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2003 (12) TMI 47
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....d order under section 263, on the ground that the intimation under section 143(1) is not an order revisable under section 263 of the Income-tax Act? (C) Whether the findings of the Income-tax Appellate Tribunal are contrary to law laid down by the hon'ble High Court of Bombay in CIT v. Rajkumar Dipchand Phade [2001] 249 ITR 520 and by the hon'ble Madras High Court in CIT v. Chidambaram Construction Co. [2003] 261 ITR 754?" Briefly stated, the respondent (hereinafter, referred to as the "assessee") is a company incorporated under the provisions of the Companies Act. The assessment year relevant for this appeal is 1999-2000. The assessee filed its return on December 31,1999, declaring a total income of Rs. 4,42,870 under section 115JA for the assessment year in question. The said return was processed under section 143(1) of the Act, on March, 24, 2000, by the Joint Commissioner of Income-tax (Assessment) Special Range, Panaji. The document annexed as exhibit A is titled as "Order under section 143(1) of the Income-tax Act, 1961". The fact remains that this was an assessment under section 143(1) of the Act. Subsequently, it was noticed that while computing the book profits under....
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....e to the case of the assessee for the assessment year 1999-2000, it recognises only one order under section 143(3) to be passed by the Assessing Officer, and which alone was revisable under section 263 of the Act. Whereas, the purport of section 143(1) of the Act only enables the Assessing Officer to prepare intimation in respect of the return furnished by the assessee under section 139 or in response to notice under section 142(1) of the Act. It was contended that intimation is not an order. On this premise, it was argued that exercise of power by the Commissioner under section 263 of the Act, in the fact situation of the present case, was without authority of law. It was also contended that even if intimation sent by the Assessing Officer under section 143(1) as in this case, was to be treated as an order, even then, action under section 263 of the Act was unavailable in terms of Circulars No.4 dated July 8,1986 and No.176 dated August 26,1987. To buttress the above argument, reliance was placed by the assessee on the decision reported in the case of Nazir Singh v. CIT [2001] 252 ITR 820 of the Madhya Pradesh High Court and another decision reported in the case of CIT v. Smt Prak....
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....ed down on the reasoning given by the Tribunal, while accepting the argument advanced on behalf of the assessee. According to him, filing of return by the assessee and sending intimation to the assessee on the basis of such return being an assessment partakes of the colour of an order in that behalf. To support his argument, he has placed reliance on the language of section 143(1) which provides that intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of the Act shall apply accordingly. He submits that by this legal fiction, intimation sent to the assessee is a notice of demand under section 156; and if it is so, having regard to the purport of section 156 of the Act, which provides for issuance of notice of demand in consequence of any order passed under the Act, it will have to be assumed that the submission of the return under section 139 by the assessee and acknowledgment or acceptance thereof by the proper authority itself is an assessment under section 143(1) of the Act, which amounts to an order passed by the proper authority (Assessing Officer) in that behalf. He submits that if this argument was to be accepted, it necessarily....
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....ead with section 143(3), contends learned counsel, it is only when the Assessing Officer has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, that the Assessing Officer would resort to procedure provided under sections 143(2) and 143(3) and only thereafter, proceed to pass an order in writing either allowing or rejecting the claim or claims, specified in such notice and make an assessment determining a total income or loss accordingly and determine the sum payable by the assessee on the basis of such assessment. It is only when such order is passed, that the same is amenable to be questioned by the Commissioner in exercise of power vested in him under section 263 of the Act and not otherwise. To demonstrate the above contention, learned counsel has placed reliance on section 154 of the Act, which provides for rectification of mistake. That provision makes distinction between an "order" and an "intimation" or "deemed intimation" under sub-section (1) of section 143. He has also relied on the contents of the Departmental Circular No.549 dated October 31, 1989, which spells out the scope and the effect of the amend....
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....vance tax paid, any tax paid on self-assessment and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-section (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 section 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 and an intimation to that effect shall be sent to the assessee: Provided that except as otherwise provided in this sub-section, the acknowledgment of the return shall be deemed to be an intimation under this sub-section where either no sum is payable by the assessee or no refund is due to him." Having considered the rival submissions, the principal question that arises for our consideration is regarding the scope of interference under section 263 of the Act That question is no more res integra. The apex court in Malabar Industrial Co. Ltd. [2000] 243 ITR 83 has held as under: "A bare reading of this provision makes it clear that the prerequisite to the exercise of jurisdiction by the Commissioner ....
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....e produced any evidence or particulars specified therein or on which the assessee may rely in support of such claim. However, this power by virtue of the proviso to sub-section (2) is required to be exercised within 12 months from the end of the month in which the return is furnished. If the Assessing Officer invokes that power, then on further inquiry as referred to in sub-section (3), he would make an order in writing allowing or rejecting the claim or claims specified in the notice given to the assessee and make an assessment determining the total income or loss accordingly, and determine the sum payable by the assessee on the basis of such assessment. Indeed, the order passed under sub-section (3) of section 143 is "regular assessment" within the meaning of section 2(40) of the Act which defines "regular assessment" as meaning the assessment made under sub-section (3) of section 143 or section 144. Section 2(40) which defines "regular assessment", was amended by the Finance Act, 1990, with effect from April 1,1989, which corresponds to the amendment effected in section 143(1) of the Act. In other words, the procedure for assessment has been simplified so as to dispense with a r....
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....iction of the Commissioner in respect of proceeding under section 143(1) of the Act, which is also an assessment and, therefore, in the nature of an order, it would have expressly made provision in that behalf, just as it has amended section 154 of the Act by the Finance Act, 1999, in respect of the provision for "rectification of mistake" as a consequential amendment made to envelop the amended section 143(1) of the Act. It will be useful to advert to section 142 of the Act which enables the Assessing Officer to make inquiry before assessment, after the return of income under section 139 of the Act is filed by the assessee. Section 142 precedes section 143 and is not restricted only to the assessment order to be passed within the meaning of section 143(3) of the Act. In other words, on the filing of the return under section 139, if the Assessing Officer, has reason to believe that and inappropriate claim has been made by the assessee in the return, before sending the intimation under section 143(1) he can make such inquiry and if he is satisfied in that inquiry about the inappropriate claim of the assessee, he can proceed in terms of sub-section (2) and sub-section (3) of section ....