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TMI Blog1998 (8) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... ocessed under section 143(1)(a) of the Income-tax Act, 1961 on 23-4-1990. The Assessing Officer found that the assessee had claimed deduction under section 80G of the said Act on donation of Rs. 17 lakhs paid to Viswamongal Trust. The deduction was allowed while processing the return under section 143(1)(a). However, the Assessing Officer found that the Hon'ble Calcutta High Court has held that donations to Viswamongal Trust were not eligible for deduction under section 80G against which the assessee is in appeal before the Hon'ble Supreme Court. The above facts were mentioned by the assessee in the letter dated 26-12-1989 which accompanied the return. The Assessing Officer followed the CBDT Instruction No. 1814 F. No. 244/2/89 ITA-2 dated 4-4-1989 and came to the conclusion that deduction under section 80G on donations made to Viswamongal Trust became a prima facie adjustment in view of the decision of the Hon'ble Calcutta High Court. Since at the time of order under section 143(l)(a) dated 23-4-1990 the said prima facie adjustment was not made, the Assessing Officer issued notice under section 154. The assessee filed a letter dated 14-8-1991 objecting to the proposed rectificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue has preferred this appeal to the Tribunal. The Id. DR submitted before us that the CIT(A) was not justified in cancelling the order of the Assessing Officer passed under section 154 just because a notice under section 143(2) was issued before the action under section 154. He invited our attention to the provisions of section 154(1)(b) and pleaded that what is relevant is the provision envisaged in sub-section (1)(b) of section 154 and, therefore, notice under section 143(2) does not take away the power of the Assessing Officer to take action under section 154. He further pointed out that on merit it is not the case of the CIT(A) that action under section 154 does not lie. On the basis of these arguments and contentions, he supported the order passed by the Assessing Officer under section 154. 5. The Id. Counsel for the assessee, on the other hand, invited our attention to pages 1 and 2 of the paper-book where notices are placed, and submitted that the notice under section 143(2) was issued on 12-6-1990 while the notice under section 154 was issued on 6-8-1991. According to him, the notice under section 154 was issued more than one year later. He also drew our attenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of the case ? We will deal with them one by one with reference to the facts ot the case and the legal position envisaged in the scheme of the Act. 8. Coming to the first question or issue, we find that the provisions of section 143(1 )(a) are "without prejudice" to the provisions of section 143(2) of the Act. Under the provisions of section 143(2) in a case where the Assessing Officer wants to verify whether the assessee has not under-stated the income or has not computed excessive loss or has not underpaid the tax in any manner, he may take up the case for regular assessment for scrutiny and for this purpose he is empowered to issue notice within the expiry of 12 months from the end of the month in which the return is furnished,In the present case, the return of income is filed on 27-12-1989 and the case was taken up for regular assessment by issuing a notice dated 12-6-1990 under section 143(2) which is within the time-limit envisaged under sub-section (2) of section 143. This notice issued under section 143(2) is, therefore, a valid notice and has not been disputed or questioned by the parties at any stage. The return of income was processed on 23-4-1990 or an order und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 143(1)(a) is that once the notice under section 143(2) has been issued, there is no scope for the authorities either to make prima facie adjustment on the basis of the return as filed or issue an intimation under section 143(1)(a). The omission by the Legislature to make the issuance of a notice under section 143(2) without prejudice to an intimation under section 143(l)(a) while specifically providing that the issuance of an intimation under section 143(1)(a) would be without prejudice to section 143(2) was deliberate because of the difference in the nature of the two sections. The jurisdiction under section 143(l)(a) is a summary one, whereas section 143(2) precedes an assessment under section 143(3)." In the above case, where notice under section 143(2) was issued prior to intimation under section 143(1)(a), the Hon'ble Calcutta High Court, held further as under : "The notice under section 143(2) had been issued prior to the intimation under section 143(1)(a). The impugned adjustment and intimation in respect of the assessment year in question were ultra vires the section and where liable to be set aside." Applying the above ratio of the judgment, to the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this, after issuance of notice under section 143(2) of the Act, there is no question of issuing notice under section 154(1)(b) of the Act but the assessment is to be made under section 143(3) of the Act. Therefore, the impugned notices deserve to be quashed and set aside." 10. When we turn to question number three, we find that it has become very easy for us how to solve the issue in the light of above discussions. As the notice under section 154 is not valid and legal, it deserves to be quashed and set aside. Accordingly, the order passed on the basis of such notice is also invalid and illegal and cannot be said to be in accordance with the provisions of law. 11. Apart from the above, there is also possibility of two interpretations or constructions of the statute and, therefore, no action lies under section 154. The Assessing Officer was not competent to rectify the order passed under section 143(1)(a), as held by the Kerala High Court in the case of Travancore Ltd. (supra) and Madras High Court in the case of Kerala Nilgiri Potato Growers Cooperative Society Ltd. (supra) as quoted by the Assessing Officer yet, there is another angle to look at the issue. The assessee has al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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