Income Tax Appellate Tribunal - Amritsar
Lakshmi Enterprises vs Deputy Commissioner Of Income-Tax on 16 July, 1997
ORDER
Miss Moksh Mahajan, Accountant Member
1. In an appeal filed the assessee has challenged the order of the Commissioner of Income-tax passed under section 263 of the Income-tax Act.
2. The facts in brief as gathered from the order in question are that the assessee is a registered firm. It filed a return declaring an income of Rs. 6,48,370. The return filed is for assessment year 1989-90. The returned version was accepted by the Assessing Officer under section 143(1)(a) of the Income-tax Act and the refund was determined at Rs. 21,500. Subsequently, an order under section 154 of the Act was passed on 28-2-1992 whereby the income was enhanced by an amount of Rs. 8,555 on account of disallowance of bonus payable already allowed under section 143(1)(a) of the Act. The order was dated 28-2-1992. The learned CIT initiated proceedings under section 263 of the Act and for the reasons given in the order, the action of the Income-tax Officer in accepting the return under section 143(1) of the Act was held to be erroneous in so far it was prejudicial to the interests of the revenue. After holding that it was the assessment which was framed under section 143(1)(a) of the Act, the CIT directed the Assessing Officer to frame the assessment afresh after verifying certain facts relating to issues highlighted in the order. According to the learned AR, the CIT fell in an error in holding that the intimation issued under section 143(1)(a) of the Act constituted an order which could be cancelled under section 263 of the Act. The intimation issued under section 143(1)(a) does not constitute an order as wrongly held by the learned CIT. Reliance was placed on the Explanation inserted by the Finance (No. 2) Act, 1991 and that of Finance Act, 1994 whereby intimation under sub-section (1) or sub-section (1A) of section 143 of the Act is deemed to be an order for the purposes of sections 246 and 264 alone. There is no reference to section 263 of the Act in the explanation as inserted. It was argued that clause (b) of sub-section (1A) of section 143 as well clause (b) of sub-section (1B) of section 143 clearly bring out the intention of the Legislature whereby only orders passed under various sections as mentioned could be covered. Reliance was placed on the decision of ITAT Patna Bench in the case of Rajendra Prasad & Co. v. CIT [1995] 52 ITD 142 wherein it was clearly held that the intimation could not be treated as an order for the purpose of section 263 of the Act. The learned DR, on the other hand, heavily relied on the order of the learned CIT. It was submitted that the respectively clause (b) to sections 143(1) and 143(1A) make a mention of section 263 along with other sections as listed therein. It could not be said that intimation sent under section 143(1)(a) of the Act is not an order. The explanation introduced subsequently cannot be held to be clarificatory in nature. Therefore, the provisions of clause (b) of sections 143(1)(a) and 143(1A) cover intimation sent to the assessee.
3. We have carefully considered the rival submissions. We have also gone through the order of the ITAT Patna Bench in the case of Rajendra Prasad & Co. (supra) as referred to by the learned AR. Before we come to the issue in question, it would be relevant to briefly state the provisions of section 143 of the Act as these were there for the relevant assessment year. As per section 143(1)(a) of the Act, where a return is filed under section 139, or in response to a notice under sub-section (1) of section 142 of the Act, unless adjustments are called for under proviso to the aforesaid section, the tax or interest or refund is to be determined on the basis of the return as the case may be and the intimation to be issued to the assessee. The intimation is deemed to be the notice of demand as in terms of section 143(1)(a)(i) of the Act. The adjustments to be made as given in the proviso are -
(i) any arithmetical errors in the return, accounts or documents accompanying;
(ii) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, prima facie admissible but claimed in the return, to be allowed;
(iii) any loss carried forward, deduction, allowance or relief claimed in the return, which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, to be disallowed.
No intimation for interest or tax to be sent after the expiry of two years from the end of the assessment year in which the income was first assessable. Clause (b) of sub-section (1) of section 143 provides for variation in the tax or interest as a result of orders passed under section 143(3) or section 144 or section 147 or section 154 or section 155 or section 250 or section 254 or section 262 or section 263 or section 264 of the Act as well in pursuance of order of settlement made under sub-section (4) of section 245D of the Act, relating to any earlier assessment year and passed subsequent to the filing of the return referred to in clause (a) of section 143(1) of the Act. The variations are in regard to the carry forward loss, deduction, allowance or relief claimed in the return. Intimation for any tax or interest due under the aforesaid clause cannot be sent beyond four years from the end of the financial year in which such order is passed. Similarly, clause (c) provides for variation in the share income of member of association of persons or body of individuals. Sub-section (1A) provides for an additional tax on account of increase in the income declared by the person in the return. Clause (b) to the aforesaid sub-section (1A) refers to the orders passed under section 154 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 as a result of which the additional income-tax is to be varied. For assessment year 1989-90, the aforesaid clause did not make any reference to sub-section (3) of section 143 which was inserted by the Finance Act, 1992 though with effect from 1-4-1989. The distinction between the two clauses are in regard to the omission of certain sections as well specification of the year to which the orders pertaining to various sections are referred to. There are other provisions too which we need not discuss as these are not relevant for the issue in question except the provisions of sub-sections (2) & (3) of section 143 of the Act. Thus, a comprehensive procedure has been laid down for determination of tax under the section.
4. A glance at the new procedure for assessment shows that while emphasis is placed on the voluntary compliance by the assessee to file correct and complete return, the deterrence is provided in the form of additional tax for filing incorrect return. To achieve the objectives, the requirement of passing an assessment order has been dispensed with and only an acknowledgement is sent as explained in the Board's Circular explaining the new procedure. This is called an intimation. The expression 'Intimation' in section 143(1) stands in contradistinction to the word 'Order' as mentioned in sub-section (3) of section 143 of the Act. The word 'Intimation' has not been defined anywhere. Therefore, it has to be given an ordinary meaning. In common parlance, the expression would mean 'to inform' or 'to declare' or 'to make known'. On the other hand, the word 'order' is a well-known legal expression generally understood as a direction by a Court or an authority intended to affect the rights of the parties as mentioned in the Venkataramaiya's Law Lexicon & Legal Maxims (2nd Edition). According to Blacks Law Dictionary, it has been defined as 'mandate, precept, a command or direction authoritatively given'. It has been given specific meaning in the Civil Procedure Code and the other Statutes. Thus, there exists a distinction between 'intimation' and 'order'. The difference is also evident from the fact that under section 143(1)(a)(i) the intimation is deemed to be a notice of demand issued under section 156 of the Act which in lieu is only in consequence of an order as specified therein. So, is the case under section 143(1B)(ii)(b) of the Act. If this be so then apparently the provisions of clause (b) of section 143(1) are not applicable as sections mentioned therein relate to the orders passed, unless expressly provided otherwise. But, it is not so if the object of the scheme mentioned earlier is kept in view. The determination of tax does not attain finality with the issue of intimation. The Assessing Officer is empowered to issue notice under section 143(2) of the Act, if the conditions laid down therein are satisfied. It is in these circumstances that the provisions mentioned in clause (b) surface. Recourse to section 143(3) poses no problem as after issue of an intimation the Assessing Officer can issue notice under section 143(2) as mentioned in the aforesaid section. Further section 154 of the Act has been amended to bring an intimation, under the aforesaid section. Before introduction of an Explanation providing direct appeal against intimation, appeal in case of intimation was routed through the order passed under section 154 of the Act. The applicability of provisions of section 250 or section 254 or section 260 or section 262 follow suit. Under section 263 of the Act, it is an order of the Assessing Officer which is in question at the end of the CIT(Admn.). Thus, the order passed under section 143(3) of the Act where an intimation has already been made, can be subjected to section 263 of the Act. Otherwise too the provisions of section 263 of the Act do not fit with the situation where the return is accepted with or without making prima facie adjustments. There is no action of the Assessing Officer which could be termed as erroneous and prejudicial to the interest of the revenue. The Assessing Officer while processing the return and issuing intimation cannot travel beyond the prima facie adjustments. Any other omission in the return not covered under the aforesaid section 143(1)(a) of the Act has to be roped in under section 143(3) of the Act. This view of ours is further fortified by the insertion of the Explanation wherein an intimation sent to the assessee under sub-section (1) or (1B) is deemed to be an order for the purposes of section 246 and section 264. Section 263 has been consciously omitted. Thus, provisions of section 263 of the Act cannot be made applicable to intimation. Similar view has been taken by Patna Bench of the Appellate Tribunal in the case of Rajendra Prasad & Co. (supra).
5. For the reasons as listed above we are of the considered view that the learned CIT was not justified in resorting to the provisions of section 263 of the Act in regard to the intimation issued under section 143(1)(a) of the Act. Therefore, the order passed by the learned CIT under section 263 is quashed.
6. In the result, the appeal is allowed.