Intimation under s.143(1)(a)(i) doesn't stop AO issuing fresh s.143(2) notice; no reopening under ss.147/148 needed

The HC held that an intimation under s.143(1)(a)(i) does not preclude the Assessing Officer from issuing a fresh notice under s.143(2); the fiction in s.143(1)(a)(i) merely renders that intimation a notice of demand for recovery purposes and does not bar further assessment action. Consequently, the AO need not resort to reopening under ss.147/148 to make a fresh assessment. The impugned s.143(2) notices were held valid and the writ petitions challenging them were dismissed.

---

---

Issues:
Validity of notices issued under section 143(2) of the Income-tax Act after intimation under section 143(1)(a)(i) had been sent to the petitioners.

Analysis:
The petitioners challenged the legality of notices issued under section 143(2) of the Income-tax Act after intimation under section 143(1)(a)(i) had been sent. The argument was that the intimation under section 143(1)(a)(i) should be considered a regular assessment under section 143(3), thereby preventing the Assessing Officer from issuing fresh notices under section 143(2) without proper reopening of assessments under sections 147 and 148. However, the court found this argument devoid of merit. The court highlighted that the provision of section 143(1) is "without prejudice" to section 143(2), preserving the Assessing Officer's jurisdiction to proceed under section 143(2 despite intimation under section 143(1). The court emphasized that the power under section 143(1) is limited and can only be exercised in specific circumstances mentioned in the proviso. The court also noted that the new assessment procedure aims to minimize scrutiny of all returns and concentrate on selective scrutiny. Therefore, the court concluded that intimation under section 143(1)(a)(i) does not prevent the Assessing Officer from issuing fresh notices under section 143(2) if necessary.

The court rejected the argument that an intimation should conclude the assessment process just because it is deemed to be a notice of demand under section 156. The court clarified that the purpose of this fiction is to apply the machinery provision of recovery of tax to the intimation and not to conclude the assessment process. The court held that the Assessing Officer can issue a fresh notice under section 143(2) even after sending an intimation under section 143(1)(a)(i). The court found the petitioners' contention that the only way to make a fresh assessment is through sections 147 and 148 to be misconceived. Therefore, the court upheld the validity of the notices issued under section 143(2) to the petitioners.

In conclusion, the court dismissed the writ petitions, stating that there was no merit in them. The court discharged the rule with no order as to costs, affirming the validity of the notices issued under section 143(2) of the Income-tax Act after intimation under section 143(1)(a)(i) had been sent to the petitioners.

---