2001 (1) TMI 207 - AT - Income Tax

Tribunal affirms AO's jurisdiction pre-1993, sets interest calculation limit per SC ruling.

The Tribunal upheld the Assessing Officer's jurisdiction to issue intimation under section 143(1)(c) before 1993-94, rejecting the challenge raised by the ... Assessing Officer's jurisdiction to issue intimation under section 143(1)(c) - consequential amendment and its temporal application to assessment years - non-retroactivity of procedural amendment affecting prior assessment years - substitution of provisional partner's share by firm's intimation - calculation of interest under section 234B up to date of regular assessment/intimation under section 143(1)(a)Assessing Officer's jurisdiction to issue intimation under section 143(1)(c) - consequential amendment and its temporal application to assessment years - non-retroactivity of procedural amendment affecting prior assessment years - Validity of intimations issued under section 143(1)(c) on 11-12-1995 in respect of assessment year 1990-91 - HELD THAT: - The Tribunal held that the amendment effected by Finance Act, 1992 (effective from 1-4-1993) deleting references to 'partner of a firm' and 'firm' in section 143(1)(c) was of a consequential nature and intended to operate only for assessment year 1993-94 and subsequent years. The foot-note to the amendment, the Notes on Clauses and the Memorandum explaining provisions indicate that the change was to reflect a new scheme of taxing partnership income and is not intended to strip the Assessing Officer of power to issue intimations under section 143(1)(c) in respect of assessment years prior to 1993-94. Applying this legislative material, the Tribunal concluded the amendment does not apply retrospectively to 1990-91 and therefore did not oust the Assessing Officer's jurisdiction to send intimations on 11-12-1995. The Tribunal also rejected the contention that section 143(1)(c) could not be invoked because the firm's communication under section 143(1)(a) preceded the partners' returns, observing that the partners could have shown income in accordance with the firm's intimation instead of provisional figures. [Paras 6, 7]Intimations dated 11-12-1995 under section 143(1)(c) in respect of assessment year 1990-91 are valid; the Assessing Officer had jurisdiction and the amendment effective from 1-4-1993 does not affect assessment years prior to 1993-94.Calculation of interest under section 234B up to date of regular assessment/intimation under section 143(1)(a) - Period for which interest under section 234B is chargeable in these cases - HELD THAT: - Relying on the principle in the cited Supreme Court decision concerning interest (applied analogously despite that decision dealing with a different interest provision), the Tribunal held that the period for charging interest should run from the first day of the relevant assessment year up to the date of the regular assessment/first assessment. The Tribunal treated the date of intimation under section 143(1)(a) as the date of first/regular assessment for this purpose and therefore directed that interest under section 234B be reckoned only up to those intimation dates. [Paras 9]Interest under section 234B is to be computed only up to the dates of intimation under section 143(1)(a): up to 20-1-1992 for M.G. Kalyan and up to 22-11-1991 for S.G. Kalyan; Assessing Officer directed to revise interest accordingly.Final Conclusion: Appeals allowed in part: the Assessing Officer's intimations under section 143(1)(c) for assessment year 1990-91 are upheld; however, interest under section 234B is to be recalculated only up to the dates of intimation under section 143(1)(a) as directed. Issues:1. Jurisdiction of Assessing Officer to pass order under section 143(1)(c)2. Levy of interest under section 234B of the ActJurisdiction of Assessing Officer under section 143(1)(c):The appeals involved two assessees who were partners in a firm and questioned the jurisdiction of the Assessing Officer to pass orders under section 143(1)(c) and the levy of interest under section 234B. The assessees contended that the Assessing Officer exceeded jurisdiction by sending an intimation under section 143(1)(c) after an amendment in 1992 omitted the words 'partner of a firm' and 'firm' from the provision. They argued that the intimation increasing their liability was void ab initio. However, the departmental representative argued that the 1992 amendment was procedural, granting the Assessing Officer the authority to send the intimation. The Tribunal analyzed the amendment's nature, noting it was consequential, applicable from 1-4-1993 for assessment year 1993-94 onwards, and did not restrict the Assessing Officer's powers for prior years. The Tribunal held that the Assessing Officer had the authority to issue intimation under section 143(1)(c) before 1993-94, rejecting the challenge to his jurisdiction.Levy of interest under section 234B:Regarding the levy of interest under section 234B, the assessees argued that interest should be calculated only up to the date of the intimation under section 143(1)(a), citing a Supreme Court judgment. The departmental representative supported the authorities' decision to calculate interest until the intimation under section 143(1)(c). The Tribunal considered the Supreme Court's judgment and opined that interest should be payable or chargeable from the first day of the relevant assessment year to the date of regular assessment. In this case, interest was to be calculated until the dates of the intimation under section 143(1)(a) sent to the assessees. The Tribunal directed the Assessing Officer to charge interest only up to specific dates for each assessee, thereby partially allowing the appeals.In conclusion, the Tribunal upheld the Assessing Officer's jurisdiction to issue intimation under section 143(1)(c) before 1993-94, rejecting the challenge raised by the assessees. Additionally, the Tribunal directed the calculation of interest under section 234B only up to specific dates, in accordance with the Supreme Court's judgment, partially allowing the appeals.