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TMI Blog2006 (2) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... th Nov., 1998, and on the same date, the notice was issued under s. 143(2) of the Act. 4. The case of the learned Departmental Representative, on the other hand is that the proceedings under s. 143(2) were commenced after processing the return under s. 143(1)(a) and hence impugned proceedings are valid. In this regard, the learned Departmental Representative relied on the decision of the Tribunal 'A' Bench, Hyderabad, in the case of Nav Bharat Ferro Alloys Ltd. (ITA No. 502/Hyd/1999, dt. 26th Feb., 2004), wherein the Bench observed that though the date of intimation and the date of notice under s. 143(2) were 13th Nov., 1998, the intimation has been processed first, and then only notice under s. 143(2) was issued, and hence proceedings under s. 143(1)(a) are valid. The learned Departmental Representative has filed two paper books, the first one containing 7 pages and the other containing 17 pages. Adverting our attention to the order-sheet entries the learned Departmental Representative submitted that the prima facie adjustments were made and necessary calculations were made in the order-sheet and only after processing the return under s. 143(1)(a), notice was issued under s. 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch being the case, the intimation under s. 143(1)(a) deserves to be cancelled. The learned Departmental Representative placed reliance upon the decision of the Tribunal in the case of Nav Bharat Ferro Alloys, which is distinguishable on facts inasmuch as, in that case there is a categorical finding of the Bench that the return was processed under s 143(1)(a) prior to issuance of the notice under s. 143(2) whereas in the instant case the facts, as found out from the order-sheet entries, clearly give an indication that the intimation under s. 143(1)(a) was signed by the AO only after commencement of proceedings under s. 143(2) of the Act. 7. Under the circumstances, we set aside the order of the AO, and cancel the intimation dt. 24th Nov., 1998, as being not valid in law. 8. In the result, appeal filed by the assessee is allowed. B.K. HALDAR, A.M.: June, 2005 I have gone through the order passed by the learned JM. But I am unable to agree with him that in the instant case, intimation under s. 143(1)(a) sent by the AO was not valid in law. I shall state, in the following paragraphs, the reason for my disagreement. 2. The instant appeal is for asst. yr. 1997-98. Sec. 143(l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of s. 43B and paid on due dates. 6. On the facts and in the circumstances of the case, the learned Jt. CIT is not justified in disallowing under s. 143(1)(a) the provident fund for March, 1997 Rs. 2,87,320 of engineering division which was paid within the due date specified under Provident Fund Act. 7. On the facts and in the circumstances of the case, the learned Jt. CIT is not justified in disallowing under s. 143(1)(a) the deduction rightly claimed under s. 80HHC of Rs. 5,84,460 with the support of report/certificate obtained in prescribed form. 8. On the facts and in the circumstances of the case, the learned Jt. CIT is not justified in not allowing credit for the TDS of Rs. 5,219. 9. On the facts and in the circumstances of the case, the learned AO is not justified in levying additional tax under s. 143(1A) of the IT Act, 1961 after the issue of notice under s. 143(2) of the IT Act, 1961. 10. On the facts and in the circumstances of the case, the learned Jt. CIT is not justified in levying interest under s. 234C without obtaining the dates of capital gains income. 11. On the facts and in the circumstances of the case, the learned AO is not justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered by the provisions of s. 43B and paid on due dates. 6. On the facts and in the circumstances of the case, the learned Jt. CIT is not justified in disallowing under s. 143(1)(a) the provident fund for March, 1997 Rs. 2,87,320 of engineering division which was paid within the due date specified under Provident Fund Act. 7. On the facts and in the circumstances of the case, the learned Jt. CIT is not justified in disallowing under s. 143(1)(a) the deduction rightly claimed under s. 80HHC of Rs. 5,84,460 with the support of report/certificate obtained in prescribed form. 8. On the facts and in the circumstances of the case, the learned Jt. CIT is not justified in not allowing credit for the TDS of Rs. 5,219. 9. On the facts and in the circumstances of the case, the learned AO is not justified in levying additional tax under s. 143(1A) of the IT Act, 1961 after the issue of notice under s. 143(2) of the IT Act, 1961. 10. On the facts and in the circumstances of the case, the learned Jt. CIT is not justified in levying interest under s. 234C without obtaining the dates of capital gains income. 11. On the facts and in the circumstances of the case, the learned AO is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 84 (SC). He has quoted from the above decision as under: "The legislature therefore intended that where the summary proceeding under sub-s. (1) has been adopted, there should be scope available for the Revenue either suo motto or at the instance of the assessee to make a regular assessment under sub-s. (2) of s. 143. The converse is not available: regular assessment proceedings having commenced under s. 143,(2), there is no need for the summary proceedings under s. 143(1)(a)." 9. As regards the Department's reliance on the decision of the Tribunal 'A' Bench, Hyderabad in the case of Nav Bharat Ferro Alloys Ltd. in ITA No. 502/Hyd/1999, dt. 26th Feb., 2004, it has been held by him that in that case, there was a categorical finding of the Bench that the return was processed under s. 143(1)(a) prior to issuance of notice under s. 143(2) whereas in the instant case, the order-sheet entries clearly give an indication that the intimation under s. 143(1)(a) was signed by the AO only after commencement of proceedings under s. 143(2) of the Act. 10. In the instant case, the admitted fact is that both the intimation under s. 143(1)(a) and notice under s. 143(2) were signed on the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing question has been referred to me for consideration under s. 255(4) of the IT Act, 1961: "Whether, on the facts and in the circumstances of the case, the AO was justified in issuing an intimation under s. 143(1)(a) of the Act though simultaneously notice was issued under s. 143(2) of the Act." 2. The above controversy arose in the circumstances that AO issued intimation under s. 143(1)(a) on 24th Nov., 1998 when simultaneously on the same date he issued notice under s. 143(2) of the IT Act. 2.1 In the case of CIT vs. Gujarat Electricity Board (2003) 181 CTR (SC) 28 : (2003) 260 ITR 84 (SC) their Lordships after considering legislative intent behind the enactment of s. 143(1)(a) and s. 143(2) have observed as under: "The legislature therefore intended that where the summary proceeding under sub-s. (1) has been adopted, there should be scope available for the Revenue either suo motu or at the instance of the assessee to make a regular assessment under sub-s. (2) of s. 143. The converse is not available: regular assessment proceedings having commenced under s. 143(2), there is no need for the proceedings under s. 143(1)(a)." 2.2 On consideration of order sheet entries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that both the intimation under s. 143(1)(a) and notice under s. 143(2) were signed on the same date. This is clear from para 4.1 of the order of the learned CIT(A), whereas the assessee's claim is that intimation under s. 143(1)(a) was issued subsequent to issue of notice under s. 143(2) of the Act. The Department has claimed the opposite. There was no evidence produced by either party to substantiate the conclusion. However, in law there is a presumption that what is clear from record is taken as correct unless contrary is proved. As the entry of issue of intimation under s. 143(1)(a) is written prior to issue of notice under s. 143(2) in the order sheet it could be concluded that intimation was signed prior to signing of notice under s. 143(2) of the Act. 4. While upholding the action of the Revenue, the learned AM further observed as under: "However, the issue here is as to when the proceedings under s. 143(2) commenced and when the proceedings under s. 143(1)(a) was completed. If we go to the concerned section we find that the word used in s, 143(1)(a) is 'sent' whereas the word used in s. 143(2) is 'served'. The issue as to when a particular proceeding commences or conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcular No. 496 dt. 25-9-1987. ------------------------------------------------------------ 2. TNGST payable as 3,53,686 per Annexure - III to the Audit Report ------------------------------------------------------------ 3. Interest accrued 7,72,261 but not due to KSIIDC (Sch. Code 1507) ------------------------------------------------------------ 4. Interest accrued 49,532 but not due on term loans (OPG) (Sch. Code 1507) ------------------------------------------------------------ 5. P.F. of March 2,87,320 1997 paid on 21st April, 1997 (Engg. Div.) ------------------------------------------------------------ 36,26,591 ------------------------------------------------------------ (B) Deduction under 5,84,460 s. 80HHC is not allowed as the assessee has not furnished disclaimer certificate ------------------------------------------------------------ (C) Difference in depn.: Depn. Claimed 4,73,65,917 Depn. As per 4,73,17,637 48,280 Depn. Statement -------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the above section has to be held to be illegal and cancelled. There is no dispute on this proposition. 7.2 In the present case, the proposed order of the learned AM has also recorded that there is no clear evidence that notice under s. 143(2) was issued after intimation proceedings were concluded. In my considered opinion it is not possible to hold even on minute examination of the order sheet entry dt. 24th Nov., 1998 as to whether proceedings under s. 143(1)(a) were completed before notice under s. 143(2) was issued or vice versa. Both actions appear to have been taken simultaneously by the AO on 24th Nov., 1998. It is evident that he had decided to commence regular proceedings and decided/directed to issue notice under s. 143(2) of IT Act which is dt. 24th Nov., 1998 before proceedings under s. 143(1)(a) stood completed. The question referred also talks of 'simultaneous notice'. 7.3 In order to resolve above controversy, we must take into account the following provisions of the IT Act . "143(1)(a) Where a return has been made under s. 139, or in response to a notice under sub-s. (1) of s. 142, (i) If any tax or interest is found due on the basis of such return, after a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not underpaid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished. (3) On the day specified in the notice issued under sub-s. (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the AO may require on specified points, and after taking into account all relevant material which he has gathered, the AO shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him on the basis of such assessment. (4) Where a regular assessment under sub-s. (3) of this section or s. 144 is made,- (a) any tax or interest paid by the assessee under sub-s. (1) shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorized the AO to come to his findings by making an assessment, in order to show that he has discharged his obligation in terms of sub-s. (2) of s. 143 of the Act. Therefore, the power exercisable under sub-s. (1) of s. 143 stands on a different footing from the power exercisable under sub-s. (2) of s. 143 of the Act. It is possible that, after the power has been exercised under sub-s. (1) of s. 143, it may occur to the AO that, while issuing the intimation or while issuing the refund, certain things escaped his attention and, accordingly, he has not been able to ensure that the assessee has not underpaid tax and, accordingly, he may thereupon take steps under sub-s. (2) of s. 143 of the Act, it is however, not possible to comprehend that the self-same AO could exercise power under sub-s. (1) of s. 143 of the Act simultaneously with exercise of power under sub-s. (2) of s. 143 of the Act. In the instant case, there is no dispute that the intimation under sub-s. (1) of s. 143 of the Act was issued on the same date, when the notice under sub-s. (2) of s. 143 of the Act was issued. In the affidavit-in-opposition filed by the IT Department, it has not been stated that in point of fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated the income or has not computed excessive loss or has not underpaid the tax in any manner". In fact the AO's power to issue notice are conditioned on the formation of opinion on above lines. This is clear from use of word, "if". Further once opinion as above is formed, the AO has to issue notice as on account of use of word "shall" in the sub-section. He has further to complete assessment as per sub-s. (3) which provides that, the AO shall by an order in writing, make an assessment of the total income or loss of the assessee and determine the sum payable by him on the basis of such assessment. 9.1 It is therefore clear that when on facts and in the circumstances of this case the AO had already considered it necessary or expedient to ensure that the assessee should be called upon to produce evidence in support of return filed by the assessee, then the assessee could only be visited with regular demand based on regular assessment under s. 143(3) of the IT Act. The assessee could not be made to pay additional tax simultaneously under sub-s. (1A) of s. 143 of the IT Act. Such treatment is not envisaged when AO has already decided to call upon the assessee to produce evidence in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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