1997 (3) TMI 133 - AT - Income Tax

Summary

Issues Involved:

1. Applicability of exemption under section 11.
2. Applicability of section 13(1)(b) and 13(c)(ii).
3. Maintainability of appeal against adjustment made under section 143(1)(a).
4. Definition and appealability of an "intimation" under section 143(1)(a).
5. Alternative remedies available to the assessee.

Detailed Analysis:

1. Applicability of exemption under section 11:

The assessee, a charitable institution, had its registration under section 12A. For the assessment years 1984-85 and 1985-86, the ITAT had previously ruled that the assessee was entitled to exemption under section 11, as the provisions of section 13(1)(c) were not applicable. For the assessment year 1989-90, the assessee claimed exemption under section 11 in its return of income.

2. Applicability of section 13(1)(b) and 13(c)(ii):

The Assessing Officer (AO) made adjustments under section 143(1)(a) and denied the exemption under section 11, citing the applicability of sections 13(1)(b) and 13(c)(ii). Consequently, the AO assessed the total income of the assessee at Rs. 9,02,950, allowing expenditure of Rs. 2,53,090 from the gross total income of Rs. 11,56,042, and raised additional tax of Rs. 90,452.

3. Maintainability of appeal against adjustment made under section 143(1)(a):

The assessee appealed to the CIT(Appeals), who dismissed the appeal, stating that an appeal against an adjustment under section 143(1)(a) was not maintainable. The assessee then appealed to the ITAT, arguing that the intimation under section 143(1)(a) should be considered an assessment order and thus appealable. The assessee cited Supreme Court judgments in E. Alfred and Kalawati Devi Harlalka to support their contention that the intimation constituted an assessment.

4. Definition and appealability of an "intimation" under section 143(1)(a):

The ITAT held that an intimation under section 143(1)(a) specifying the amount of tax payable, and deemed to be a notice under section 156, does not equate to an order under the Income-tax Act. The Tribunal noted that the Legislature made a clear distinction between an order and an intimation, as evidenced by the specific provisions in section 154(1) for amending orders and intimations separately. The Tribunal referred to the Law Lexicon and jurisprudence principles, concluding that an intimation under section 143(1)(a) is not an order and therefore not appealable.

5. Alternative remedies available to the assessee:

The Tribunal discussed that the assessee had an alternative remedy of filing a rectification petition under section 154 for any mistakes in the intimation. The CIT(Appeals) had referred to the Direct Taxes Law (Amendment) Acts and Circular No. 549, which suggested rectification as the appropriate course for adjustments not of a prima facie nature. The Tribunal agreed with the CIT(Appeals) that the assessee should have pursued rectification rather than an appeal.

Conclusion:

The ITAT dismissed the appeal, affirming that an intimation under section 143(1)(a) is not an appealable order. The assessee's arguments, including reliance on previous Tribunal decisions and the Supreme Court's judgments, were not sufficient to establish the appealability of the intimation. The Tribunal emphasized the availability of rectification as an alternative remedy for the assessee.