High Court Of Punjab & Haryana
CIT vs. Arihant Industries Ltd.
Sections 143(2), 154
Asst. Year 1990-91
Jawahar Lal Gupta & N.K. Sud, JJ.
IT Appeal No. 11 of 2002
8th March, 2002
Counsel Appeared
R.P. Sawhney with Salil Bali, for the Appellant
JUDGMENT
JAWAHAR LAL GUPTA, J. :
Can proceedings under s. 154 of the IT Act, 1961, for rectification of the intimation under s. 143(1) (a) be initiated after the AO has given a notice under s. 143(2) to the assessee? This is the short question that arises for consideration in this appeal under s. 260A of the Act.
2. The assessee is a public limited company. If filed its return for the asst. yr. 1990-91. It claimed a deduction of Rs. 1,27,98,515 on account of dividend paid to the various shareholders. On 16th April, 1991, the AO issued an intimation to the assessee. On 9th Feb., 1992, the AO gave a notice under s. 143(2) to the assessee. Almost a year later on 28th Jan., 1993, a notice under s. 154(1) (b) was issued. Soon thereafter, an order dt. 25th Feb., 1993, was passed under s. 154(1)(b). Aggrieved by the order, the assessee filed an appeal. On 7th Sept., 1994, the CIT(A) accepted the assessee’s claim. The Revenue challenged the order passed by the appellate authority. Vide order dt. 26th Feb., 2001, the Tribunal dismissed the appeal. Hence, this appeal under s. 260A of the Act.
The solitary contention raised by Mr. Sawhney, learned counsel for the Revenue, is that the Act does not place any bar on the AO to invoke his jurisdiction under s. 154 even after notice under s. 143(2) has been given to the assessee. Thus, the view taken by the Tribunal cannot be sustained. Admittedly, the power under s. 154 can be invoked only to correct an error apparent on the record. The scope of proceedings under s. 143(2) is far wider. The competent authority had taken a view in the matter and issued a notice under s. 143(2) to the assessee. Such a notice is normally issued to ensure that the assessee has not understated the income or has not computed excessive loss or underpaid the tax. It is only on consideration of the matter and on being satisfied that it is necessary or expedient to do so that the AO issues the notice under s. 143(2). Once that has been done, the AO has to proceed under sub-s. (3) and make an assessment of the total income or loss of the assessee and determine the sum, if any, payable by it. The consequences follow under subs. (4).
5. It is no doubt correct that an error apparent on the record can be corrected under s. 154 of the Act. However, if parallel proceedings are permitted it would only result in waste of time. It would serve no purpose. Thus, it is not surprising that judicial opinion is consistently against the Revenue. A Division Bench of the Gujarat High Court in Gujarat Poly-Avx Electronics Ltd. vs. Dy. CIT (Asst.) (1996) 135 CTR (Guj) 141 : (1996) 222 ITR 140 (Guj) : TC S10.1215 has taken a similar view. Later on even a Division Bench of the Delhi High Court has considered the matter in CIT vs. Punjab National Bank (2001) 166 CTR (Del) 340 : (2001) 249 ITR 763 (Del). The Chief Justice Mr. Arijit Pasayat (as his Lordship then was) has been pleased to observed as under : “The question is whether after the issue of notice under s. 143(2) the intimation issued under s. 143(1) is of any consequence, more particularly when a revised return has been filed. Notice under sub-s. (2) of s. 143 is relatable to the first return. The intimation under s. 143(1) is given without prejudice to the provisions of sub-s. (2). That makes the position clear that even when intimation under s. 143(1) has been given yet proceedings for assessment under s. 143(3) can be initiated by issuance of notice under s. 143(2). The order under s. 154 of the Act was passed after issuance of notice under s. 143(2) and during the pendency of the proceedings for assessment under s. 143 (3). The order under s. 154 was passed on 9th March, 1992, while the order under s. 143(3) was passed on 27th March, 1992. We have made distinction between an intimation under s. 143(1) and an order issued under s. 143(3). The above being the position, if any change is permissible to be effected, the same can be come in the assessment under s. 143 of the Act and not by exercising power under s. 154 of the Act. We do not think it necessary to go into the question whether rectification that was done by the AO could be termed to be a mistake apparent from the record. The scope and ambit of s. 154 has been examined in several cases. We may just note that the CIT (A) himself was not very sure as to whether the so-called mistake was one which could be considered an arithmetic error because he himself had further observed that it was a matter of law which required a long drawn process of deliberations. If it is the latter, certainly s. 154 has no application.”
We are in respectful agreement with the view taken by the Court. No contrary decision has been pointed out. In view of the above, we find no merit in this appeal. It is, consequently, dismissed in limine.
[Citation : 255 ITR 458]
