TaxTMI 
TaxTMI 
1999 (2) TMI 48
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....cer processed the return under section 143(1) of the Act and made the following adjustment : Rs. (i) Depreciation on building since it was not shown in the balance sheet 71,31,250 (ii) Depreciation on plant & machinery since it was not shown in the balance sheet ....
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....i.e., prior to the issue of intimation. The Tribunal after considering the matter and relying on the decision of the Calcutta High Court in Modern Fibotex India Ltd. v. Dy. CIT [1995] 212 ITR 496, held that having issued the notice under section 143(2) of the Income-tax Act, the Assessing Officer's action in making prima facie adjustment and in issuing intimation under section 143(1)(a) was without jurisdiction. Accordingly, the Tribunal quashed the intimation dated December 18, 1992, issued under section 143(1)(a) of the Income-tax Act. Thereafter, the Tribunal referred the aforesaid question for answer of this court. In order to appreciate the controversy involved in the matter, it will be necessary to refer to the provisions of law. Section 143(1)(a)(i) reads as under : "143. (1)(a) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 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-section (2), an intimation shal....
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....sion "without prejudice to the provisions of sub-section (2)" means that it saves the action already initiated under section 143(2) of the Act. If the Legislature really intended to give full power to the Assessing Officer under section 143(1)(a)(i), then they would not have saved the action under section 143(2). In fact, this expression has carved out an exception that the Assessing, Officer can send intimation to the assessee if the Assessing Officer has not exercised his power under section 143(2) of the Act. Learned counsel for the assessee has submitted that once notice under sub-section (2) of section 143 has been issued, then the Assessing Officer cannot resort to the ex parte issessment under section 143(1)(a)(i). From an expedient point of view, a notice under section 143(2) has been issued for calling the assessee for the purpose of scrutinising the assessment, then suddenly resort to section 143(1)(a)(i) by changing the course to surprise of the assessee will also be not conducive to justice. The expression "without prejudice to the provisions of sub-section (2)", clearly stipulates that notwithstanding the fact that an intimation has been issued under section 143(1)(....
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....ection, a reference may also be made to subsection (3) of section 143 of the Act, which says that if notice under sub-section (2) has been issued then the Assessing Officer shall proceed and decide the matter. This shows that there is a mandate that the Assessing Officer should proceed and complete the assessment proceedings initiated under section 143(2) of the Act. If the Legislature wanted that the Assessing Officer can resort to section 143(1)(a)(i) of the Act, despite that he has already issued a notice under sub-section (2) of section 143 then they would not have used the expression "without prejudice to the provisions of sub-section (2)". It only shows that the intention of the Legislature was that the power of the Assessing Officer should not be circumscribed simply because he issued a notice under section 143(1)(a)(i) of the Act, he still has power to issue notice to the assessee under sub-section (2) of section 143 of the Act and assess the liability with the assistance of the assessee. In support of the aforesaid contention, our attention was invited to a decision of the Calcutta High Court given in the case of Modern Fibotex India Ltd. v. Deputy CIT [1995] 212 ITR 49....
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....t but he has to make assessment in accordance with law, i.e., under section 143(3) of the Act." Therefore, what it comes to is that once a notice under sub-section (2) of section 143 has been issued, then suddenly, the Assessing Officer cannot revert back to section 143(1)(a) and issue intimation and that would amount to committing a breach of section 143(3) which says that once a notice under section 143(2) has been issued then he shall proceed and decide the matter. For this purpose, this power has been specifically saved to the Assessing Officer where it says that if intimation has been issued by the Assessing Officer under section 143(1)(a)(i) of the Act, still without prejudice to that, the Assessing Officer has a power under sub-section (2) of section 143 of the Act to take up the proceedings in a regular assessment. But the reverse is not correct. In case, a notice under section 143(2) has been issued, it cannot revert to issue intimation under section 143(1)(a)(i) of the Act. Similarly, in this connection, our attention was invited to the decision of this court given in the case of Kamal Textiles v. ITO [1991] 189 ITR 339 ; [1991] MPLJ 441 ; and in that case, it was obse....