Indian Kanoon - Search engine for Indian Law

6.1 Therefore, in the present case, the Explanation to Section 143 would very much be applicable. The effect of the amendment is not required to be gone into for our present purpose. The question needs to be answered in the light of the said Explanation.

Section 143(1)(a): Intimation : Whether an order to attract Section 263 :

7. The amendments made in Section 143(1) indicate the changes introduced in the scheme. Under Section 143(1)(a), as originally stood, the AO was required to make a summary assessment. After the amendment under the Direct Tax Laws (Amendment) Act, 1987, effective from 1st April, 1989, the scheme of summary assessment was omitted along with the assessee's right to object to the summary assessment, and only an intimation was to be sent without prejudice to Section 143(2) which authorizes the AO to scrutinize the return and consider all the claims and pass an order of assessment under Sub-section (3) dealing with the issues involved in the assessment. The scheme shows that the AO has to accept the return and the information furnished therewith within the scope of the proviso to Section 143(1)(a) viz., in the nature of obvious corrections and not beyond. In case he wanted to differ, he could resort to Section 143(2). An Explanation was inserted in Section 143 by the Finance (No. 2) Act, 1991, to provide that an intimation sent under Sub-section (1) or Sub-section (1B) shall be deemed to be an order for the purpose of Section 264. The said Explanation was further amended by the Finance Act, 1994, to include Section 246 along with Section 264. The effect of such amendment was that the intimation was deemed to be an order for the purpose of Sections 246 and 264. The Explanation did not provide that the intimation shall be deemed to be an order within the meaning of the Act or for all purposes of the Act. It specifically mentioned only the said two provisions.

7.5 Now we may examine the other decisions cited by Mr. Shome as to how far the ratio decided therein can persuade us to hold otherwise than the simple and clear position emanating from the plain reading of the scheme of Section 143(1)(a) read with the Explanation to Section 143. The decision in Rajkumar Deepchand Phade (supra) does not spell out any reason as to how Section 263 could be applied in a case to treat an intimation as an order within the meaning of Section 263. This decision dealt with the asst. yr. 1986-87 subject to the law as it stood prior to the 1987 amendment, effective from 1989, with which we are now concerned. In the said decision, the Court had no occasion to deal with the effect of the fiction created by the Explanation to Section 143. In Smt. R.G. Umaranee (supra) also, the Madras High Court was dealing with the asst. yr. 1988-89 and as such had no occasion to deal with the impact or effect of the fiction created by reason of the Explanation to Section 143 and as such this decision does not help us in the present context. The decision in Sri Mahasastha Pictures (supra) proceeds on the reasoning that the provisions of Section 263 are widely worded to encompass any order passed by the AO including the summary assessment order, viz., under Section 143(1)(a) as it stood prior to 1987 amendment when the said section required summary assessment. This decision also had no occasion to deal with the fiction created by the Explanation to Section 143 after the 1987 amendment. Inasmuch as, acceptance of the return within the scope of the first proviso to Section 143(1)(a) does not amount even to a summary assessment order. Therefore, this decision also does help us. The decision in M.M. Khambhatwala (supra) is of no help since the said decision was not dealing with an intimation under Section 143(1)(a) as it stood after 1989 while laying down the scope of Section 263. Read in the context of the present case, those decisions are of no help. The decision in Kalyanpur Cement Ltd. (supra) was rendered altogether in a different context holding that an intimation is not an assessment contemplated under Section 139(5) for the purpose of limitation for filing revised return. Therefore, much reliance, as sought to be placed by Dr. Pal on the said decision, is of no avail.

Section 263 : Section 264 : The distinction : The scope : The fiction :

12. Section 264(1) applies in respect of order other than order to which Section 263 applies. Therefore, an order, which is subject to Section 264, must be an order to which Section 263 does not apply. The statute has created a distinction between orders contemplated in Sections 263 and 264, the application whereof mutually excludes the other. Therefore, an order, which is subject to Section 264, can never be subjected to Section 263 on account of its being an order to which Section 263 does not apply. Section 263 applies in respect of an order passed in a proceeding by the AO on account of its being erroneous and prejudicial to the interest of the Revenue. When the legislature through clear expression created a fiction to treat an intimation or acknowledgement under Section 143(1) as a deemed order for the purpose of Section 264, the legislature made its intention clear that such intimation and acknowledgement shall be outside the purview of Section 263. This is clear from the scheme introduced by the Finance Act, 1987, which was a deliberate and clear departure from the summary assessment contemplated under Section 143(1) brought about with a particular purpose and object as reflected in the Explanation to Section 143.