Income Tax Appellate Tribunal - Patna
Rajendra Prasad And Co. vs Commissioner Of Income-Tax on 24 October, 1994
Equivalent citations: [1995]52ITD142(PAT)
ORDER
--Intimation under s. 143(1)(a)(i).
Ratio:
An intimation sent by the assessing officer under s. 143(1)(a)(i) is not an `order' within the meaning of section 263 and is hence not revisable.
Held:
The word "intimation" has been used for the first time in the Income Tax Act by virtue of the Amendment to the scheme of assessments with effect from 1-4-1989. Since it is a new word, it is evident that its menaing will be not the same as the meaning of the earlier expression "order" or "assessment". The Legislature has not thought it fit to deem such an intimation to be an order for the purpose of section 156 and section 264. The fact that the amendment in the Explanation below section 143(5) relates to section 264 only and not to section 263 is a clear pointer that it was not the intention of the Legislature to bring an intimation under section 143(1)(a)(i) within the purview of section 263. A separate clause became necessary to enable rectification of intimations under section 143(1). This also shows that an intimation under section 143(1) has not been equated with an "order". Therefore, section 263 cannot be invoked in the present circumstances, when there is no dispute that it is only an intimation under section 143(1)(a)(i) which was the subject-matter of the order under section 263.
Case Law Analysis:
C. W. S. (India) Ltd. v. CIT (1994) 208 ITR 649 (SC) applied.
Application:
Also to current assessment years.
Income Tax Act 1961 s.143(1)(a) Income Tax Act 1961 s.263 ORDER V.K. Sinha, Accountant Member
1. This is an appeal filed by the assessee against an order under Section 263 passed by the CIT setting aside an "assessment order" dated 29-12-1989. It was set aside because the provisions of Section 44AC of the Act were not taken into account while determining the income from liquor business and, therefore, the "assessment order" was erroneous and prejudicial to the interest of revenue.
2. The Id. counsel for the assessee has raised a preliminary legal objection which will be considered first. According to him, the Assessing Officer did not pass any "order", and, therefore, the CIT could not invoke the provisions of Section 263 in law.
3. The Id. counsel for the assessee has invited our attention to Section 263 (1) of the Act according to which the section could be invoked if the CIT "considers that any order passed therein by the Assessing Officer" is erroneous in so far as it is prejudicial to the interest of the revenue. He. therefore, submitted that it was necessary that there should be an "order" in existence passed by the Assessing Officer. Our attention has thereafter been invited to the provisions of Section 143(1)(a)(i) of the Act introduced w.e.f. 1-4-1989 which may be usefully reproduced below :-
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 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 The Id. counsel for the assessee submitted that, under the above provisions only "an intimation" was to be sent to the assessee, which was not the same thing as "an order". It was only because the intimation did not amount to an assessment order that there was a further deeming provision that the intimation shall be deemed to be a notice of demand issued under Section 156 of the Act.
4. In this connection, our attention was also invited to Section 156 of the Act which is reproduced below :-
156. When any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable.
It was submitted that a notice of demand could be issued only in consequence of "any order" passed under this Act. However, it was only because the intimation under Section 143(1)(a)(Q did not amount to an order, that it became necessary to deem it to be a notice of demand issued under Section 156.
5. Our attention was further invited to the Explanation below Section 143(5) of the Act inserted by the Finance (No. 2) Act, 1991 w.e.f. 1 -10-1991 which is reproduced below :-
Explanation.- An intimation sent to the assessee under Sub-section (1) or Sub-section (IB) shall be deemed to be an order for the purposes of Section 264.
It was emphasised that the intimation under Section 143(1) was deemed to be an "order" for the purpose of Section 264 only and the Explanation did not include Section 263. In view of this he argued that it was the intention of the Legislature to deliberately keep an intimation under Section 143(1)(a)(0 outside the purview of Section 263.
6. The Id. counsel for the assessee invited our attention further to the amended provisions of Section 154(1) substituted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1-4-1989 which are reproduced below :-
154(1). With a view to rectifying any mistake apparent from record, an income-tax authority referred to in Section 16 may,-
(a) amend any order passed by it under the provisions of this Act;
(b) amend any intimation sent by it under Sub-section (1) of Section 143, or enhance or reduce the amount of refund granted by it under that sub-section.
7. It was emphasised that before the amendment w.e.f. 1-4-1989 rectification was permissible to "amend any order passed by it under the provision of this Act". It was only because an intimation under Section 143(1) did not amount to an order that it became necessary to introduce the specific provisions of Section 154(1)(b) providing that even an intimation under Section 143(1) could be amended in case of a mistake apparent from record.
8. Our attention was then invited to the proviso below Section 154(2) inserted by the Finance Act, 1992 w.e.f. 14-5-1992 which is reproduced below :-
(2) ** ** **
(a) ** ** **
(b) ** ** ** Provided that the Assessing Officer shall make an amendment for rectifying any mistake, which has been brought to his notice by the assessee in relation to an intimation referred to in Clause (b) of Sub-section (1), within a period of three months from the end of the month in which it is so brought to his notice and if no such amendment is made within the said period of three months, the assessee may appeal to the Deputy Commissioner (Appeals), or as the case may be, Commissioner (Appeals) against such intimation and the provisions of Section 246 and Section 249 shall have effect as if the said intimation were an order for the purposes of those sections.
The Id. counsel for the assessee submitted that the above provisions related to Section 143(1)(b) of the Act only and not Section 143(1)(a) and this also supported his submission that the intimation under Section 143(1)(a) was not "an order". For the above reasons, it was submitted that Section 263 could not be invoked in law to set aside an intimation under Section 143(1)(a) of the Act as has been done in the present case and so the order under Section 263 should be quashed.
9. The Id. DR, on the other hand, argued that the intimation under Section 143(1)(a)(i) was nothing but "an order". According to him, the statute should be interpretated in such a manner that the result should not become absurd. Reliance was placed on the decision of the Supreme Court in the case of C.W.S. (India) Ltd. v. CIT [1994] 208 ITR 649. In this connection, she submitted that the scheme of the Act was such that the assessee was allowed to appeal against an order of assessment or some other orders passed by the Assessing Officer, but the department had no such corresponding right of appeal. It was only in consequence thereof that the powers of revision under Section 263 of the Act were given to the CIT to take appropriate action in cases where an order passed by the Assessing Officer was erroneous in so far as it was prejudicial to the interest of the revenue. According to her, this was an essential feature of the Act and brought balance to the working of the Income-tax Act. If an interpretation was given that Section 263 was not applicable to an intimation under Section 143(1)(a)(0 of the Act, then one of the wings of the Act would be cut and it would not be possible to have smooth flight. According to her such an interpretation would be an absurd one and, therefore, a literal interpretation was not justified and it should be held that the intimation was an "order" for the purpose of Section 263 of the Act.
10. We have considered the rival submissions carefully. At the outset, before proceeding further, we may point out a factual error in the last part of the argument of the Id. counsel for the assessee relating to the proviso below Section 154(2) of the Act. The proviso speaks of "an intimation referred to in Clause (h) of Sub-section (1)". The Id. counsel has taken it to mean Section 143(1)(b) of the Act. However, in our opinion, it only refers to Section 154(1)(b) of the Act which has also been reproduced by us above. This sub-clause speaks of the entire Section 143(1) and is not confined to Section 143(1)(b). Thus, the last part of the argument of the Id. counsel is not acceptable.
11. However, we find merit in the remaining arguments of the Id. counsel for the assessee. In this connection, we may also refer to the decision of the Hon'ble Supreme Court in C.W.S. (India) Ltd.'s case (supra) relied upon by the Id. DR. The following observation appear at page 656 :-
While we agree with that literal construction may be the general rule in construing taxing enactments, it does not mean that it should be adopted even if it leads to a discriminatory or incongruous result. Interpretation of statutes cannot be a mechanical exercise. The object of all the rules of interpretation is to give effect to the object of the enactment having regard to the language used. The intention of Parliament in enacting Section 40(a)(t>) can be gleaned from the memorandum explaining the provisions of the Finance Bill, 1968, which sets, out the object behind this clause. The Full Bench of the Kerala High Court has set out the memorandum in the judgment under appeal. In this connection, we may refer to the well recognised rule of interpretation of statutes that where a literal interpretation leads to an absurd or unintended result, the language of the statute can be modified to accord with the intention of Parliament and to avoid absurdity.
12. The question, therefore, arises as to what was the intention of the Parliament. The word "intimation" has been used for the first time in the Income-tax Act by virtue of the Amendment to the scheme of assessments w.e.f. 1-4-1989. Since it is a new word, it is evident that its meaning will be not the same as the meaning of the earlier expression "order" or "assessment". The Legislature has not thought it fit to deem such an intimation to be an order for the purpose of Section 156 and Section 264. The fact that the amendment in the Explanation below Section 143(5) relates to Section 264 only and not to Section 263 is a clear pointer that it was not the intention of the Legislature to bring an intimation under Section 143(1)(a)(£) within the purview of Section 263. The Id. counsel's argument finds further support from the amended provisions of Section 154(1) reproduced above. A separate clause became necessary to enable rectifications of intimations under Section 143(1). This also shows that an intimation under Section 143(1) has not been equated with an "order".
13. In the above circumstances, even after application of the ratio of the judgment of the Hon'ble Supreme Court in the case of C.W.S. (India) Ltd. (supra), we have come to the conclusion that it was not the intention of the Parliament to treat an intimation under Section 143(1)(a)(Q of the Act as "an order" for the purpose of Section 263 of the Act. We, therefore, uphold the contention of the Id. counsel for the assessee that Section 263 cannot be invoked in the present circumstances, when there is no dispute that it is only an intimation under Section 143(1)(a)(i) which was the subject-matter of the order under Section 263.
14. For the above reasons, the order under Section 263 is cancelled and the assessee's appeal is allowed.