2007 (12) TMI 407 - HC - Income Tax

Whether section 246 of the Act provides for separate appeal against the order under section 143(1)(a) of the Income-tax Act 1961? Whether the provisions laid down in under section 246 of the Act for filing separate appeal against the order under section 143(1)(a) of the Act and for non-filing of appeal by the assessee debars the right of the assessee for challenging the issue? Held that - A look at the provisions of section 246 of the Income-tax Act which provides for appeal and which has been taken into consideration by the learned Tribunal shows that as it existed at the relevant time it did not permit filing of any appeal against any order made under section 143(1)(a). This section 246 has undergone amendments from time to time and the relevant amendment was made with effect from June 1 1994 whereby the provision for appeal against an intimation under section 143(1) or 143(1B) was provided to lay. There is nothing to show that this amendment was made to apply to the orders passed till then. That being the position obviously the assessee could very well assail the correctness of the determination made or findings recorded in that order under section 143(1)(a) in the appeal to be filed against the regular assessment made under section 143(3). In favour of assessee.

Summary

Issues:
Challenge to Tribunal's order on regular assessment for the assessment year 1992-93 under Income-tax Act, 1961.

Detailed Analysis:
The appeal was filed by the assessee to challenge the order of the Tribunal related to Income-tax Appeal No. 1762/JP/1994 for the assessment year 1992-93. The Deputy Commissioner of Income-tax had sent an intimation to the appellant regarding the payable amount under section 143(1)(a) of the Income-tax Act, 1961. Subsequently, a notice was served proposing adjustments under section 154, leading to the appellant filing a revised return declaring a loss. The provisional assessment was done, demand created, and a regular assessment was made for the year 1992-93. The Commissioner of Income-tax (Appeals) partially accepted the appeal and remanded it back to the Assessing Officer for reexamination. The Revenue appealed before the Tribunal, which accepted the appeal on the grounds of jurisdiction.

The Tribunal found that the Commissioner (Appeals) had no jurisdiction to decide the issue as the order was passed under section 154(1)(b). The appeal was admitted, and three substantial questions of law were formulated. The controversy revolved around the appealability of the order under section 143(1)(a) and the right of the assessee to challenge it in an appeal against the regular assessment order under section 143(3). Section 246 of the Income-tax Act did not allow appeals against orders under section 143(1)(a) at the relevant time.

The Tribunal's decision was based on a misconception of the law regarding the right of appeal against determinations or intimation under section 143(1)(a). Consequently, all questions were answered in favor of the assessee, and the appeal was allowed, setting aside the Tribunal's order. Since the Tribunal did not assess the merits of the determination and set aside the Commissioner's order based on jurisdictional grounds, the matter was remanded back to the Tribunal to decide on the findings independently and in accordance with the law.