TMI Blog2005 (4) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... - - - - - Dated:- 11-4-2005 - Judge(s) : R. K. AGRAWAL., P. KRISHNA. JUDGMENT The judgment of the court was delivered by P. Krishna J.- The Income-tax Appellate Tribunal, New Delhi, at the instance of the Income-tax Department has referred the following question of law under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for opinion to this court: "Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the Assessing Officer has no jurisdiction to change the status while making the assessment under section 143(1) and in that background whether a change in the status is appealable to the first appellate authority?" The assessment years 1986-87 to 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint of the first appellate authority that the status of the assessee could not be changed while framing the assessment under section 143(1) of the Act. Heard Shri A.N. Mahajan, learned standing counsel for the Department, and Shri Rakesh Ranjan Agrawal, learned counsel for the assessee-respondent. It was submitted that an order passed under section 143(1) of the Act is not appealable under section 246(1) of the Act. Appeal being a creature of a statute, the order under section 143(1) having not been made appealable under the provisions of the Act, the view of the Tribunal that the appeal was maintainable is wrong. He further submitted that an order passed under section 143(1) of the Act has been made appealable for the first time by ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... association of persons and levied the tax at the maximum rate of tax. According to the assessee-respondent, the trust being not a business trust, there was no tax liability. It is also not in dispute that the assessee challenged the orders purporting to have been passed under section 246(1) of the Act. In this factual background the question referred to us is to be answered. Section 143 of the Act deals with the assessment of income. Two kinds of procedure are provided therein. Section 143(1) provides for assessment, without issuing any notice to the assessee, and gives a limited power to the Income-tax Officer to rectify arithmetical mistakes and make prima facie adjustments only. Section 143(3) empowers the Income-tax Officer to frame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses under section 35D(1). (h) Prospecting expenses under section 35E(1). (i) Expenses on family planning, etc., under section 36(1)(ix), first proviso. (j) Any loss carried forward under section 72(1) or 73(2) or 74(1) or 74(3) or 74A(3), and (k) Any deficiency in "tax holiday" profits under section 80J(3). The record of the assessment of the assessee for the past years might be referred to only for the purposes of giving effect to the allowances referred to above. Thus, it is clear that the change of status in summary proceedings under section 143(1) was not such an adjustment to the income or loss declared in the return, permissible under section 143(1) of the Act. The Income-tax Officer, while framing an assessment under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed in the return, which on the basis of the information available in such return, accounts or documents was prima facie inadmissible. The present case does not fall in either of the above categories. In view of the plain language of section 143(1) of the Act, change of status has not been provided as prima facie adjustment under section 143(1)(a) read with section 143(1)(b) of the Act, and the action of the Income-tax Officer under section 143(1) was unjustified. Thus, the necessary corollary of the above discussion is that the assessment in question made by the Income-tax Officer was beyond the scope of section 143(1). It is correct that the order purported to have been passed under section 143(1), and it was beyond the four corners o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of law, it does not become invalid so long as there is some other provision of law under which the order could be validly made. Mere recital of a wrong provision of law does not have the effect of invalidating an order which is otherwise within the power of the authority making it." At this juncture, it is apt to notice one argument of learned standing counsel who referred to the Explanation to section 143 and submitted that in view of the Explanation, clause (1)(f), the assessment under sub-section (1) shall be deemed to be incorrect, inadequate or incomplete in a material respect, in the present case and the Income-tax Officer was justified to tax on the income of the assessee in correct status. He could refuse to accept the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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