Commissioner of Income Tax vs Gupta Textiles

A.M. Sapre, J.

This is an appeal filed by revenue (CIT) u/s 260A of the Income Tax Act against an order dated 21-04-1999, passed by ITAT in ITA No. 512/Ind/95.

Heard Shri R.L. Jain, learned senior counsel with Ku~ V. Mandlik, learned counbel for the revenue and Shri Sarda, learned counsel for the assessee.

Having heard learned counsel for the parties and having perused record of the case, we are of the view that appeal has no substance. In other words, we have formed an opinion that the view taken by the Tribunal is in accord with the settled view on the issue already taken by several High Courts and hence, it does not call for any interference in this appeal.

The issue in substance that arose before the taxing authorities was in relation to powers of assessing officer while passing the order u/s 143(1)(a) of the Income Tax Act. In this case, assessee filed a return as firm. However, in exercise of powers conferred u/s 143(1)(a), the assessing officer treated the assessee as AOP and sent them intimation for being assessed as AOP in place of Firm. It is essentially this question which was gone into upto Tribunal. By impugned order, the Tribunal inter alia held that while exercising the powers u/s 143(1)(a) of the Act, the assessing officer can not change the status of assessee to his detriment. It was held that such change does not amount of prima facie adjustment within the meaning of section 143(1)(a). In other words, it was not an adjustment which could be done on the basis of the return filed by the assessee. In this view of the matter, the Tribunal while restoring the status of assessee as firm directed the assessing officer to assess the assessee in their capacity as firm and not in their capacity as AOP as mentioned in intimation sent u/s 143(1)(a) ibid.

We respectfully concur with the view taken by the Tribunal referred supra. Indeed in our opinion, it is in accord with the view taken by judicial authorities. We may usefully quote one authority of Kerala High Court in the case of Commissioner of Income Tax Vs. K.V. Mankaram and Co., . In this case, the learned Chief Justice Hon''ble Arijit Pasayat (as his Lordship then was), examined the scope and ambit of powers u/s 143(1)(a) ibid and held while concluding their decision as follows

"That clearly brings about the distinction between an order of assessment and a notice of demand. As indicated above, intimation u/s 143(1)(a) is deemed to be the letter. u/s 246 also, a clear distinction is made between intimation and an order of assessment.

The Tribunal was, therefore, justified in holding that the change of status as done by the assessing officer was impermissible u/s 143(1)(a) of the Act."

We respectfully follow the aforesaid view of Kerala High Court. In our opinion, the view so taken is completely in accordance with the object that lies behind section 143(1)(a). In other words, the assessing officer has no jurisdiction to change the status of assessee while exercising the powers u/s 143(1)(a) to his detriment.

In this view of the matter, the appeal has no merit. It is accordingly dismissed resulting ;n upholding of the order passed by Tribunal.

No costs.