Section 263, read with section 143(1)(a)

HIGH COURT OF PUNJAB AND HARYANA Commissioner of Income-tax, Amritsar v. Kartar Singh & Co. (P.) Ltd. M.M. KUMAR & AJAY KUMAR MITTAL, JJ IT REFERENCE NO. 57 OF 1995 December 12, 2007 Section 263, read with section 143(1)(a), of Income-tax Act, 1961 - Revision - Of orders prejudicial to interest of revenue - Assessment year 1989-90 - Whether jurisdiction under section 263 can be exercised only in relation to an order passed by Assessing Officer under section 143(1) and not in relation to an intimation - Held, yes FACTS The Assessing Officer completed assessment of the assessee-company under section 143(1)(a). Subsequently, the Commissioner noticed that the assessee was not maintaining day to day record of consumption of raw material and work-in-progress and, therefore, the provisions of section 145 were attracted in the case of assessee and the income was liable to be computed by applying the net profit rate of 10 per cent on the total receipt without allowing further deduction on account of expenses or depreciation etc. The commissioner, therefore, exercising his reversionary jurisdiction under section 263 held that the assessment framed under section 143(1) was erroneous and prejudicial to interest of revenue and cancelled the same directing the Assessing Officer to frame fresh assessment. On appeal, the Tribunal held that since the order under section 143(1) was not a statutory order but was only an intimation as same was not served upon assessee, the Commissioner could not exercise jurisdiction under section 263 because jurisdiction under section 263 can be exercised only in relation to an ‘order’ passed by the Assessing Officer and not in relation to an ‘intimation’, On reference: HELD The omission of the expression ‘intimation’ from section 263 establishes the intention of the Parliament to limit the power of revision of a Commissioner only to cases where an order has been passed. A plain reading of section 263 would alone be sufficient to reach the aforementioned conclusion. A perusal of section 263 brings out that the Legislature never intended to clothe the Commissioner with the powers of revision in summary cases where intimation and acknowledgement had been sent to the assessee after filing of the return. The Supreme Court in the case of Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500/161 Taxman 316 interpreted two expressions ‘assessment’ and ‘intimation’ as used in section 143(1)(a). The Supreme Court held that the intimation under section 143(1)(a) cannot be treated an order of assessment, and that under the first proviso to the newly substituted section 143(1), with effect from 1-6-1999, except as provided in the provision itself, the acknowledgment of the return shall be deemed to be an intimation under section 143(1) where (a) either no sum is payable by the assessee, or (b) no refund is due to him and therefore, there being no assessment under section 143(1)(a), the question of change of opinion, did not arise. (Para 7) Therefore, the Tribunal was justified in cancelling the order passed by the Commissioner by holding that jurisdiction under section 263 can be exercised only in relation to an order passed by the Assessing Officer and not in relation to an intimation. (Para 8) CASE REVIEW: Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd., [2007] 291 ITR 500/161 Taxman 316 (SC) followed. (Para 7)