2002 (3) TMI 40 - HC - Income Tax

Summary

Issues Involved:
Whether proceedings u/s 154 of the Income-tax Act can be initiated after the Assessing Officer has given a notice u/s 143(2) to the assessee?

Judgment Details:

The judgment pertains to an appeal under section 260A of the Income-tax Act, 1961, involving the initiation of proceedings under section 154 for rectification of an intimation under section 143(1)(a) after the Assessing Officer issued a notice under section 143(2) to the assessee. The assessee, a public limited company, claimed a deduction on account of dividend paid to shareholders in its return for the assessment year 1990-91. Subsequently, notices were issued under sections 143(2) and 154(1)(b), leading to an order dated February 25, 1993. The Commissioner of Income-tax (Appeals) accepted the assessee's claim, which was challenged by the Revenue. The Tribunal dismissed the appeal, resulting in the current appeal before the High Court.

The main contention raised was whether there is any legal bar for the Assessing Officer to invoke jurisdiction under section 154 after issuing a notice under section 143(2) to the assessee. The court emphasized that the power under section 154 is limited to correcting an error apparent on the record, while proceedings under section 143(2) have a broader scope, including making assessments and determining tax liabilities. The court cited precedents, including a Division Bench of the Gujarat High Court and the Delhi High Court, to support the view that allowing parallel proceedings would be inefficient and unnecessary.

The court agreed with the cited precedents and held that once a notice under section 143(2) has been issued, any necessary corrections should be made during the assessment under section 143 and not through section 154. The court highlighted that the scope and application of section 154 have been extensively examined in previous cases, emphasizing that rectifications should be made within the assessment process. As no contrary decision was presented, the court found no merit in the appeal and dismissed it summarily.

Therefore, the High Court upheld the view that initiating proceedings under section 154 after issuing a notice under section 143(2) would be redundant and inefficient, and rectifications should be made within the assessment process under section 143.