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TMI Blog2005 (5) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... islature has embodied section 263 in the Act. Such a case is definitely prejudicial to the Revenue sufficient for invoking section 263 even in respect of an order passed under section 143(1). Fiscal statute; Principle of interpretation: Before we proceed to deal with the matter and examine the law, we may remind ourselves that the provisions of a fiscal statute have to be construed strictly. The court can neither add or subtract nor presume, nor can introduce its own view. The provisions of fiscal statutes are to be interpreted strictly according to the letters. The court is powerless to mould the law to suit a particular situation, which the court thinks just even though such a meaning cannot be obtained out of the language employed and the scheme and the context in which those are used. The court is not supposed to twist the law to make it just and serve justice. If the Legislature enacts a law, it has to be interpreted as it stands, and if two meanings are possible then the one beneficial to the assessee is to be adopted. The expressions used in a statute take colour from the context in which they are employed. The court cannot infuse any meaning to stretch its application in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) and CIT v. C.P. Sarathy Mudaliar [1972] 83 ITR 170 (SC). By reason of the Explanation, an intimation or an acknowledgment is a deemed order by fiction created thereunder for the purpose of section 246 providing for an appeal against an intimation under section 143(1) where the assessee objects to the making of adjustments brought about by the Finance Act, 1994 with effect from June 1, 1994. By reason of such fiction, it is a deemed order for the purpose of section 264 under which the Commissioner either on his own motion or an application by the assessee for revision may call for the records and make or cause an enquiry subject to the provisions of the Act not being an order prejudicial to the assessee, as he may think fit. Respondent's contention: On the other hand, Mr. Shome contended that the Act was amended by the Finance Act, 1999, with effect from June 1, 1999, by omitting sub-section (5) and the Explanation to section 143. Therefore, without the Explanation the question is to be considered. He relied on several decisions to contend that the intimation or acknowledgement is definitely not an assessment order. It may not be a formal order, as is understood in ordinary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of Kerala [1966] 60 ITR 262 (SC) where the apex court had held that the law as stands on the 1st of April of the financial year would govern the assessment of the returns submitted in respect of that financial year and any amendment made after 1st of April of that financial year would not apply to the assessment of the return of the year commencing 1st of April of that year. Therefore, in the present case, the Explanation to section 143 would very much be applicable. The effect of the amendment is not required to be gone into for our present purpose. The question needs be answered in the light of the said Explanation. Section 143(1)(a): Intimation: Whether an order to attract section 263: The amendments made in section 143(1) indicate the changes introduced in the scheme. Under section 143(1)(a), as it originally stood, the Assessing Officer was required to make a summary assessment. After the amendment under the Direct Tax Laws (Amendment) Act, 1987 effective from April 1, 1989, the scheme of summary assessment was omitted along with the assessee's right to object to the summary assessment, and only an intimation was to be sent without prejudice to section 143(2) which auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing opportunity through a process of regular assessment under section 143(3) after resorting to section 143(2). We may find support for the above proposition in the decision in Pradeep Kumar Har Saran Lal [1998] 229 ITR 46 (All). In K.V. Mankaram and Co. [2000] 245 ITR 353 (Ker), it was held that an intimation given under section 143(1)(a) does not result in an order of assessment nor can it be treated to be an order of assessment. The very scheme of section 143(1)(a) indicates that no order is passed but only an intimation is sent. In Punjab National Bank [2001] 249 ITR 763 (Delhi), it was held that the Legislature had used the word "intimation" as substitute for assessment. From these, two different concepts emerge : one, while making an assessment, the Assessing Officer is free to make any addition after giving opportunity to the assessee, and the other, under section 143(1)(a), no addition impermissible by the information given in the return could be made by the Assessing Officer. This is so because section 143(1)(a) does not contemplate any opportunity granted to the assessee and the Assessing Officer has to proceed only on the basis of the return filed by the assessee as was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 143(1)(a) is contrary to the power conferred under section 143(3), the provisions whereof are completely incompatible and diametrically opposite to section 143(1)(a). Therefore, we do not think that this decision can help us in the present context. Now we may examine the other decisions cited by Mr. Shome as to how far the ratio decided therein can persuade us to hold otherwise than the simple and clear position emanating from the plain reading of the scheme of section 143(1)(a) read with the Explanation to section 143. The decision in Rajkumar Dipchand Phade [2001] 249 ITR 520 (Bom) does not spell out any reason as to how section 263 could be applied in a case to treat an intimation as an order within the meaning of section 263. This decision dealt with the assessment year 1986-87 subject to the law as it stood prior to the 1987 amendment effective from 1989 with which we are now concerned. In the said decision, the court had no occasion to deal with the effect of the fiction created by the Explanation to section 143. In Smt R.G. Umaranee [2003] 262 ITR 507 (Mad) also, the Madras High Court was dealing with the assessment year 1988-89 and as such had no occasion to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which the Assessing Officer has passed an erroneous order prejudicial to the Revenue. Therefore, in order to attract section 263, the following four conditions need be satisfied viz., (1) there should be a proceeding; (2) there should be an order passed by the Assessing Officer in such proceeding; (3) such order should be erroneous; (4) and such order should be prejudicial to the Revenue. Absence of one of the conditions would be sufficient to detract section 263. As discussed above, section 143(1)(a) does not envisage initiation of any proceeding and the intimation is not an order passed in any proceeding to attract section 263. Even if we assume that an intimation is an order, then an order to be erroneous, it must be something, which does not conform to the scope of the first proviso to section 143(1)(a); and those in the first proviso are rectifiable under section 154(1)(b). In the absence of any liberty given to the Assessing Officer except those under the first proviso to section 143(1)(a), there is no scope of committing an error other than those rectifiable under section 154(1). Section 143(1)(a) does not postulate any scope of error envisaged under section 263 in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided that all the provisions of the Act shall apply accordingly. This fiction is also to be interpreted strictly. It has to be construed having regard to the context; and it must draw its colour from the purpose for which the fiction is created. The phrase "all the provisions of the Act shall apply accordingly" qualifies section 156 referred to in section 143(1)(a). Inasmuch as, the phrase "all the provisions of the Act shall apply accordingly" means that all the provisions of the Act as are applicable in respect of a notice of demand under section 156 when issued would apply. It does not widen the scope of application of the Act in all respects contrary to the confines created by the amendment substituting section 143(1) under the Finance Act, 1987. It restricts the application only in relation to section 156 treating the intimation as a deemed notice of demand confining the scope within the fiction created. It has to be construed in consonance with the scheme of section 143(1)(a) read with the Explanation to section 143. Therefore, the application of the provisions "accordingly" being confined within the fiction would not lead us to hold that the Legislature had intended to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a direction or order to that effect. Therefore, though not an assessment order, an intimation is nevertheless an order. Since it was not an order of assessment, therefore the assessee is entitled to file a revised return under section 139(5) even after issue of intimation as was held in Kalyanpur Cement Ltd. [2005] 276 ITR 49 (Cal). But this proposition cannot be reconciled with the Explanation to section 143, which allows the assessee to prefer an appeal under section 246 and seek a revision under section 264 confining the characteristics of the intimation as a deemed order only for the limited purpose for which the fiction was created through the enactment of the Explanation. Even if an intimation could be treated to be an order, even then the question remains as to whether it would be an order revisable under section 263. Section 246 and the fiction: At the same time, section 246 for which the fiction is created, itself prescribes specifically under section 246(1)(a) that an appeal would lie against an intimation under section 143(1). Thus, we find that even in section 246(1)(a) the appeal has been provided against an intimation under section 143(1). The language employed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de is only a ministerial act. It does not partake of the character of an assessment nor of a proceeding nor of any process ancillary thereto. On the other hand, it is only a calculation for the purpose of adjustment of the tax paid on the basis of the computation made by the assessee in its return. Therefore, the same cannot be treated to be a proceeding; and an intimation or an acknowledgement issued being a ministerial act cannot be treated to be an order passed in a proceeding by the Assessing Officer. Section 263 applies only to a proceeding in which the Assessing Officer had passed an order erroneously and prejudicial to the interests of the Revenue. The Explanation created a fiction to treat an intimation or an acknowledgement as an order for the purpose of section 264. This very fiction has excluded the application of section 263 by treating the intimation or acknowledgement as a deemed order fictionally only for the purpose of section 264 other than an order to which section 263 applies. Once the Explanation creates a fiction for treating an intimation as an order for the purpose of section 264, it excludes the application of section 263. Therefore, section 263 can never be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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