1991 (8) TMI 291 - SC - Income Tax

Section 143(3) upheld where officer signed I.T.N.S.150; assessment valid, petitions dismissed; Department urged to annex calculations

SC held that the tax demand complied with section 143(3) where the Income-tax Officer had signed the computation form (I.T.N.S. 150), so the assessment ... Interpretation of section 143(3) - Demand notice under section 156 - Held that:- rule 15(2) of the Income-tax Rules prescribed Form No. 8, a sheet containing the computation of the tax, though there was no form prescribed for the assessment of the income. This sub-rule was dropped in 1964. Thereafter, the matter has been governed by departmental instructions. Under these, two forms are in vogue. One is the form of what is described as the 'assessment order' (I. T. 30 or I. T. N. S. 65). The other is what is described as the 'Income-tax Computation Form' or 'Form for Assessment of Tax/Refund' (I. T. N. S. 150). The practice is that, after the 'assessment order' is made by the Income-tax Officer, the tax is calculated and the necessary columns of I. T. N. S. 150 are filled up showing the net amount payable in respect of the assessment year. This form is generally prepared by the staff but it is checked and signed or initialled by the Income-tax Officer and the notice of demand follows thereafter. There is no dispute in the present case that the Income-tax Officer has signed the Form I. T. N. S. 150. We, therefore, think that the statutory provision has been duly complied with and that the assessment order was not, in any manner, vitiated. No reason to grant leave in these petitions which are, consequently, dismissed. We should, however, like to observe that, to avoid unnecessary controversies like this, the Department should, in future, adopt the salutary and useful practice of incorporating the entire tax calculations in I. T. N. S.. 65 Form itself or, in the alternative, make the I. T. N. S. 150 an annexure to form part of the assessment order, have it signed by the Income-tax Officer and have it served on the assessee along with I. T. N. S. 65. That will enable the assessee to have the full details necessary to enable him to file a proper appeal, if needed, against the order and demand. Issues:1. Interpretation of section 143(3) of the Income-tax Act, 1961 regarding the requirement of a written order for determining the sum payable by the assessee.2. Validity of assessment orders and demand notices issued by the Income-tax Officer.3. Compliance with statutory requirements in the assessment process.4. Judicial interpretation of the assessment process and the significance of signed documents by the Income-tax Officer.Analysis:1. The judgment addresses the interpretation of section 143(3) of the Income-tax Act, 1961, concerning the necessity of a written order by the Income-tax Officer to determine the sum payable by the assessee. The petitioner argued that the assessment order should include calculations of tax, interest, and net sum payable, not relegating these details to the demand notice. The court agreed with the petitioner, emphasizing that the determination of the net sum payable is an integral part of the assessment process and should be included in a written order by the Income-tax Officer.2. The validity of the assessment orders and demand notices issued by the Income-tax Officer was challenged by the petitioner on the grounds of non-compliance with statutory requirements. The court examined the documents provided to the assessee, including the assessment orders and demand notices, and concluded that the necessary computations and determinations were appropriately made and signed by the Income-tax Officer, thus upholding the validity of the assessment process.3. The judgment delves into the compliance with statutory requirements during the assessment process. It highlights that while the statute does not mandate specific forms for computations, the essential aspect is that the calculations are accurately determined and signed by the Income-tax Officer. The court acknowledged the departmental practices of utilizing different forms for assessment orders and tax computations, emphasizing the importance of ensuring that all necessary details are provided to the assessee.4. Judicial interpretations of the assessment process and the significance of signed documents by the Income-tax Officer were examined in the judgment. Various court decisions were referenced to illustrate that the determination of tax payable must be in writing, either in the assessment order or a separate form signed by the Income-tax Officer. The court emphasized the importance of providing full details to the assessee for transparency and proper appeal procedures, encouraging Income-tax Officers to take responsibility for verifying and authenticating tax computations.In conclusion, the Supreme Court dismissed the petitions while providing detailed reasoning on the interpretation of statutory provisions, compliance with assessment requirements, and the significance of signed documents in the assessment process. The judgment serves as a guideline for Income-tax Officers to ensure transparency and accuracy in tax computations and assessments to facilitate proper appeal procedures for assessees.