of the apex court in the case of Panchamahal Steel Ltd. v. U. A. Joshi, ITO [1997] 225 ITR 458 in which their Lordships have held that a revised return cannot be filed even after the draft assessment order referred with the assessee's objection to the IAC under the law. In these circumstances, the revised return is non est in law and no cognizance can be taken thereof. If any assessment is framed on the basis of such a revised return, it would be invalid and void ab initio. Since in the instant case, the assessment was framed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) of the Act may not be an assessment and the Assessing Officer may initiate assessment proceedings even after such intimation by issuing a notice under section 143(2) of the Act to the assessee. But once the limitation period as prescribed in the proviso to section 143(2) of the Act expires without issue of a notice under section 143(2) of the Act to the assessee the intimation partakes of the character of an assessment and becomes final and this is what the Tribunal has held in the impugned order. He cited the decision of the Punjab and Haryana High Court in Punjab Tractors Ltd. v. Joint CIT [2002] 254 ITR 242 in which it has been held that the intimation under section 143(1) of the Act operates as an order of assessment unless the authority proceeds to issue notice under section 143(2) of the Act and passes an order under section 143(3) of the Act. He also relied, on the decision of the Punjab and Haryana High Court in Vipan Khanna v. CIT [2002] 255 ITR 220 in support of his submissions that a notice under section 143(2) of the Act cannot be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished and that in such a cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly; and (ii) if any refund is due on the basis of such return, it shall be granted to the assessee: Provided that in computing the tax or interest payable by, or refundable to, the assessee, the following adjustments shall be made in the income or loss declared in the return, namely: (i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified; (ii) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, is prima facie admissible but which is not claimed in the return, shall be allowed; (iii) any loss carried forward, deduction, allowance or relief claimed in the return, which, on the basis of the information available in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) of the Act partakes of the character of an assessment and the revised return filed after the intimation had become an assessment, was not a valid revised return under sub-section (5) of section 139 of the Act and the assessment framed on the basis of such revised return was consequently invalid. We have to consider whether this view taken by the Tribunal in the impugned order is correct or incorrect in law. A plain reading of sub-section (l)(a) of section 143 of the Act would show that an intimation is sent to the assessee specifying the sum payable towards any tax or interest found due on the basis of return filed by the assessee. Similarly, intimation is sent to the assessee if such refund is found due on the basis of the return filed by the assessee. Further, under the first proviso to sub-section (l)(a) of section 143 by adjustments arithmetical errors in the return may be corrected, losses, deduction, allowance or relief on the basis of the information available in the return, accounts or documents may be allowed and similarly loss, deduction, allowance or relief claimed in the return on the basis of the information available in such return, accounts or documents may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his office or to produce or cause to be produced any evidence on which the assessee relies in support of his return and the Assessing Officer takes into account such evidence and all relevant material which he has gathered and by an order in writing makes an assessment of the total income or loss of the assessee determining the sum payable by the assessee. There is, therefore, a marked difference between an intimation sent under sub-section (1)(a) of section 143 of the Act to the assessee and an assessment made in accordance with the procedure laid down in sub-sections (2) and (3) of section 143 of the Act. For the aforesaid conclusion, we find support in the decisions of the Allahabad High Court in Pradeep Kumar Har Saran Lal [1998] 229 ITR 46, the Delhi High Court in Apogee International Ltd. [1996] 220 ITR 248 and this court in Kamal Textiles [1991] 189 ITR 339 cited by Mr. Jain. In the aforesaid three decisions, the difference between an intimation sent to the assessee under section 143(1)(a) and an assessment made under section 143(3) pursuant to a notice under section 142 of the Act has been clearly brought out. In Pradeep Kumar Har Saran Lal [1998] 229 ITR 46 as well as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 143(3) of the Act pursuant to the notice under section 143(2) of the Act and only an intimation is sent, the Assessing Officer can also assess under section 147 of the Act if he has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. In Punjab Tractors Ltd. [2002] 254 ITR 242 (P H) cited by Mr. Choudhary, the contention that was raised by the assessee was that in the absence of an assessment made by the Assessing Officer under sub-section (3) of section 143 of the Act, a notice for reassessment under section 148 of the Act could not have been issued. While negativing the said contention, the Punjab and Haryana High Court held that an intimation under section 143(1)(a) operates as an order of assessment unless the authority proceeds to give notice under sub-section (2) of section 143 and passes an order under sub-section (3) of section 143 of the Act and that the absence of an order under sub-section (3) of section 143 is not a bar to proceed under section 148 of the Act. The aforesaid judgment of the Punjab and Haryana High Court does not really equate an intimation under section 143(1)(a) with an assessment under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice under sub-section (2) of section 143 to the assessee within the period of twelve months contempated therein is wholly erroneous in law. In our considered opinion, the intimation dated October 17, 1994, did not partake of the character of regular assessment on completion of the period of twelve months contemplated under sub-section (2) of section 143 of the Act even if no notice was served on the respondent under the said sub-section during the said period of 12 months. Since no assessment was made pursuant to the original return, the respondent could file a revised return under sub-section (5) of section 139 of the Act at any time before the expiry of one year from the end of the relevant assessment year 1994-95, i.e., before March 31, 1996, and as the revised return was filed by the respondent on August 31, 1995, it was a valid revised return under sub-section (5) of section 139 of the Act and the assessment made pursuant to the said revised return by the Assessing Officer was a valid assessment. The conclusions of the Tribunal that the revised return was invalid in law and the assessment made on the basis of such a revised return was also invalid in law, are thus incorrect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , he was required to submit the valuation report by September 30, 1996, but the valuation was started only in October-November, 1996 by the Valuation Officer and such a valuation beyond the time-limit fixed in the commission issued to him cannot be used as a piece of evidence against the respondent and accordingly, set aside the order passed by the Commissioner of Income-tax (Appeals). In Smt. Amiya Bala Paul v. CIT [2003] 262 IIR 407 ; [2003] 1 RC 313, the Supreme Court, inter alia, held that the Assessing Officer cannot refer the matter to the Valuation Officer as provided in section 55A of the Act for estimating the investment on construction of a house of the assessee for the purpose of section 69 of the Act because the object of the said section 55A is a reference to the Valuation Officer by the Assessing Officer for determining the fair market value of the asset for the purpose of capital gain only. But after the said judgment of the Supreme Court, section 34 of the Finance (No.2) Act, 2004 inserted a new section 142A in the Act. The said section 34 of the Finance (No.2) Act, 2004 is quoted herein below: "34. Insertion of new section 142A.-After section 142 of the Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from November 15, 1972, to make a reference to the Valuation Officer for estimating the value of any investment referred to under section 69 of the Act including the investment on any construction made by an assessee. In the proviso to the newly added section 142A, however, it is stated that nothing contained in this newly added section shall apply in respect of an assessment made on or before September 30, 2004, except in cases where reassessment is required to be made in accordance with the provisions of section 153A. We called upon Mr. Jain, learned counsel for the appellant, and Mr. Choudhary, learned counsel for the respondent to address us on the question as to whether section 142A will apply to the assessment in the present case when the appeal under section 260A of the Act arising out of the said assessment on the issue with regard to valuation of the construction of Bagria Towers made by the Valuation Officer is still pending before this court. Mr. Jain submitted that the assessment in the present case has not become final and conclusive as yet because the appeal on the very issue regarding valuation by the District Valuation Officer under section 260A of the Act is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid reference under section 142A of the Act as if the said section 142A of the Act was in force when the reference was made on August 23, 1996. The language of the proviso to section 142A of the Act makes it clear that the section shall not apply in respect of the assessment made on or before September 30, 2004, and where such assessment has become final and conclusive on or before September 30, 2004. In this case, the assessment may have been made before September 30, 2004, but the same has not become final and conclusive and is still pending in the appeal under section 260A of the Act before the High Court. The Supreme Court has held in Garikapati Veeraya v. N. Subbiah Choudhry, AIR 1957 SC 540 in paragraph 23: "... the legal pursuit of a remedy, suit, appeal and second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding..." Thus, an appeal is only a continuation of the assessment proceedings. Therefore, the assessment in the present case has not become final and conclusive on or before September 30, 2004, particularly when the very issue with regard to valuation of the investment made on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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