1998 (8) TMI 116 - AT - Income Tax

Rectification Of Mistakes, Apparent From Record, Valid Order, Intimation, Donation, Prima Facie Adjustments

Summary

Issues Involved:
1. Validity of the notice issued under section 143(2) after intimation under section 143(1)(a).
2. Validity of the notice issued under section 154 after the issuance of notice under section 143(2).
3. Legality and survival of the order passed under section 154.

Issue-wise Detailed Analysis:

1. Validity of the notice issued under section 143(2) after intimation under section 143(1)(a):

The Tribunal examined whether the notice issued under section 143(2) on 12-6-1990, after the intimation under section 143(1)(a) on 23-4-1990, was legally valid. The provisions of section 143(1)(a) are "without prejudice" to section 143(2). The Assessing Officer is empowered to issue a notice under section 143(2) within 12 months from the end of the month in which the return is furnished to verify the return. In this case, the return was filed on 27-12-1989, and the notice under section 143(2) was issued on 12-6-1990, thus within the time limit. The Tribunal concluded that the notice under section 143(2) was valid and should prevail over the provisions of section 143(1)(a). This view was supported by CBDT Circular No. 549 and the Gujarat High Court decision in Gujarat Poly-avx Electronics Ltd. v. Dy. CIT, which stated that once a notice under section 143(2) is issued, the Assessing Officer cannot make adjustments or issue intimation under section 143(1)(a).

2. Validity of the notice issued under section 154 after the issuance of notice under section 143(2):

The Tribunal analyzed whether the notice issued under section 154 on 6-8-1991 was valid when issued after the notice under section 143(2) on 12-6-1990. Section 154(1)(b) allows for the rectification of any mistake apparent from the record in an intimation under section 143(1). However, once a notice under section 143(2) is issued, the assessment must be completed under section 143(3), and no notice under section 154 can be issued. The Tribunal held that the notice under section 154 issued on 6-8-1991 was not legal and could not survive. This view was supported by the Gujarat High Court decision in Lakhanpal National Ltd. v. Dy. CIT, which stated that after issuing a notice under section 143(2), no notice under section 154(1)(b) can be issued.

3. Legality and survival of the order passed under section 154:

Given that the notice under section 154 was not valid, the order passed on 19-9-1991 under section 154 was also deemed invalid and illegal. The Tribunal noted that if there are multiple interpretations of the statute, no action lies under section 154. The adjustment under consideration was not a prima facie adjustment as it involved a debate and long-drawn process of argument. The Tribunal referred to the case of Bharat General & Textile Industries Ltd., where it was held that once a notice under section 143(2) is issued, there is no scope for making a prima facie adjustment. Consequently, the Tribunal confirmed that the order passed by the Assessing Officer under section 154, after the issuance of notice under section 143(2), was not in accordance with the law and was correctly canceled by the CIT(A).

Conclusion:

The Tribunal dismissed the departmental appeal, confirming the CIT(A)'s order canceling the rectification under section 154. The notices and orders under section 154 were deemed invalid as they were issued after the notice under section 143(2), which should prevail and supersede the provisions of section 143(1)(a).