TaxTMI 
TaxTMI 
2006 (2) TMI 226
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....he instant case, intimation was processed on 24th Nov., 1998, and on the same date, the notice was issued under s. 143(2) of the Act. 4. The case of the learned Departmental Representative, on the other hand is that the proceedings under s. 143(2) were commenced after processing the return under s. 143(1)(a) and hence impugned proceedings are valid. In this regard, the learned Departmental Representative relied on the decision of the Tribunal 'A' Bench, Hyderabad, in the case of Nav Bharat Ferro Alloys Ltd. (ITA No. 502/Hyd/1999, dt. 26th Feb., 2004), wherein the Bench observed that though the date of intimation and the date of notice under s. 143(2) were 13th Nov., 1998, the intimation has been processed first, and then only notice under s. 143(2) was issued, and hence proceedings under s. 143(1)(a) are valid. The learned Departmental Representative has filed two paper books, the first one containing 7 pages and the other containing 17 pages. Adverting our attention to the order-sheet entries the learned Departmental Representative submitted that the prima facie adjustments were made and necessary calculations were made in the order-sheet and only after processing the return unde....
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....tinue with the summary proceedings. Such being the case, the intimation under s. 143(1)(a) deserves to be cancelled. The learned Departmental Representative placed reliance upon the decision of the Tribunal in the case of Nav Bharat Ferro Alloys, which is distinguishable on facts inasmuch as, in that case there is a categorical finding of the Bench that the return was processed under s 143(1)(a) prior to issuance of the notice under s. 143(2) whereas in the instant case the facts, as found out from the order-sheet entries, clearly give an indication that the intimation under s. 143(1)(a) was signed by the AO only after commencement of proceedings under s. 143(2) of the Act. 7. Under the circumstances, we set aside the order of the AO, and cancel the intimation dt. 24th Nov., 1998, as being not valid in law. 8. In the result, appeal filed by the assessee is allowed. B.K. HALDAR, A.M.: June, 2005 I have gone through the order passed by the learned JM. But I am unable to agree with him that in the instant case, intimation under s. 143(1)(a) sent by the AO was not valid in law. I shall state, in the following paragraphs, the reason for my disagreement. 2. The instant appeal is for....
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....e circumstances of the case, the learned Jt. CIT is not justified in disallowing under s. 143(1)(a) the provident fund for March, 1997 Rs. 2,87,320 of engineering division which was paid within the due date specified under Provident Fund Act. 7. On the facts and in the circumstances of the case, the learned Jt. CIT is not justified in disallowing under s. 143(1)(a) the deduction rightly claimed under s. 80HHC of Rs. 5,84,460 with the support of report/certificate obtained in prescribed form. 8. On the facts and in the circumstances of the case, the learned Jt. CIT is not justified in not allowing credit for the TDS of Rs. 5,219. 9. On the facts and in the circumstances of the case, the learned AO is not justified in levying additional tax under s. 143(1A) of the IT Act, 1961 after the issue of notice under s. 143(2) of the IT Act, 1961. 10. On the facts and in the circumstances of the case, the learned Jt. CIT is not justified in levying interest under s. 234C without obtaining the dates of capital gains income. 11. On the facts and in the circumstances of the case, the learned AO is not justified in applying the provisions of s. 143(1)(a) of the IT Act, 1961 against the circu....
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....umstances of the case, the learned Jt. CIT is not justified in disallowing under s. 143(1)(a) the provident fund for March, 1997 Rs. 2,87,320 of engineering division which was paid within the due date specified under Provident Fund Act. 7. On the facts and in the circumstances of the case, the learned Jt. CIT is not justified in disallowing under s. 143(1)(a) the deduction rightly claimed under s. 80HHC of Rs. 5,84,460 with the support of report/certificate obtained in prescribed form. 8. On the facts and in the circumstances of the case, the learned Jt. CIT is not justified in not allowing credit for the TDS of Rs. 5,219. 9. On the facts and in the circumstances of the case, the learned AO is not justified in levying additional tax under s. 143(1A) of the IT Act, 1961 after the issue of notice under s. 143(2) of the IT Act, 1961. 10. On the facts and in the circumstances of the case, the learned Jt. CIT is not justified in levying interest under s. 234C without obtaining the dates of capital gains income. 11. On the facts and in the circumstances of the case, the learned AO is not justified in applying the provisions of s. 143(1)(a) of the IT Act, 1961 against the circular is....
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....re the summary proceeding under sub-s. (1) has been adopted, there should be scope available for the Revenue either suo motto or at the instance of the assessee to make a regular assessment under sub-s. (2) of s. 143. The converse is not available: regular assessment proceedings having commenced under s. 143,(2), there is no need for the summary proceedings under s. 143(1)(a)." 9. As regards the Department's reliance on the decision of the Tribunal 'A' Bench, Hyderabad in the case of Nav Bharat Ferro Alloys Ltd. in ITA No. 502/Hyd/1999, dt. 26th Feb., 2004, it has been held by him that in that case, there was a categorical finding of the Bench that the return was processed under s. 143(1)(a) prior to issuance of notice under s. 143(2) whereas in the instant case, the order-sheet entries clearly give an indication that the intimation under s. 143(1)(a) was signed by the AO only after commencement of proceedings under s. 143(2) of the Act. 10. In the instant case, the admitted fact is that both the intimation under s. 143(1)(a) and notice under s. 143(2) were signed on the same date. This is clear from para 4.1 of the learned CIT(A)'s order whereas the assessee's claim is that inti....
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....he facts and in the circumstances of the case, the AO was justified in issuing an intimation under s. 143(1)(a) of the Act though simultaneously notice was issued under s. 143(2) of the Act." 2. The above controversy arose in the circumstances that AO issued intimation under s. 143(1)(a) on 24th Nov., 1998 when simultaneously on the same date he issued notice under s. 143(2) of the IT Act. 2.1 In the case of CIT vs. Gujarat Electricity Board (2003) 181 CTR (SC) 28 : (2003) 260 ITR 84 (SC) their Lordships after considering legislative intent behind the enactment of s. 143(1)(a) and s. 143(2) have observed as under: "The legislature therefore intended that where the summary proceeding under sub-s. (1) has been adopted, there should be scope available for the Revenue either suo motu or at the instance of the assessee to make a regular assessment under sub-s. (2) of s. 143. The converse is not available: regular assessment proceedings having commenced under s. 143(2), there is no need for the proceedings under s. 143(1)(a)." 2.2 On consideration of order sheet entries dt. 24th Nov., 1998 and the decision of the Apex Court, the learned JM held that intimation was issued subsequent t....
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.... 4.1 of the order of the learned CIT(A), whereas the assessee's claim is that intimation under s. 143(1)(a) was issued subsequent to issue of notice under s. 143(2) of the Act. The Department has claimed the opposite. There was no evidence produced by either party to substantiate the conclusion. However, in law there is a presumption that what is clear from record is taken as correct unless contrary is proved. As the entry of issue of intimation under s. 143(1)(a) is written prior to issue of notice under s. 143(2) in the order sheet it could be concluded that intimation was signed prior to signing of notice under s. 143(2) of the Act. 4. While upholding the action of the Revenue, the learned AM further observed as under: "However, the issue here is as to when the proceedings under s. 143(2) commenced and when the proceedings under s. 143(1)(a) was completed. If we go to the concerned section we find that the word used in s, 143(1)(a) is 'sent' whereas the word used in s. 143(2) is 'served'. The issue as to when a particular proceeding commences or concludes has not been discussed in cases relating to validity of intimation under s. 143(1)(a) by any of the Courts or in the repor....
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....---------------------------- 3. Interest accrued 7,72,261 but not due to KSIIDC (Sch. Code 1507) ------------------------------------------------------------ 4. Interest accrued 49,532 but not due on term loans (OPG) (Sch. Code 1507) ------------------------------------------------------------ 5. P.F. of March 2,87,320 1997 paid on 21st April, 1997 (Engg. Div.) ------------------------------------------------------------ 36,26,591 ------------------------------------------------------------ (B) Deduction under 5,84,460 s. 80HHC is not allowed as the assessee has not furnished disclaimer certificate ------------------------------------------------------------ (C) Difference in depn.: Depn. Claimed 4,73,65,917 Depn. As per 4,73,17,637 48,280 Depn. Statement ------------------------------------------------------------ 42,59,331 ------------------------------------------------------------ Adjusted total income 4,23,13,481 Capital Gains 50,90,153 ------------------------------------------------------------ Levy Additional tax on Rs. 42,59,331 Issue Notice under s. 143(2) immediately. Sd./- 24th Nov., 1998" 5.1 The learned counsel further ....
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....usly by the AO on 24th Nov., 1998. It is evident that he had decided to commence regular proceedings and decided/directed to issue notice under s. 143(2) of IT Act which is dt. 24th Nov., 1998 before proceedings under s. 143(1)(a) stood completed. The question referred also talks of 'simultaneous notice'. 7.3 In order to resolve above controversy, we must take into account the following provisions of the IT Act . "143(1)(a) Where a return has been made under s. 139, or in response to a notice under sub-s. (1) of s. 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 and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-s. (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 s. 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 a....
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.... notice issued under sub-s. (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the AO may require on specified points, and after taking into account all relevant material which he has gathered, the AO 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-s. (3) of this section or s. 144 is made,- (a) any tax or interest paid by the assessee under sub-s. (1) shall be deemed to have been paid towards such regular assessment; (b) if no refund is due on regular assessment or the amount refunded under sub-s. (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly....." 7.4 Above statutory provisions make it clear that AO is permitted to make 'adjustments' without prejudice to the provisions of sub-s. (2). After adjustments the AO can send intimation to the assessee. It is further clear that after making adjustments and....
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....d tax and, accordingly, he may thereupon take steps under sub-s. (2) of s. 143 of the Act, it is however, not possible to comprehend that the self-same AO could exercise power under sub-s. (1) of s. 143 of the Act simultaneously with exercise of power under sub-s. (2) of s. 143 of the Act. In the instant case, there is no dispute that the intimation under sub-s. (1) of s. 143 of the Act was issued on the same date, when the notice under sub-s. (2) of s. 143 of the Act was issued. In the affidavit-in-opposition filed by the IT Department, it has not been stated that in point of fact, the intimation under sub-s. 143 was issued at an earlier point of time on the same date and subsequent thereto it came to the knowledge of the AO that for some reason or the other he has not been able to ensure that the assessee has not underpaid the tax. The conclusion would be, therefore, that the intimation under sub-s. (1) and notice under sub-s. (2) were issued simultaneously. When steps are taken under sub-s. (2) of s. 143, it is commonly known as regular steps to make regular assessment. The same stand culminated upon making of an assessment order of the total income. Once that order is made, s. ....
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.... is therefore clear that when on facts and in the circumstances of this case the AO had already considered it necessary or expedient to ensure that the assessee should be called upon to produce evidence in support of return filed by the assessee, then the assessee could only be visited with regular demand based on regular assessment under s. 143(3) of the IT Act. The assessee could not be made to pay additional tax simultaneously under sub-s. (1A) of s. 143 of the IT Act. Such treatment is not envisaged when AO has already decided to call upon the assessee to produce evidence in support of return. These reasons given by the Hon'ble Gujarat High Court also support the claim that two proceedings: one under s. 143(1)(a) and second under s. 143(2) cannot be commenced or carried on simultaneously. 9.2 In the present case it is not clear whether AO signed intimation issued under s. 143(1)(a) of the IT Act or signed and issued notice under s. 143(2) of the IT Act. The notice under s. 143(2) of IT Act was served on the assessee earlier than intimation issued under s. 143(1)(a). At the same time it is reasonable to hold on facts that both the proceedings were simultaneously taken by the AO....