1994 (10) TMI 125 - AT - Income Tax

Summary

Issues:
1. Interpretation of whether an intimation under section 143(1)(a)(i) constitutes an "order" for invoking section 263 of the Income Tax Act.

Analysis:
The judgment involved an appeal by the assessee against an order under section 263 passed by the CIT, setting aside an assessment order due to non-consideration of section 44AC provisions. The assessee raised a legal objection, arguing that as per section 263(1), an order by the Assessing Officer is a prerequisite for invoking section 263. The counsel highlighted the distinction between an intimation and an order, citing section 143(1)(a)(i) where only an intimation is sent to the assessee, not an order. The counsel further pointed out that a notice of demand under section 156 can only be issued in consequence of an order passed under the Act.

The counsel emphasized the legislative intent behind the provisions, noting that the intimation under section 143(1) was not deemed an order for the purpose of section 263. The counsel also referred to the amended provisions of section 154(1), indicating that rectification was permissible for an order passed under the Act, necessitating a separate clause for amending intimations under section 143(1). The counsel argued that the intention was to keep intimation outside the purview of section 263, supported by the Explanation below section 143(5) and the specific provisions of section 154(1)(b).

The Departmental Representative contended that the intimation under section 143(1)(a)(i) should be considered an order to maintain balance in the Act's functioning. However, the Tribunal found merit in the assessee's arguments, citing a Supreme Court decision emphasizing that a literal interpretation should not lead to absurd results. The Tribunal analyzed the legislative intent behind the use of "intimation" and concluded that it was not intended to be equated with an order for invoking section 263. Consequently, the Tribunal upheld the contention that section 263 could not be invoked based on an intimation under section 143(1)(a)(i) and canceled the order under section 263, allowing the assessee's appeal.