(1.) This is an appeal under Section 260Aofthe Income-tax Act, 1961 (in short, Act) filed by Revenue questioning correctness of the conclusion recorded by the Income- tax Appellate Tribunal (in short, Tribunal) to the effect that action taken under Section 154 of the Act was not legal after issuance of notice under Section 143(2) of the Act.
(2.) Factual position in a nutshell is as follows: For the assessment year 1989-90, due date of filing return was 31.12.1989. Assessee filed return on 28.12.1989. An intimation in terms of Section 143(1)(a) of the Act was given to the assessee on 31.3.1990 on the basis of return filed. Notice under Section 143(2) was issued in the month of December, 1990. Subsequently, a notice for taking action under Section 154 of the Act was issued on 28.2.1991. Assessee submitted its reply on 21.3.1991 taking the stand that there was no scope for taking any action under Section 154. On 27.3.1991, revised return was filed by the assessee. Rejecting the assessee's plea that after issuance of notice under Section 143(2) of the Act, as well as on facts, there was no case for resorting to Section 154 an order under Section 154 was passed. In the order under Section 154, ITO decided the question as to how profits under section 115J of the Act was to be undertaken and passed an order determining taxable book profit of Rs. 8,58,21,204.00 It was held that there was mistake which was apparent from record and rectifiable under Section 154. Assessee filed an appeal before Commissioner of Income-tax (Appeals) (in short, CIT(A)). The said authority held that the matter was not one which involved any interpretation of law but one of inclusion or non-inclusion of certain item for calculating book profit under Section 115J. As the language of Section 115J is very clear, regarding the items to be included and not to be included for working out book profit, when a particular item was left out or included by mistake it could be considered as arithmetical error and matter of law which required long drawn process of deliberations. The fact that the assessee had filed a revised return, according to CIT(A), was indicative of the fact that there was mistake with regard to adding back book profits. Action of the assessing officer in carrying out rectification was found to be in order. Assessee carried the matter in appeal before Tribunal. Its stand that action under Section 154 was not in order, was accepted by the Tribunal. It was held that after commencement of proceedings for making assessment under Section 143(3) by issuance of notice under Section 143(2), the assessing authority cannot rectify any intimation under Section 143(1 )(a), because once notice for scrutiny of account is issued and matter is in progress under sub-section (2), then to again rely on the intimation under Section 143(1 )(a) of the Act would be improper. Reading Section 143(1) and (2) together, it was observed that even when intimation under section 143(1 )(a) has been issued, yet power under sub- section (2) of Section 143 can be exercised. In fact, there was no scope for rectifying an intimation after resort to Section 143(2).
(3.) In this appeal under section 260AoftheAct, following question has been raised for adjudication:- a) Whether the ITAT is correct in law in holding that after commencing proceedings for making assessment u/s 143(3) the AO cannot rectify any intimation u/s 143(1 )(a)? b) Whether the ITAT has correctly interpreted the provisions of statute, namely, 115J, 143(1)(a), 143(1A), 143(2), 143(3) and 154? c) Whether the ITAT is correct in holding that if the AO has already issued a notice under Section 143(2), then he cannot send any intimation on the basis of return filed? d) Whether the order of the A.O. passed u/s 154 after issue of notice u/s 143(2) making adjustment and charging additional tax is proper in law? e) Whether the order passed by the ITAT is perverse and contrary to law? f) Whether the AO. was justified in re-computing the book profit u/s 154/ 143(1)(a) for the purpose of Section 115J in the light of the fact that notice under Section 143(2) had already been issued. g) Whether the ITAT is correct in law in holding that once notice under Section 143(2) has been issued, recourse to Section 154 is not warranted? h) Whether Section 154 and 143(2) are mutually exclusive or not? i) Whether the interpretation put forward by the A.O. with reference to computation of book profits under section 115J is correct? j) Whether principles of natural justice are violated if recourse to Section 154 is taken and to rectify intimation under section 143(1 )(a) when proceedings under Section 143(2) are going on.