Section 143(1) Intimation is only an intimation and it cannot be treated as an order for the purpose of Section 264 of Income Tax Act.
In a recent judgment Hon’ble Kerala High Court has held that Section 143(1) Intimation is only an intimation and it cannot be treated as an order for the purpose of Section 264 of Income Tax Act
ABCAUS Case Law Citation:
5007 (2026) (01) abcaus.in HC
In the instant case, the assessee/Petitioners had challenged the order passed by the CIT in rejecting revision application u/s 264 of the Income Tax Act, 1961 (the Act).
The Petitioner(s) were NRI. Their properties were acquired by the Government and they received compensation under the provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (Land Acquisition Act).
As per Section 96 of the Land Acquisition Act, the income by way of compensation consequent to compulsory acquisition was exempted under the provisions of the Act and therefore, the petitioners were eligible for complete exemption. However, the Petitioners were not aware of the provisions and furnished returns disclosing the said income, as long term capital gain and paid tax.
Accepting the returns submitted by the Petitioners, Income Tax Department granted refund and intimations under section 143(1) of the Act were issued.
On becoming aware of the exemption under section 96, the Petitioners submitted applications under Section 264, before the Commissioner of Income Tax. After considering the same, CIT rejected the said application on the ground that intimations issued under section 143(1) were not orders, against which no revision would lie.
Before the Hon’ble High Court, the main contention raised by the petitioner was that, as per Section 246A of the Income Tax Act, a specific reference of an intimation under Section 143(1) of the Income Tax Act is contemplated and going by Section 246A, it had been treated as an appealable order. Therefore, since it was an appealable order, the same can be subjected to the revisional powers under Section 264 as well.
On the other hand, the Revenue opposed the aforesaid contention by pointing out that issues raised by the petitioner is already decided by the Honourable Supreme Court and also by the High Court of Karnataka.
The Hon’ble High Court observed that a crucial aspect to be noticed was that, earlier, there was an Explanation to Section 143 in the statute, prior to 01.06.1999, which provided that, an intimation to the assessee under sub Section 143 (1), is deemed to be an order for the purpose of Section 264. Aforesaid explanation was deleted by the Finance Act, 1999 with effect from 01.06.1999.
The Hon’ble High Court opined that consequence of such deletion and the purpose for which such deletion was made by the legislature, cannot be ignored.
It was further noted that this aspect was taken note of in the decision rendered by the High Court of Karnataka and therefore, there was force in the contention of the Revenue that, Section 143(1) is only an intimation and it cannot be treated as an order for the purpose of Section 264 of the Act.
The Hon’ble High Court further observed that even if the impact of Section 246A is taken into account, it is evident that this is only for the purpose of an appeal against the said intimation and since Section 264 or any other provision do not specifically provide for treating an intimation under Section 143(1)(b) as an order, the contention of the petitioner cannot be accepted. Particularly because, as far as the appellate and revisional remedies are concerned, those are creation of the statutes and therefore, authorities exercising the powers under the relevant provisions, are bound to confine their jurisdiction within the four corners specified in the relevant provision.
Therefore, the Hon’ble High Court opined that so long as the Section 264 of the Income Tax Act or any other provision enables the treatment of intimation under Section 143(1), as an order, under no circumstances, the authorities, which are bound to exercise such powers, can treat such intimation as an order and exercise power of revision upon the same. Therefore, there was no justifiable reason to interfere with impugned orders.
However, the Hon’ble High Court opined that the petitioners were not remedy-less and they may be entitled to get exemption by virtue of Section 96 even if the same was not claimed mistakenly in the returns by filing a rectification application under Section 154 of the Act.
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