TMI Blog1996 (7) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... ting year ending on March 31, 1993 (the assessment year 1993-94). It was specifically pointed out that "the amount of interest received during the public issue of Rs. 1,07,85,590 is not to be considered as income and has been given set off against the interest outgoings included under pre-operative expenditure" in view of several decisions including that of the apex court. As stated by learned counsel, on filing of the return, the Assessing Officer under the new scheme for assessment under section 143 of the Act, had two options, i.e., (i) either to accept the return under section 143(1) with necessary adjustments, if there is any, or (ii) to proceed to make assessment under section 143(3) or under section 144 by issuing notice under section 143(2) of the Act. In the instant case, instead of accepting the return under section 143(1) of the Act undisputedly, the Assessing Officer issued notice under section 143(2) of the Act on December 1, 1994, vide annexure "C". It is contended in the petition that in continuation of the notice the Assessing Officer addressed a letter on November 15, 1995, calling upon the assessee to attend on November 27, 1995, vide letter annexure "C-1". The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot computed excessive loss or has not underpaid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return : Provided that no notice under this sub-section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished. (3) On the day specified in the notice issued under sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him on the basis of such assessment. (4) Where a regular assessment under sub-section (3) of this section or section 144 is made,--- (a) any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudice to the provisions of sub-section (2) of section 143 of the Act. However, exercise of the powers under section 143(1) is not made permissible after issuance of notice under section 143(2) of the Act. The Assessing Officer cannot exercise the powers under section 143(1) of the Act as he himself has decided to make regular assessment under section 143(3) of the Act. That in section 143(2) like under section 143(1) powers are not saved. As the Assessing Officer has called upon the assessee to furnish evidence to satisfy himself about the correctness or legality of the claim made by the assessee in his return, hence only after hearing the assessee and after considering the evidence that may be produced by the assessee the Assessing Officer has to make the order in writing making assessment of the total income or loss of the assessee and he has to determine the amount payable on the basis of such assessment, that is, under section 143(3) of the Act. Mr. Shelat, learned counsel for the Revenue, fairly stated that notice under section 143(2) of the Act cannot be withdrawn. Notice under section 143(2) of the Act is a step towards regular assessment under section 143(3) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, it is permissible for the Assessing Officer to assess under section 143(1) of the Act. One has to examine the claim on account of the result of adjustments made in the income shown in the return whether it results in increase or the loss declared in the return is reduced or is converted into income. If that is so it would entail further tax at the rate of 20 per cent. on the income so increased or a further tax of 20 per cent. on the loss so reduced as if it is income and the assessee will be charged as per sub-section (1A) of section 143 of the Act. With a view to see that taxpayers in the return furnish details with accuracy and correctness this provision is made. The assessee is aware about the provision and should take care that no incorrect statement is made with a view to save additional tax which may be imposed on him. However, when the Assessing Officer is not assessing the correctness about the claim which is either prima facie admissible or prima facie inadmissible, and the Assessing Officer with a view to ensure that the assessee has not computed excessive loss or has not underpaid tax in any manner has issued notice under section 143(2) of the Act, then there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any time after the expiry of two years from the end of the assessment year in which the income was first assessable. Thus, in any case, for regular assessment under section 143(3) of the Act notice is to be issued within the period of one year as per the proviso to section 143(2) of the Act, however, after the expiry of that period as indicated under section 143(2) of the Act intimation as contemplated under section 143(1) can be issued. Thus, the Legislature has not permitted simultaneous proceedings. If we consider the submission made by learned counsel that simultaneous or parallel proceedings can be commenced is certainly not acceptable. As indicated above, after the expiry of 12 months from the end of the month in which the return is furnished no notice can be served on the assessee. Is it open to the Department to issue notice after the period has expired ? Certainly it is not open but intimation under section 143(1) can be sent before the expiry of two years from the end of the assessment year and, therefore, parallel proceedings are not contemplated. The Central Board of Direct Taxes in its Circular No. 549, dated October 31, 1989 at paragraph 5.16 has advised as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjected, or was likely to subject, a person to lengthy proceedings and unnecessary harassment, the High Courts would issue appropriate orders or directions to prevent such consequences. The existence of such alternative remedies as appeals and references to the High Court was not, however, always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action. When the Constitution conferred on the High Courts the power to give relief it became the duty of the courts to give such relief in fit cases and the courts would be failing to perform their duty if relief were refused without adequate reasons. " In this view of the matter, we are of the opinion that after issuance of notice under section 143(2) of the Act, it is not open to the Assessing Officer to make adjustment or to pass an order under section 143(1) of the Act, but he has to make assessment in accordance with law, i.e., under section 143(3) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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