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TMI Blog2006 (2) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... there could be a levy of additional tax under section 143(1A) for the first time by an order under section 154?" The assessee filed a return of income on December 31, 1990, for the assessment year 1990-91 declaring a loss of Rs. 1,58,225. The Assessing Officer processed the return under section 143(1) (a) on August 20, 1991, accepting the returned loss. Later the Assessing Officer noticed that a mistake has been committed in processing the return as the provisions of section 43B were not applied in respect of the assessee's claim of bonus. The assessee had claimed deduction for Rs. 2,07,114 as bonus payable even though the liability was outstanding as on March 31, 1990, the last date of the accounting year. The assessee had no objection in rectifying the intimation under section 154. The Assessing Officer passed the order of rectification on August 26, 1992. Consequently, the Assessing Officer also levied additional income-tax of Rs. 22,368 under section 143(1A). The assessee however took up the matter in appeal before the Commissioner (Appeals) with the plea that after the return had been processed under section 143(1)(a), the Assessing Officer completed the regular assessment u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that addition under section 43B should have been made in processing the return under section 143(1)(b). Counsel submitted that the Tribunal is justified in not following the decisions of the Calcutta and the Delhi High Courts since the impact of the Finance Act, 1992, was not pointedly raised or considered in the above decisions. Counsel submitted that the Revenue is justified in levying additional income-tax of Rs. 22,368 under section 143(1A) of the Act. The question to be considered is whether the Assessing Officer under section 154 could rectify the mistake in the intimation under section 143(1) (a) in allowing the claim of bonus even though the liability had not been outstanding on the last day of the accounting year. The necessity of introducing section 143(1A) was felt because of the increase in respect of the income-tax assessees. On April 1, 1989, a new scheme was introduced by which the requirement of passing an assessment order in all cases where returns of income are filed has been dispensed with and the issue of an acknowledgment slip to the assessee will conclude the matter if he has correctly paid the tax and interest, if any, due on the basis of the return. If on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which the income was first assessable. (b) Where, as a result of an order made under sub-section (3) of this section or section 144 or section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264, or any order of settlement made under sub-section (4) of section 245D relating to any earlier assessment year and passed subsequent to the filing of the return referred to in clause (a), there is any variation in the carry forward loss, deduction, allowance or relief claimed in the return, and as a result of which,- (i) if any tax or interest is found due, 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, it shall be granted to the assessee: Provided that an intimation for any tax or interest due under this clause shall not be sent after the expiry of four years from the end of the financial year in which any such order was passed. (c) Where the assesssee is a partner of a firm or a member of an association of pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which additional income-tax is payable under clause (a) has been increased or reduced, as the case may be, the additional income-tax shall be increased or reduced accordingly, and,- (i) in a case where the additional income-tax is increased, the Assessing Officer shall serve on the assessee a notice of demand under section 156; (ii) in a case where the additional income-tax is reduced, the excess amount paid, if any, shall be refunded. Explanation.- For the purposes of this sub-section, 'tax payable on such excess amount' means,- (i) in any case where the amount of adjustments made under the first proviso to clause (a) of sub-section (1) exceed the total income, the tax that would have been chargeable had the amount of the adjustments been the total income; (ii) in any other case, the difference between the tax on the total income and the tax that would have been chargeable had such total income been reduced by the amount of adjustments ... (2) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer shall, if he considers it necessary or expedient to ensure that the assessee has not understated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to ask for rectification under section 154. Apart therefrom, the provisions of section 143(1)(a)(i) indicate that the intimation sent under section 143(1)(a) shall be without prejudice to the provisions of sub-section (2). The Legislature, therefore, intended that, where the summary procedure under sub-section (1) has been adopted, there should be scope available for the Revenue, either suo moru or at the instance of the assessee to make a regular assessment under sub-section (2) of section 143. The converse is not available; a regular assessment proceeding having been commenced under section 143(2), there is no need for a summary proceeding under section 143(1)(a)." The Calcutta High Court in Coates of India Ltd. v. Deputy CIT (No. 1) [1995] 214 ITR 498 however took the view that where the order under section 143(1)(a) is followed by a regular assessment under section 143(3), the order under section 143(1)(a), in so far as it is contrary to the regular assessment under section 143(3) ceases to be executable and becomes ineffective. The court also opined that apart from the fact that no notice under section 154 being permissible in the circumstances of the case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from April 1, 1989, by the Finance Act, 1992, operative from April 1, 1989, that is, for and from the assessment year 1989-90 till May 31, 1999, the provision was however ultimately omitted with effect from June 1, 1999, by the Finance Act, 1999, but had taken care of a situation (i) as a result of an order of regular assessment under section 143(3), (ii) a rectification order under section 154 or section 250 or section 254 or section 260 or section 262 or section 264, the amount on which additional income-tax shall be increased or reduced accordingly. The provision made to increase or reduce the amount of additional tax as a result of an order under subsection (3) of section 143 would show that the intimation under section 143(1)(a) would survive after an order under section 143(3) is passed. The abovementioned facts would evidently show that the Legislature had envisaged a situation that intimation under section 143(1A) would survive after the completion of the order under section 143(3) is passed or else there was no need to introduce section 143 (1A)(b), a provision for increase or reduce the amount of additional income-tax as a result of section 143(3). After making regular ..... X X X X Extracts X X X X X X X X Extracts X X X X
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