TMI Blog2003 (12) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Act, 1961,is directed against the judgment and order passed by the Income-tax Appellate Tribunal, Panaji Bench (SMC), dated March 13,2003, in I.T.A. No.214/Panj of 2001 (assessment year 1999-2000). By this appeal, the Revenue has posed the following substantial questions of law to be answered by this court arising out of the impugned decision: "(A) Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that there was no order under section 143(1) of the Act, and that the Commissioner has no jurisdiction to revise such an intimation? (B) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is justified in setting aside the impugned order under section 263, on the ground that the intimation under section 143(1) is not an order revisable under section 263 of the Income-tax Act? (C) Whether the findings of the Income-tax Appellate Tribunal are contrary to law laid down by the hon'ble High Court of Bombay in CIT v. Rajkumar Dipchand Phade [2001] 249 ITR 520 and by the hon'ble Madras High Court in CIT v. Chidambaram Construction Co. [2003] 261 ITR 754?" Briefly stated, the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principal contention raised on behalf of the assessee in that appeal was that the Commissioner had no jurisdiction to invoke power vested under section 263 of the Act, for that power could be invoked only against an order passed by the Assessing Officer. The argument advanced on behalf of the assessee was that in cases of assessment under section 143(1), in view of the scheme of the amended provision, which came into effect from April 1,1989, it does not postulate any order to be passed by the Assessing Officer. If that was so, there was no order passed by the Assessing Officer in law, though it was labelled as order under section 143(1) of the Act. It was next contended that, under the scheme of section 143 of the Act, as applicable to the case of the assessee for the assessment year 1999-2000, it recognises only one order under section 143(3) to be passed by the Assessing Officer, and which alone was revisable under section 263 of the Act. Whereas, the purport of section 143(1) of the Act only enables the Assessing Officer to prepare intimation in respect of the return furnished by the assessee under section 139 or in response to notice under section 142(1) of the Act. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship, that the Legislature provided that the intimation shall be deemed to be a notice of demand but that does not mean that it will partake the character of 'order' as envisaged in the provisions of section 263 of the Act." It is mainly on this premise, the Tribunal, reversed the order passed by the Commissioner and allowed the appeal preferred by the assessee. The Revenue has preferred the present appeal, raising substantial questions of law, referred to above. We have heard, Mr. Rivonkar, for the appellant-Revenue, and Mr. Inamdar, instructed by R.S. Padvekar and Shri S.D. Padiyar, for the respondent-assessee. Mr. Rivonkar contends that the power bestowed in the Commissioner by virtue of section 263 of the Act cannot be whittled down on the reasoning given by the Tribunal, while accepting the argument advanced on behalf of the assessee. According to him, filing of return by the assessee and sending intimation to the assessee on the basis of such return being an assessment partakes of the colour of an order in that behalf. To support his argument, he has placed reliance on the language of section 143(1) which provides that intimation shall be deemed to be a notice of demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any order on the return filed by the assessee under section 139 or in response to notice under section 142, by virtue of the amended section 143(1) of the Act. Whereas, the Assessing Officer has to mechanically acknowledge or accept the return so filed, which is the end of the matter. In other words, the Assessing Officer is not at all required to apply his mind which is the quintessence to constitute an order, but only discharges his ministerial work of acknowledging the return so filed and sends an intimation on the basis of such return for payment of deficit tax or interest or for refund of excess amount already paid by the assessee. To demonstrate the distinction between the procedure provided for under section 143(1) and 143(2) read with section 143(3), contends learned counsel, it is only when the Assessing Officer has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, that the Assessing Officer would resort to procedure provided under sections 143(2) and 143(3) and only thereafter, proceed to pass an order in writing either allowing or rejecting the claim or claims, specified in such notice and make an asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd for the purposes of adjustments referred to in sub-clause (iv) of clause (b), also with reference to the record of the assessments, if any, of past years, and determine the sum payable by the assessee or refundable to him on the basis of such assessment" The amended provision of section 143(1) of the Act, as applicable with effect from April 1,1989,i.e., assessment year 1989-90, reads thus: "New section 143(1)(a) with effect from April 1, 1989,i.e., assessment year 1989-90. 143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, - (i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid, any tax paid on self-assessment 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 g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section shall be sent after the expiry of one year from the end of the financial year in which the return is made. The scheme of this provision is that the return as filed by the assessee should be accepted at its face value being self-assessment. However, the said sub-section is without prejudice to the provisions of sub-section (2). Sub-section (2) of section 143 provides that on furnishing of the return, if the Assessing Officer has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, he can serve notice on the assessee specifying such claim of loss, exemption, allowance or relief, and require the assessee on the specified date to produce or cause to be produced any evidence or particulars specified therein or on which the assessee may rely in support of such claim. However, this power by virtue of the proviso to sub-section (2) is required to be exercised within 12 months from the end of the month in which the return is furnished. If the Assessing Officer invokes that power, then on further inquiry as referred to in sub-section (3), he would make an order in writing allowing or rejecting the claim or claims ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plain reading of section 156 of the Act, notice of demand is served upon the assessee when any tax, interest, penalty, fine or other sum is payable in consequence of any order passed under the Act. To put it differently, issuance of notice of demand (read intimation under section 143(1) of the Act), presupposes that it is in consequence of an order having been passed under the Act. In that sense "intimation" under section 143(1) would partake of the colour of an order passed under the Act. Understood thus, interference under section 263 of the Act by the Commissioner even against an intimation referable to section 143(1) is open. We are persuaded to take this view because if the Legislature had intended to exclude the jurisdiction of the Commissioner in respect of proceeding under section 143(1) of the Act, which is also an assessment and, therefore, in the nature of an order, it would have expressly made provision in that behalf, just as it has amended section 154 of the Act by the Finance Act, 1999, in respect of the provision for "rectification of mistake" as a consequential amendment made to envelop the amended section 143(1) of the Act. It will be useful to advert to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invocation of power under section 263 was inappropriate. Even in the case of Nazir Singh [2001] 252 ITR 820 (MP) a more or less similar position was noticed by the Madhya Pradesh High Court, inasmuch as, the liability of the payment of the assessee was only around Rs.1,300. It is in that backdrop, the Madhya Pradesh High Court took the view that section 263 of the Act was not available and ought not to have been invoked, in such cases. The Madhya Pradesh High Court has referred to the Board's Circulars Nos.4 dated July 8,1986 and 176 dated August 26,1987, which provide that no remedial action was necessary for summary assessment as the revenue loss, if any, was consciously suffered by the Government in utilising resources in scrutiny and investigation of larger cases. In that sense, this decision is also of no avail to the respondent. In our view, in the present case, the Tribunal has not based its opinion on the said circulars as such. On the other hand, having regard to the case as made out by the Commissioner for exercising power under section 263, that the respondent-assessee was liable to pay income-tax to the extent of Rs. 49,23,078 being 30 per cent. deemed income on the sp ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
