THE COMMISSIONER OF INCOME TAX. V. M/S BOPPANA OILS LTD.

RC/73/2000

AI Insights

The case revolves around the procedural correctness of the Income Tax Appellate Tribunal (ITAT) in cancelling an intimation under Section 143(1)(a) of the Income Tax Act, 1961. The assessee had filed a return declaring a loss and claimed deductions for interest payable to financial institutions, which were not actually paid. The Assessing Officer initially processed this return and issued an intimation under Section 143(1)(a) after issuing a notice under Section 143(2). The ITAT found this procedure incorrect, leading to the cancellation of the intimation. The Revenue challenged this decision, leading to the reference of the question to the High Court, which upheld the ITAT's decision based on the Supreme Court's precedent in C.I.T. v. Gujarat Electricity Board.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 745131 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 28-12-2011
• Assessment Year: misc
• Other Referred Cases: C.I.T. v. Gujarat Electricity Board
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Applicant
• Court: HIGH COURT
• Keywords: Assessment; Deduction; Income Tax; Interest; Intimation; Rectification
• Section: 143(2); 154; 43B; 143(1)(a)

Judgement Text

" THE HON’BLE SRI JUSTICE V.V.S. RAO AND THE HON’BLE SRI JUSTICE B.N. RAO NALLA REFERRED CASE No.73 OF 2000 ORDER:(Per Hon’ble Sri Justice V.V.S. Rao) The Income Tax Appellate Tribunal, Hyderabad Bench ‘B’ referred the following question in obedience to the orders of this Court in ITC No.159 of 1998. Whether on the facts and in the circumstances of the case, the ITAT was correct in cancelling the intimation under sec.143(1)(a) on the ground that the Assessing Officer cannot process the return under sec.143(1) (a) after issue of notice u/s.143(2)? The assessee filed return of income for the assessment year 1989-1990 declaring the loss of Rs.4,21,50,458/-. The Assessing Officer commenced the proceedings by issuing notice under Section 143(2) of the Income Tax Act,1961 (the Act) on 9.3.1990 after observing that the assessee claimed deduction of Rs.54,31,445/- being the interest payable to ICICI, IFCI & IDBI which was not actually paid. The Assessing Officer disallowed the same under Section 43B of the Act and sent an intimation under Section 143(1)(a) of the Act on 25.10.1990. Subsequently, the assessee sought rectification under Section 154 of the Act which was rejected. Aggrieved by the same, the assessee filed appeal before the Commissioner of Income Tax (Appeals), Hyderabad (CIT (A)) who confirmed the order of the Assessing Officer. On further appeal, the appellate Tribunal cancelled the intimation under Section 143(1)(a) of the Act observing that the Assessing Officer was not correct in processing the return under Section 143(1)(a) of the Act after issuing notice under Section 143(2) of the Act. The Revenue unsuccessfully sought a reference under Section 256(2) and thereafter, filed ITC No. 159 of 1998 before this Court wherein this Court directed the appellate Tribunal to refer the question to this Court. During the course of submissions, the junior Counsel for Income Tax has brought to the notice of this Court the decision of the Supreme Court in C.I.T. v. Gujarat Electricity Board[1]. The Supreme Court therein considered the question whether it is open to the Revenue to issue intimation under Section 143(1) (a) of the Act, after notice for regular assessment has been issued under Section 143 (2) of the Act. The question was answered in the negative observing that. There is no dispute that section 143(1)(a) of the Act enacts a summary procedure for quick collection of tax and quick refunds. Under the scheme if there is a serious objection to any of the orders made by the Assessing Officer determining the income, it is open to 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 motu 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). In view of the settled position, the question referred to this Court is answered in the affirmative against the Revenue and in favour of the assessee. The referred case shall stand disposed of accordingly. There shall be no order as to costs. _______________ (V.V.S. RAO,J) ____​_________________ (B.N. RAO NALLA, J) Date:28-12-2011 Stp [1] (2003) 260 ITR 84 (SC) "