2008 (12) TMI 88 - HC - Income Tax

Effect of deletion of the explanation w.e.f. 1.6.1999 on the right of appeal vis-a-vis intimation u/s 143 (1) Since the case in hand relates to A.Y 1995-96, this explanation will be very much applicable - Tribunal was not justified in holding that no appeal lies against the order of intimation u/s 246 held that appeal is maintainable from order of intimation

Summary

Issues Involved:
1. Maintainability of appeal against an intimation under section 143(1)(a) of the Income-tax Act, 1961.
2. Taxability of capital gains declared by the assessee.
3. Levy of interest under section 234(c) of the Act.

Issue-wise Detailed Analysis:

1. Maintainability of Appeal Against Intimation Under Section 143(1)(a):
The central question was whether the Income-tax Appellate Tribunal was justified in holding that no appeal lies against the order of intimation under section 246 of the Act. The court examined the statutory provisions, specifically section 246 and section 143(1) as amended by the Direct Tax Laws (Amendment) Act, 1987, and the Finance Act, 1994. The court noted that the explanation to section 143(1) deemed an intimation to be an order for the purposes of sections 246 and 264, making it appealable. The court held that as the explanation was applicable for the assessment year in question (1995-96), the appeal against the intimation was maintainable. The court emphasized that the right of appeal should be read in a reasonable, practical, and liberal manner.

2. Taxability of Capital Gains Declared by the Assessee:
The appellant had declared long-term capital gains from the sale of a godown with a cost of acquisition as 'Nil' and paid taxes accordingly. The appellant argued that the capital gains were not taxable under section 45 of the Act, citing the Supreme Court's decision in CIT vs. B. C. Srinivas Shetty. The Commissioner of Income-tax (Appeals) rejected this ground, stating that no appeal lies under section 246(1)(a) against an intimation sent under section 143(1)(a) since no adjustment was made by the assessing authority. The court disagreed, holding that the appeal was maintainable and that the assessing officer should have applied the law correctly, ensuring that only legitimate taxes were collected.

3. Levy of Interest Under Section 234(c) of the Act:
The appellant challenged the levy of interest under section 234(c), arguing that no advance tax was required for capital gains and that the advance tax paid on March 15, 1996, covered the full amount of capital gains. The Commissioner of Income-tax (Appeals) allowed this ground, directing the assessing officer to recalculate the interest. The court noted that if the appeal was maintainable for one ground, it should be maintainable for all grounds raised by the appellant.

Conclusion:
The court concluded that the appeal against the intimation under section 143(1)(a) was maintainable, and the Commissioner of Income-tax (Appeals) should have considered all grounds raised by the appellant. The court quashed the Tribunal's order and restored the appeal to the Commissioner of Income-tax (Appeals) for a decision in accordance with the law. The judgment emphasized that tax authorities must ensure that only legitimate taxes are collected and that there can be no estoppel against the statute in matters of tax liability.