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TMI Blog1999 (2) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. (i) Depreciation on building since it was not shown in the balance sheet 71,31,250 (ii) Depreciation on plant machinery since it was not shown in the balance sheet 1,90,13,145 (iii) Entertainment expenditure 2,105 ----------- 2,61,46,500 ----------- As a result of the above adjustment, the loss was reduced to Rs. 2,08,52,641. Accordingly, the Assessing Officer issued intimation under section 143(1)(a) of the Income-tax Act, on December 18, 1992, levying additional tax under section 143(1A) of the Act at Rs. 20,56,830. Against the said intimation, the assessee moved an application under section 154 of the Act on January 6, 1993, which was rejected by the Assessing Officer. The assessee then went in appeal before the Commissioner of Income-tax (Appeals), who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." The reading of both the aforesaid provisions would show that if any notice under sub-section (2) of section 143 of the Income-tax Act, has been issued for the scrutiny of the assessment and the matter is in progress in sub-section (2) then to change the course and resort to section 143(1)(a)(i) of the Act would be against the principles of natural justice. Once a return has been filed under section 139 of the Act and the Assessing Officer is proceeding in the matter to scrutinise the return filed and to make an assessment under section 143(2), thereafter, he suddenly sends an intimation under section 143(1)(a)(i), it would mean that he has changed the course from usual course and taken the assessee by surprise which is not contemplated by the Legislature. Section 143(1)(a)(i) of the Act is almost like an ex parte assessment because on the basis of the return filed by the assessee and it is scrutinised by the Assessing Officer, the intimation is sent to the assessee specifying the sums so payable because that is a sort of a demand notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be bound by issuing an intimation under section 143(1)(a)(i) of the Act and the Legislature has given him sufficient power to resort to normal procedure of assessment under section 143(2) of the Act. This power has been given for the benefit of the assessee so that the Assessing Officer can be apprised of the correct facts. It is a cardinal principle of interpretation of the statute that normally the court should endeavour to interpret the provisions of the statutes in a manner which will advance the cause of justice. Therefore, from a reading of sections 143(1) and 143(2) together, it appears that notwithstanding the fact that the Assessing Officer has issued a notice under section 143(1)(a), still the power under sub-section (2) of section 143 is reserved for the Assessing Officer so that he can exercise the same ; therefore, the expression, which has been used, is "without prejudice to the provisions of sub-section (2)" of the Act meaning thereby that the Assessing Officer has a power under sub-section (2), despite the fact that he has exercised his power earlier in subsection (1)(a)(i) of section 143 of the Act. But the converse of it is not true. If the Assessing Officer ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jarat Poly-AVX Electronics Ltd. v. Deputy CIT [1996] 222 ITR 140 and in that case, it was held : "Reading the language of sub-clause (i) of clause (a) of sub-section (1) of section 143 of the Income-tax Act, 1961, it is clear that the Assessing Officer is permitted to make adjustments and the same is without prejudice to the provisions of sub-section (2). The right of the Assessing Officer to proceed under section 143(2) is preserved despite intimation to the assessee under section 143(1) of the Act. The use of the word 'shall' in sub-section (2) of section 143 of the Act mandates the Assessing Officer to issue notice to the assessee with a view 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. After expiry of 12 months from the end of the month in which the return is furnished no notice can be served on the assessee. But intimation under section 143(1) can be sent before the expiry of two years from the end of the assessment year. Thus, the Legislature has not permitted simultaneous proceedings. The Central Board of Direct Taxes in its Circular No. 549, dated October 31, 1989, has advised the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 143(2), it partakes of the nature of a regular assessment and the assessing authority should pass an order under section 143(3). The intimation under section 143(1)(a)(i) is only fictionally taken as a notice of demand under section 156. A notice of demand under section 156 is to be served in the prescribed-form. The intimation under section 143(1)(a)(i) is not in such prescribed form. It cannot be said that on issuance of such intimation, the assessment proceedings can be reopened only in terms of section 147 and the authority is not entitled to proceed under sub-section (2) of section 143." Our attention was also invited to the decision of the Delhi High Court given in the case of Apogee International Ltd. v. Union of India [1996] 220 ITR 248. We have gone through that decision, but with great respect the view taken by the Delhi High Court does not appear to be well founded in the present case for the simple reason that what is reserved is the power of the Assessing Officer under section 143(2) that if the intimation has been issued to the assessee, still the Assessing Officer reserved the power to issue notice under section 143(2) for a regular proceeding. But the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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