The Commissioner of Income Tax V. M/s. Vibra Automat Limited

ITTA/75/2000

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The case revolves around the procedural correctness of the Income Tax Department in processing an income tax return under Section 143(1)(a) of the Income Tax Act, 1961, while simultaneously issuing a notice under Section 143(2) for a regular assessment. The assessee, M/s. Vibra Automat Limited, contested that the dual proceedings were inappropriate, leading to an appeal to the Income Tax Appellate Tribunal, which sided with the assessee. The Revenue's appeal to the High Court challenged this decision, arguing that the summary proceedings under Section 143(1)(a) were independent and could coexist with the notice under Section 143(2). However, the High Court upheld the Tribunal's decision, emphasizing that the initiation of proceedings under Section 143(2) precludes the continuation of summary proceedings under Section 143(1)(a).

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 681460 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 01-12-2011
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax v. Gujarat Electricity Board
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Assessment; Income Tax; Notice issuance; Section 143; Section 143; Intimation Cancellation
• Section: 144; 143(3); 143(2); 154; 143(1)(a)

Judgement Text

"THE HON’BLE THE CHIEF JUSTICE SHRI MADAN B. LOKUR AND THE HON’BLE SHRI JUSTICE SANJAY KUMAR I.T.T.A. NO.75 OF 2000 DATED:01.12.2011 Between: The Commissioner of Income Tax Andhra Pradesh – II, Hyderabad … Appellant And M/s. Vibra Automat Limited 12, 13-195 Opp. Huda Complex Tarnaka, Secunderabad … Respondent THE HON’BLE THE CHIEF JUSTICE SHRI MADAN B. LOKUR AND THE HON’BLE SHRI JUSTICE SANJAY KUMAR I.T.T.A. NO.75 OF 2000 JUDGMENT: (per the Hon’ble the Chief Justice Shri Madan B. Lokur) Although this appeal was admitted on 19.1.2001, it appears that no substantial question of law was framed. Accordingly, we frame the following substantial question of law for consideration:- “Whether on the facts and in the circumstances of the case, the Income T ax Appellate Tribunal was correct in cancelling the intimation under Section 143(1)(a) of the Income T ax Act, 1961 on the ground that the Assessing Officer cannot process the return under Section 143(1)(a) of the Act, while contemplating issue of the notice under Section 143(2) of the Act ?” 2. The relevant assessment year is 1991-92. The return of income filed by the assessee was processed under Section 143(1)(a) of the Act, 1961 (for short, ‘the Act’). While doing so, the assessing officer disallowed certain amounts and on a rectification petition filed by the assessee under Section 154 of the Act, some relief was granted to the assessee. 3. With regard to the amounts that were disallowed, the assessee was assessed to additional tax and the appeal against the order passed under Section 154 of the Act was dismissed by the Commissioner of Income T ax (Appeals). Thereafter, the assessee preferred an appeal before the Income Tax Appellate Tribunal. 4. The sole ground urged by the assessee before the Tribunal was that at the relevant time while the return was being processed under Section 143(1)(a) of the Act, a notice was also issued by the assessing authority for the purpose of initiating regular assessment proceedings. It was contended that in view of the notice issued under Section 143(2) of the Act, the assessing officer was not competent to process the return under Section 143(1)(a) thereof. The contention was that if a notice has been issued under Section 143(2) of the Act, regular assessment is required to be made under Section 143(3) of the Act or under Section 144 of the Act. This contention of the assessee was upheld by the Tribunal when it concluded that since the issuance of notice under Section 143(2) of the Act was in contemplation, the intimation under Section 143(1)(a) of the Act should have been cancelled. 5. It is under these circumstances that the present appeal has been filed under Section 260-A of the Act. 6. Learned counsel for the Revenue has drawn our attention to the decision in Commissioner of Income Tax v. Gujarat Electricity Board[1]. In this decision, the Supreme Court held that the provisions of Section 143(1)(a) of the Act provide for summary proceeding for quick collection of tax and quick refunds. If the assessee has any objection to the order made by the assessing officer in this regard, he can always apply for rectification under Section 154 of the Act. The intimation sent under Section 143(1)(a) of the Act is without prejudice to the provisions of Section 143(2) of the Act as mentioned in the Income T ax Act itself. Therefore, when proceedings under Section 143(2) of the Act have been initiated, there is no scope for going ahead with the intimation given to the assessee under Section 143(1)(a) of the Act. In other words, both the proceedings cannot co- exist. 7. We find, on the facts of the present case, that the proceedings under Section 143(2) of the Act were contemplated by the assessing officer on 31.7.1992. On that very day, the assessing officer issued intimation to the assessee under Section 143(1)(a) of the Act and also passed an order for the purpose of issuing notice under Section 143(2) of the Act. It is true that no notice was in fact issued under Section 143(2) of the Act on that day, i.e., on 31.7.1992, but it was very much in contemplation. Applying the ratio laid down by the Supreme Court that proceedings both under Section 143(1)(a) of the Act and Section 143(2) of the Act cannot co-exist, we are of the opinion that the assessing officer having decided to issue a notice under Section 143(2) of the Act ought not to have proceeded with the intimation under Section 143(1)(a) of the Act. 8. Under these circumstances, the substantial question of law must be answered in the affirmative, in favour of the assessee and against the Revenue to the extent that the Tribunal was correct in cancelling the intimation under Section 143(1)(a) of the Act since notice under Section 143(2) thereof was already issued by the assessing officer. __________________ MADAN B. LOKUR, CJ _______________ SANJAY KUMAR, J 01-12-2011 bnr [1] [2003] 260 ITR 84 (SC) "