PEICO ELECTRONICS AND ELECTRICALS LIMITED VS DEPUTY COMMISSIONER OF INCOME-TAX, 2000 PTD-CALCUTTA-HIGH-COURT-INDIA 2506 (1924)

Income-tax---

----Assessment---Intimation under S.143(1)(a)---Intimation under S.143(1)(a) cannot be issued after notice has been given under S.143(2)---Indian Income Tax Act, 1961, S.143.

There is a difference in the nature of jurisdiction exercised by the Assessing Officer under sections 143(2) and 143(l)(a) of the Income Tax Act, 1961. The jurisdiction under section 143(1)(a) is a summary one whereas section 143(2) precedes an assessment under section 143(3) or what can be described as a regular assessment. A plain reading of the provisions of section 143(1)(a) of the Income Tax Act, 1961, shows that a notice under section 143(2) can. be issued even after intimation under section 143(1)(a), but no intimation can be issued under section 143(1)(a) after issuance of the notice under section 143(2) of the Act.

Gujarat Poly-AVX Electronics Ltd. v. Deputy CIT (1996) 222 ITR 140 (Guj.); Lakhanpal National Limited and Hytasiun Magnetics Limited v.

Deputy CIT (1996) 222 ITR 151 (Guj.) and Modern Fibotex India Ltd. v. Deputy CIT (1995) 212 ITR 496 (Cal.) fol.

CIT v. Rai Bahadur Bissesswarlal Motilal Malwasie Trust (1992) 195 ITR 825 (Cal.) ref.

Dr. Debi Prosad Pal, Pronab Kumar Pal and Miss Manisha Seal for Petitioners.

Dipak Kumar Shome acrd Md. Nizamuddin for Respondent.

JUDGMENT

By this petition, the petitioner has prayed that the intimation under section 143(1)(a) of the Income Tax Act, 1961, issued by the Assessing Officer should be quashed and no effect should be given to any order which is issued under intimation under section 143(1)(a) of the Act.

The petitioner has filed the income-tax return on December 27, 1989, for the assessment year 1989-90 showing a loss of Rs.28,74,24,579. Thereafter, the petitioner has field a revised return claiming a sum of Rs.45,08,85,300 to be carried forward as loss. Before the petitioner filed the second revised return he received a notice, dated May 31, 1990, under section 143(2) of the Act on June 1, 1990, whereby respondent No. l required the petitioner to produce the documents and accounts on which the petitioner wanted to rely in support of the return on June 18, 1990. In pursuance of that notice, the authorised representative of the petitioner produced all the books of account and documents. In the course of hearing, respondent No. 1 required the authorised representative of the petitioner to furnish certain particulars for which he fixed the next date of hearing on September 3, 1990. The matter was adjourned time and again. But before completion of the assessment under section 143(3) of the Act, the petitioner has received an intimation under section 143(1)(a) of the Act alongwith an adjustment explanation sheet both, dated March 27, 1991, relating to the assessment year 1989-90.

The grievance of the petitioner is that once the notice under section 143(2) of the Act has been issued, the Assessing Officer has no power to issue the intimation under section 143(1)(a) of the Act.

Section 143(1)(a) of the Income tax Act, 1961, reads as under:

" 143(I)(a). Where a return has been made under section 139, or in response to a notice under subsection (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 subsection (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 granted to the assessee:

Provided that in computing the tax or interest payable by, or refundable to, the assessee, the following adjustments shall be made in the income or loss declared in the return, namely:---

(i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified;

(ii) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, is prima facie admissible but which is not claimed in the return, shall be allowed;

(iii) any loss carried forward deduction, allowance or relief claimed in the return, which, on the basis of the information available is such return, accounts or documents, is prima facie inadmissible, shall be disallowed; "

Counsel for the petitioner further placed reliance on the decisions of his Court and the Gujarat High Court which are as follows:

(1) Modern Fibotex India Ltd. v. Deputy CIT (1995) 212 ITR 496 (Cal.); (2) Gujarat Poly-AVX Electronics Ltd. v. Deputy CIT(1996) 222 ITR 140 (Guj.) and (3) Lakhanpal National Limited and Hytaisun Magnetics Limited v. Deputy CIT (1996) 222 ITR 151 (Guj.).

In Modern Fibotex India Ltd. v. Deputy CIT (1995) 212 ITR 496 at page 515, this Court has observed as under:

"The omission by the Legislature to make the issuance of a notice under section 143(2) without prejudice to an intimation under section 143(1)(a) while specifically providing that the issuance of an intimation under section 143(1)(a) would be without prejudice to section 143(2), was, in my view, deliberate because of the difference in the nature of the jurisdictions exercised by .the Assessing Officer under the two sections. The jurisdiction under section 143(1)(a) as already seen is a summary one, whereas section 143(2) precedes an assessment under section 143(3) or what has been described as the scrutiny or regular assessment. The language of section 143(3) shows the object of the issuance of notice under section 143(2) and reads: ......

The respondents' submission that the issuance of an intimation is compulsory is incorrect. To accept the submission would be to read the provisions of section 143(1)(a) in a manner not warranted by the language. It is true that the word 'shall' has been used in connection with the issuance of an intimation but it is well-established that the construction of the expression 'shall' depends upon the provisions of the Act, the setting in which the direction is given and the consequences that would follow from the infringement of the direction and other such considerations (see CIT v. Rai Bahadur Bisseswarlal Motilal Malwasie Trust (1992) 195 ITR 825 (Cal). The context in which the word 'shall' has been used in- section 143(2) has to be read in the background of the proviso to the section and that is where there is no scope for any adjustments in terms of the proviso, there would be no scope for sending any intimation. "

In Gujarat Poly-AVX Electronics Ltd., v. Deputy CIT (1996) 222 ITR 140 (Guj.) at page 150, the Gujarat High Court has observed as under:

"Looking to the language of section 143(2) of the Act, it is clear that the Assessing Officer has to follow the procedure under section 143(3) of the Act for making assessment. Mr. Shah, learned counsel, submitted that in the instant case by issuing notice under section 143(2) of the Act, proceedings commenced under section 143(3) of the Act. According to him, once the proceedings under section 143(3) of the Act have commenced the Assessing Officer has no power to pass order under section 143(1) of the Act. "

In both the cases, referred to above, it was observed that once there is a notice under section 143(2), the assessment should be completed under section 143(3) and not under section 143(1) of the Act.

In Lakhanpal National Limited and Hytaisun Magnetics Limited v. Deputy CIT (1996) 222 ITR 151, the Gujarat High Court has reiterated its earlier view that once. a notice under section 143(2) has been issued, the Assessing Officer has to complete the assessment under section 143(3) of the Act.

Counsel for the petitioner, Dr. Pal, submits that when there was a notice under section 143(2) of the Act that was issued in 1990, no intimation can be issued thereafter under section 143(1)(a), which has been issued in this case in 1991. Therefore, it should be quashed.

Counsel for the respondents, Mr. Shome, submits that in pursuance of the order of this Court, dated June 6, 1991, the assessment under section 143(3) has been completed in pursuance of he notice under section 143(3) of the Act. Therefore, that should be permitted to be communicated to the assessee and be allowed for recovery of the tax in pursuance of the assessment order.

Dr. Pal, has not objected to this limited submission, but he insisted that the intimation under section 143(1)(a) in 1991, should be quashed.

The plain reading of the provisions of section 143(1)(a) of the Act shows that a notice under section 143(2) can be issued even after intimation under section 143(1)(a), but no intimation can be issued under section 143(1)(a), after issuance of the notice under section 143(2). of the Act. In the instant case, admittedly, a notice under section 143(2) has been issued on May 31, 1990, being Annexure "A" to the writ petition, and an intimation under section 143(1)(a), being Annexure "B" to the writ petition, has been issued on March 27, 1991, that is, after issuance of the notice under section 143(2). The notice under section 143(2) is a notice of regular assessment while the intimation under section 143(1)(a) is the adjustment which can be made on the basis of the record available to the Assessing Officer which is filed alongwith the return by the assessee.

Therefore, I agree with Dr. Pal that after issuance of the notice under section 143(2) the Assessing Officer has no jurisdiction to issue an intimation under section 143(1)(a). Hence, that intimation, being Annexure "B", dated March 27, 1991 is quashed.

Counsel for the respondents, Mr. Shome, submits that in pursuance of the order of this Court, dated June 6, 1991 the assessment now, completed under section 143(3) should be allowed to be communicated to the petitioner for necessary action.

Dr. Pal has no objection in case the assessment order is given effect to,

In view of this undisputed fact, referred to above, and the provisions of law, I quash the intimation, being Annexure "B" to the writ petition, dated March 27, 1991. It will be open to the respondent to communicate the assessment order which has been passed under section 143(3) in pursuance of the notice under section 143(2) to the assessee for necessary action.

In the result, the petition is disposed of in the light of the above observations.

All parties shall act on a xerox signed copy of this judgment duly counter-signed by the Assistant Registrar of this Court on the usual undertaking.

M.B.A/4159/FCOrder accordingly.