2007 (12) TMI 132 - HC - Income Tax

Tribunal is right in cancelling the order u/s 263 passed by CIT, ignoring the provisions of sec.143 relating to the assessment procedure - omission of the expression intimation from section 263 of the Act establishes the intention of Parliament to limit the power of revision - intimation under section 143(1) cannot be construed as an order of assessment CIT cannot exercise revisional jurisdiction in instant case - Tribunal order require no interference so revenue appeal dismissed

Issues Involved:
1. Jurisdiction of the Commissioner of Income-tax under section 263 of the Income-tax Act, 1961.
2. Distinction between "order" and "intimation" under section 143(1)(a) of the Income-tax Act, 1961.
3. Conditions for exercising revisional jurisdiction under section 263 of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Commissioner of Income-tax under section 263 of the Income-tax Act, 1961:

The core issue revolves around whether the Commissioner of Income-tax had the jurisdiction to revise an intimation issued under section 143(1)(a) of the Income-tax Act, 1961. The Commissioner had exercised his revisional jurisdiction under section 263, claiming that the assessment framed was erroneous and prejudicial to the interests of the Revenue. However, the Tribunal held that the Commissioner lacked jurisdiction, as the order under section 143(1) was not served and thus could not be revised under section 263.

2. Distinction between "order" and "intimation" under section 143(1)(a) of the Income-tax Act, 1961:

The Tribunal observed that an intimation under section 143(1)(a) does not equate to an "order" and thus cannot be subject to revision under section 263. The Tribunal emphasized that the jurisdiction under section 263 can only be exercised in relation to an "order" passed by the Assessing Officer and not an "intimation." This distinction was crucial in determining whether the Commissioner could revise the assessment.

3. Conditions for exercising revisional jurisdiction under section 263 of the Income-tax Act, 1961:

For the Commissioner to exercise revisional jurisdiction under section 263, two conditions must be met: the order must be erroneous, and it must be prejudicial to the interests of the Revenue. The Tribunal and the High Court both concluded that an intimation under section 143(1)(a) does not fulfill these conditions, as it is not an "order" but merely an acknowledgment of the return filed by the assessee.

Judgment Summary:

The High Court upheld the Tribunal's decision, emphasizing that the omission of the term "intimation" from section 263 indicates the legislative intent to limit the Commissioner's revisional powers to actual "orders." The court referred to the Supreme Court's interpretation in Assistant CIT v. Rajesh Jhaveri Stock Brokers P. Ltd., which clarified that an intimation under section 143(1)(a) is not an assessment order and does not involve any adjudication or determination of tax liability.

The court concluded that the legislative intent was to minimize departmental work and focus on selective scrutiny, as reflected in various CBDT circulars. Therefore, an intimation under section 143(1)(a) cannot be revised under section 263, as it is not an "order" and does not meet the conditions required for exercising revisional jurisdiction.

In conclusion, the High Court answered the question of law in favor of the assessee and against the Revenue, upholding the Tribunal's order that the Commissioner of Income-tax did not have the jurisdiction to revise the intimation under section 143(1)(a) using section 263 of the Income-tax Act, 1961.

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