TaxTMI 
TaxTMI 
2005 (4) TMI 607
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and in that background whether a change in the status is appealable to the first appellate authority ?" 2. The assessment year 1984-85 is involved in the present reference. The brief facts of the case are as follows :- The assessee-respondent had filed the income-tax returns and claimed the status as "specified trust". The Income-tax Officer completed the assessment for all these years under section 143(1) of the Act. However, he while making the assessment under section 143(1) of the Act adopted the status as that of A.O.P. and charged tax at maximum marginal rate. The said assessment orders were challenged by way of filing appeals before the Deputy Commissioner of Income-tax (Appeals) and it was contended that the Income-tax ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for the first time by making necessary amendments with effect from 1st of October, 1998 by amending sub-clause (a) of section 246(1) of the Act. In contra, the learned counsel for the assessee submitted that the order passed by the Income-tax Officer though in exercise of power under section 143(1) of the Act was, in fact, an order under section 143(3) of the Act and was, therefore, appealable under section 246(1)(a) of the Act. Elaborating the argument, he submitted that only certain specified adjustments could have been made by the Income-tax Officer while passing an order under section 143(1) of the Act. In a case where the Income-tax Officer exceeds its power and makes the adjustments not permissible under section 143(1), the assessment....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Income-tax Officer to frame assessment after notice to the assessee and after making such inquiry as he deems fit. 7. A bare perusal of section 143(1), as it stood at the relevant time, shows that the Income-tax Officer without calling upon the assessee for production by him of any evidence in support of the return, may make assessment of total income or loss of the assessee after making such adjustments to the income or loss declared in the return as was required to be made under clause (b). The said assessment to the income or loss declared in the return is to be made with reference to the return and accounts and documents, if any, accompanying to it and also with reference to the past record of the earlier assessment years and de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....declared in the return, permissible under section 143(1) of the Act. The Income-tax Officer, while framing an assessment under section 143(1), has no jurisdiction not to accept the status as disclosed in the return of income. The Income-tax Officer if not satisfied by the disclosed status of the assessee in the return, has been empowered to issue a notice under sub-section (2) of section 143 requiring the assessee to produce or caused to be produced any evidence on which the assessee may rely in support of the return. Thereafter the assessment shall be finalised under section 143(3) of the Act. The section as it stood at the relevant time, empowers the Income-tax Officer to make only certain specified adjustments to the income or losses dec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of section 143(1). It is correct that the order purported to have been passed under section 143(1), and it was beyond the four corners of the aforesaid section and such order was not appealable, at the relevant point of time. Such an order was not made appealable for the obvious reasons. The reason appears to be because of the limited nature of power to be exercised by the Income-tax Officer in such matters. Assessment orders passed under section 143(3) were appealable. The basic difference is that the proceedings under section 143(1) are summary in nature except making prima facie adjustments as provided therein, the disclosed income or loss is accepted as correct without calling upon the assessee while proceedings under section 143(3) a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the Income-tax Officer was justified to tax on the income of the assessee in correct status. He could refuse to accept the disclosed status, while framing the assessment under section 143(1). He proceeded on the assumption that the Explanation clarifies the words inaccurate, inadequate or incomplete in material respect with reference to sub-section (1) of section 143. The argument is misconceived. These expressions do not find place under section 143(1) but they could be find out under sub-section (2) of section 143. The scheme of section 143 confers power to pass a summary assessment order after rectifying the arithmetical mistake, allowances and deductions permissible under section 143(1) of the Act. The said assessment order can be reo....