In a recent case, Calcutta High Court has upheld that the issuance of the intimation under Section 143(1) of the Income tax Act, 1961 does not amount to completion of the assessment within the meaning of section 139(5) which bars the assessee from revising its return of income.

It is to be noted that the section 143(1) as it stood in the material time contained the phrase “without prejudice to the provisions of sub section (2)” The Section 143(1) has since been substituted by the Finance Act 2008. However the question of Law as in the present case, is still very much relevant even with the amended section 143(1) in view of the power of the assessing officers  to initiate scrutiny under the provisions of the section 143(2).

Section existing 139(5) of the Income Tax Act, 1961 regarding revision of income tax returns is extracted as under:
"If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of   section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier."

Case Details:
TATA METALIKS LTD. (appellant) Versus C.I.T III, KOLKATA (Respondent)
ITA No. 301 of 2005
Date : 22nd September, 2014.

Facts of the Case:
The appellant received intimation under Section 143(1) of the Income Tax Act, 1961 along with refund on 8 ^th August, 2000 for Assessment Year 1999-2000. Later, the appellant sought to file a revised return on 31 ^st March, 2001 which was within the time provided under Section 139(5).

However, the said revised return was not accepted by the income tax department on the ground that the assessment stand completed. The Tribunal also held the same and consequently, the assessee filed Income Tax Appeal before Calcutta High Court which was admitted on the following question of Law;

Whether, on a true and proper interpretation of the provisions of Sections 139 and 143 and other relevant provisions of the Income Tax Act, 1961, the Tribunal was justified in law in holding that issue of the intimation under Section 143(1) for the assessment year 1999-2000 on August 08, 2000 amounted to completion of assessment within the meaning of section 139(5) disabling the appellant from filing a revised return and that the revised return filed on March 31, 2001 was belated and invalid?"

Case Laws Considered:
Assistant Commissioner of Income Tax versus Rajesh Jhaveri Stock Brokers (P) Ltd. : 291 ITR 500(SC)
Tarsem Kumar versus Income Tax Officer & Ors. : 256 CTR (P&H 116)
Haryana Financial Corporation and Anr Vs. Jagdamba Oil Mills and another 2002(3) SCC 496
State of Orissa & Ors. Versus Md. Illiyas 2006(1) SCC 275
CIT versus Punjab National Bank : 249 ITR 763

Judgment:
The High Court held in favour of the appellant assessee holding that completion of assessment as envisaged in section 139(5) does not complete on issuance of intimation u/s 143(1).

The court remarked that the section 143(1) as it stood in the material time, contemplates an assessment without prejudice to sub-section (2). Under the section 143(2), the Assessing Officer if considers necessary, is empowered to initiate income tax scrutiny and thus the provision for assessment to be made for the purpose of issuance of an intimation under section 143(1) of the said Act reserve the authority of the Assessing Officer to resort to the provisions under sub-section (2) thereof, cannot be said to be completion of assessment.

 The High Court relied on the judgment of the Hon’ble Supreme Court in Assistant Commissioner of Income Tax versus Rajesh Jhaveri Stock Brokers (P) Ltd. : 291 ITR 500(SC) by quoting the para 13 of the said judgment which as under:

“One thing further to be noticed is that intimation under s.143(1)(a) is given without prejudice to the provisions of s.143(2). Though technically the intimation issued was deemed to be a demand notice issued under s.156, that did not per se preclude the right of the AO to proceed under s.143(2). That right is preserved and is not taken away. Between the period from 1st April, 1989 to 31st March, 1998, the second proviso to s.143(1)(a), required that where adjustments were made under the first proviso to s.143(1)(a), an intimation had to be sent to the assessee notwithstanding that no tax or refund was due from him after making such adjustments. With effect from 1st April, 1998, the second proviso to s.143(1)(a) was substituted by the Finance Act, 1997, which was operative till 1st June, 1999. The requirement was that an intimation was to be sent to the assessee whether or not any adjustment had been made under the first proviso to s.143(1) and notwithstanding that no tax or interest was found due from the assessee concerned. Between 1st April, 1998 and 31st May, 1999, sending of an intimation under s.143(1)(a) was mandatory. Thus, the legislative intent is very clear from the use of the word “intimation” as substituted for “assessment” that two different concepts emerged. While making an assessment, the AO is free to make any addition after grant of opportunity to the assessee. By making adjustments under the first proviso to s.143(1)(a), no addition which is impermissible by the information given in the return could be made by the AO. The reason is that under s.143(1)(a) no opportunity is granted to the assessee and the AO proceeds on his opinion on the basis of the return filed by the assessee. The very fact that no opportunity of being heard is given under s.143(1)(a) indicates that the AO has to proceed accepting the return and making the permissible adjustments only. As a result of insertion of the Explanation to s.143 by the Finance (No.2) Act of 1991 w.e.f. 1 ^st Oct., 1991, and subsequently w.e.f. 1st June, 1994, by the Finance Act, 1994, and ultimately omitted w.e.f. 1st June, 1999, by the Explanation as introduced by the Finance (No.2) Act of 1991 an intimation sent to the assessee under s.143(1)(a) was deemed to be an order for the purposes of s.246 between 1st June, 1994, to 31st May, 1999, and under s.264 between 1st Oct., 1991, and 31st May, 1999. It is to be noted that the expressions “intimation” and “assessment order” have been used at different places. The contextual difference between the two expressions has to be understood in the context the expressions are used. Assessment is used as meaning sometimes “the computation of income”, sometimes “the determination of the amount of tax payable” and sometimes “the whole procedure laid down in the Act for imposing liability upon the taxpayer”. In the scheme of things, as noted above, the intimation under s.143(1)(a) cannot be treated to be an order of assessment. The distinction is also well brought out by the statutory provisions as they stood at different points of time. Under s.143(1)(a) as it stood prior to 1st April, 1989, the AO had to pass an assessment order if he decided to accept the return, but under the amended provision, the requirement of passing of an assessment order has been dispensed with and instead an intimation is required to be sent. Various circulars sent by the CBDT spell out the intent of the legislature, i.e., to minimize the Departmental work to scrutinize each and every return and to concentrate on selective scrutiny of returns. These aspects were highlighted by one of us (D.K. Jain, J.) in Apogee International Ltd. vs. Union of India (1997) 137 CTR (Del) 93: (1996) 220 ITR 248 (Del). It may be noted above that under the first proviso to the newly substituted s.143(1), w.e.f. 1st June, 1999, except as provided in the provision itself, the acknowledgement of the return shall be deemed to be an intimation under s.143(1) where (a) either no sum is payable by the assessee, or (b) no refund is due to him. It is significant that the acknowledgement is not done by any AO, but mostly by ministerial staff. Can it be said that any “assessment” is done by them? The reply is an emphatic “no”. The intimation under s. 143(1) (a) was deemed to be a notice of demand under s.156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provision. Therefore, there being no assessment under s.143(1)(a), the question of change of opinion, as contended, does not arise.”

The important excerpt of the Judgment is a under:
"We notice the said provision contemplates an assessment without prejudice to the provisions of sub-section (2) of the said section where under the Assessing Officer shall, if he considers it necessary, serve on the assessee a notice requiring him, on a date to be specified therein, to attend his office or to produce or cause to be produced there, any evidence on which the assessee may rely in support of the return and after taking into account all relevant materials the Assessing Officer shall by an order in writing make an assessment. Thus we find, the provision for assessment to be made for the purpose of issuance of an intimation under section 143(1) of the said Act reserving the authority of the Assessing Officer to resort to the provisions under sub-section (2) thereof, cannot be said to be completion of assessment and, therefore, limit the time otherwise available to file revised return. We are fortified in our finding by the judgment in Rajesh Jhaveri (supra)."

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