COMMISSIONER OF INCOME TAX Vs. A V THOMAS AND CO
LAWS(KER)-2003-1-44
HIGH COURT OF KERALA
Decided on January 21,2003

COMMISSIONER OF INCOME TAX Appellant
VERSUS
A V Thomas And Co Respondents

JUDGEMENT

G.SIVARAJAN, J. - (1.) THIS is an appeal filed by the CIT, Trivandrum, against the order of the Tribunal, Cochin Bench, in ITA No. 712/Coch/95, dt. 17th Aug., 1999. The assessment year concerned in 1992 -93. The following questions of law are formulated by the appellant, and notice was ordered on the said questions : '1. Whether, on the facts and in the circumstances of the case and also in the light of the decision Apogee International Ltd. v. Union of India and Anr. : [1996]220ITR248(Delhi) the Tribunal is right in holding the intimation issued by the AO under Section 143(1)(a) on 26th Nov., 1993, after issuing the notice under Section 143(2) on 13th July, 1993, was not a valid intimation that could be upheld in law.' (ii) 'such an invalid order under Section 143(1)(a) could not be rectified under Section 154 of the IT Act. Hence, the impugned order of rectification is to be annulled.' '2. Whether, on the facts and in the circumstances of the case and also in the light of the principle laid down in CIT v. Bidhu Bhusan Saikai : [1967]63ITR278(SC) , Seshasayee Paper and Boards Ltd. v. IAC : [1986]157ITR342(Mad) and CIT v. Ramakrishna Sons (P) Ltd. : [1991]192ITR282(Mad) , the Tribunal is right in considering and in deciding the validity of intimation under Section 143(1)(a) in an appeal filed against the order under Section 154 of the IT Act ?'
(2.) THE brief facts necessary for decision of this appeal is as follows. The respondent -assessee filed return of its income under the IT Act, 1961, for short 'the Act', on 31st Dec., 1992. The respondent -assessee is a public limited company engaged in the business of dealing in pesticides, acting as commission agents, dealing in various types of plants using tissue culture technology, exporting tea, spices and also doing civil construction. The assessment year concerned is 1992 -93. The due date for filing the return for the assessment year was 31st Dec., 1992. However, the assessee filed the original return on 4th March, 1993. Later, the assessee filed a revised return on 26th April, 1993, and further revised return on 28th July, 1993. The AO issued a notice under Section 143(2) of the Act, to the assessee on 13th July, 1993. The AO processed the latest revised return filed on 28th July, 1993, under Section 143(1)(a) of the Act and issued an intimation on 26th Nov., 1993, (Annexure -A). It would appear from the said intimation that the return was accepted. The Department filed an application for rectification under Section 154 of the Act. The assessee filed objections to the said rectification petition. However, the AO ordered rectification vide Annexure -A1 order. Being aggrieved by the said order, the assessee filed appeal before the CIT(A), Cochin. The said appeal was dismissed confirming the order of the AO. However, in second appeal by the assessee, the Tribunal allowed the appeal by holding that the processing of the return under Section 143(1)(a) after the issuance of a notice under Section 143(2) of the Act is invalid. The Tribunal had also entered a finding that only valid return filed under Section 139(4) of the Act is the return dt. 4th March 1993, and the subsequent two revised returns cannot be treated as returns filed under Section 139(5) of the Act. The contention taken by the Department before the Tribunal was that since the assessee has not challenged the original intimation (Annexure -A), the validity of the same is not open to challenge in any appeal against the rectification order made at the instance of the Department. The said contention was also rejected by the Tribunal holding that for considering the validity of the rectification order, it is necessary to consider the validity of the order passed under Section 143(1)(a) of the Act. It is against the said order of the Tribunal that the Department has filed this appeal, and raised the questions of law extracted earlier. Sri. P.K.R. Menon, senior Central Government standing counsel, appearing for the appellant submits that since the assessee had not challenged the proceedings under Section 143(1)(a) of the Act, the same cannot be challenged in an appeal filed against the rectification order passed by the AO at the instance of the Revenue. The senior counsel in support of his contention relied on the decision of the Supreme Court in CIT v. Bidhu Bhusan Sarkar : [1967]63ITR278(SC) , and the decisions of the Madras High Court in Seshasayee Paper and Boards Ltd v. IAC : [1986]157ITR342(Mad) , and the decision of the same Court in CIT v. Ramakrishna Sons (P) Ltd. : [1991]192ITR282(Mad) , All the above decisions are relied in support of the proposition that even an invalid order terminating assessment proceedings has the effect of terminating them, and in such a case, an appropriate method for correcting the illegality committed is to have that order vacated by the appellate or higher authorities having jurisdiction to intervene. In other words, the contention of the appellant is that as long as the order is not set aside, it remains in force and takes full effect. On the basis of these three decisions, the counsel submits that the Tribunal was not justified in holding that Tribunal has got the jurisdiction to consider the validity of the proceedings under Section 143(1)(a) of the Act, which has become final, while considering the appeal against the rectification order.
(3.) THE senior counsel also submitted that question No. 1 formulated by the appellant having two limbs is covered by a decision of this Court in ITA No. 101 of 2000, wherein this Court has held that the AO has no jurisdiction to process a return under Section 143(1)(a) of the Act, after the issuance of a notice under Section 143(2) of the Act, and that since the return filed by the assessee was processed under Section 143(1)(a) of the Act only after issuance of the notice under Section 143(2), the proceedings under Section 143(1)(a) cannot survive.;


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