TaxTMI 
TaxTMI 
2005 (4) TMI 48
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....ssessing Officer has no jurisdiction to change the status while making the assessment under section 143(1) and in that background whether a change in the status is appealable to the first appellate authority?" The assessment years 1986-87 to 1988-89 are 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 an association of persons and charged tax at the maximum marginal rate. The said assessment orders were ch....
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....g not been made appealable under the provisions of the Act, the view of the Tribunal that the appeal was maintainable is wrong. He further submitted that an order passed under section 143(1) of the Act has been made appealable for the first time by making necessary amendments w.e.f. 1st of October, 1998, by amending clause (a) of section 246(1) of the Act. In contra, 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 ....
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....(1) provides for assessment, without issuing any notice to the assessee, and gives a limited power to the Income-tax Officer to rectify arithmetical mistakes and make prima facie adjustments only. Section 143(3) empowers the Income-tax Officer to frame assessment after notice to the assessee and after making such inquiry as he deems fit. 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 of the ....
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.... Thus, it is clear that the change of status in summary proceedings under section 143(1) was not such an adjustment to the income or loss 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 cause 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....
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....the necessary corollary of the above discussion is that the assessment in question made by the Income-tax Officer was beyond the scope 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 th....
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....)(f), the assessment under sub-section (1) shall be deemed to be incorrect, inadequate or incomplete in a material respect, in the present case and 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 a 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 found out under sub-section (2) of section 143. The scheme of section 143 confers power to pass a summary assessment order a....