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TMI Blog2006 (1) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... 03] 260 ITR 84 1 (SC) their Lordships after considering legislative intent behind the enactment of section 143(1)( a ) and section 143(2) have observed as under : "The Legislature therefore intended that where the summary proceeding under sub-section (1) has been adopted, there should be scope available for the Revenue either suo moto or at the instance of the assessee to make a regular assessment under sub-section (2) of section 143. The converse is not available: regular assessment proceedings having commenced under section 143(2), there is no need for the proceedings under section 143(1)( a )." 2.2 On consideration of order sheet entries dated 24-11-1998 and the decision of the Apex Court, the learned Judicial Member held that intimation was issued subsequent to the decision of the Assessing Officer to commence regular assessment proceedings. Therefore, intimation was not issued in accordance with law. The intimation was accordingly cancelled as per the proposed order. 3. The learned Accountant Member did not agree with the above view. He has reproduced all the grounds raised by the assessee before the Commissioner of Income-tax (Appeals) as well as before the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at intimation under section 143(1)( a ) was issued subsequent to issue of notice under section 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 section 143(1)( a ) is written prior to issue of notice under section 143(2) in the order sheet it could be concluded that intimation was signed prior to signing of notice under section 143(2) of the Act. 4. While upholding the action of the Revenue, the learned Accountant Member further observed as under : "However, the issue here is as to when the proceedings under section 143(2) commenced and when the proceedings under section 143(1)( a ) was completed. If we go to the concerned section we find that the word used in section 143(1)( a ) is sent whereas the word used in section 143(2) is served . The issue as to when a particular proceeding commences or concludes has not been discussed in cases relating to validity of intimation under section 143(1)( a ) by any of the Courts or in the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure - III to the Audit Report 3,53,686 3. Interest accrued but not due to KSIIDC (Sch. Code 1507) 7,72,261 4. Interest accrued but not due on term loans (OPG) (Sch. Core 1507) 49,532 5. P.F. of March 97 paid on 21-4-1997 (Engg. Div.) 2,87,320 36,26,591 (B) Deduction u/s. 80HHC is not allowed as the assessee has not furnished disclaimer certificate 5,84,460 (C) Difference in depn: Depn. Claimed Rs. 4,73,65,917 Depn. As per Depn Statement Rs. 4,73,17,637 48,280 42,59,331 Adjusted total income 4,23,13,481 Capital Gains 50,90,153 Levy additional tax on Rs. 42,59,331 Issue Notice under section 143(2) immediately. Sd. 24-11-1998" 5.1 The learned counsel further relied on the decision of the Hon ble Calcutt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... versa . Both actions appear to have been taken simultaneously by the Assessing Officer on 24-11-1998. It is evident that he had decided to commence regular proceedings and decided/directed to issue notice under section 143(2) of Income-tax Act which is dated 24-11-1998 before proceedings under section 143(1)( a ) stood completed. The question referred also talks of simultaneous notice . 7.3 In order to resolve above controversy, we must take in to account the following provisions of the Income-tax Act. "143(1)( a ) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, ( i ) If any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly; and ( ii )if any refund is due on the basis of such return, it shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce 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-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer 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-section (3) of this section or section 144 is made, ( a )any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessment; ( b )if no refund is due on regular assessment or the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (3) of section 143 authorized the Assessing Officer to come to his findings by making an assessment, in order to show that he has discharged his obligation in terms of sub-section (2) of section 143 of the Act. Therefore, the power exercisable under sub-section (1) of section 143 stands on a different footing from the power exercisable under sub-section (2) of section 143 of the Act. It is possible that, after the power has been exercised under sub-section (1) of section 143, it may occur to the Assessing Officer 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-section (2) of section 143 of the Act, it is however, not possible to comprehend that the self-same Assessing Officer could exercise power under sub-section (1) of section 143 of the Act simultaneously with exercise of power under sub-section (2) of section 143 of the Act. In the instant case, there is no dispute that the intimation under sub-section (1) of section 143 of the Act was issued on the same date, when the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision of sub-section (2) of section 143, it is seen that before ministerial act of issuance and service of notice under the above section are carried, the Assessing Officer has to form an opinion that "it is 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". In fact the Assessing Officer 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 Assessing Officer has to issue notice as on account use of word "shall" in the sub-section. He has further to complete assessment as per sub-section (3) which provides that, the Assessing Officer 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 Assessing Officer 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, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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