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Judgment
S. Nagamuthu, J.—The short question which arises for consideration is, ""whether an order of rectification u/s 154 of the Income Tax Act
could be passed to rectify the intimation given u/s 143(1)(a) of the Act, after a final assessment order u/s 143(3) of the Act has been passed.
The petitioner is a Government of Tamil Nadu undertaking. It is an income tax assessee. For the accounting year ended with 31.03.1993, the
petitioner submitted the tax return admitting Nil income. The said return was accepted by the second respondent on 07.03.1994 by issuance of an
intimation in terms of Section 143(1)(a) of the Income Tax Act, 1961. Subsequently, the second respondent issued a notice u/s 143(2) of the Act
on 31.03.1994. The petitioner later on filed a revised return of the income on 04.07.1995 wherein, the deduction originally claimed for the
provisions created for bonus and gratuity was reversed. The second respondent acting on the revised return, completed the scrutiny assessment u/s
143(3) of the Act on 22.11.1995.
While so, later on, the second respondent issued a notice u/s 154 of the Act, with a view to rectify the original intimation dated 07.03.1994
issued u/s 143(1)(a) of the Act. The petitioner objected to the same. Rejecting the said objection, the second respondent passed an order of
rectification on 14.12.1998 thereby levying an additional income tax to the tune of Rs. 4,70,346/ -. Aggrieved over the said order, the petitioner
preferred a revision u/s 264 of the Act to the first respondent. The said revision was also dismissed. Challenging the same, the petitioner has come
forward with this writ petition.
The learned Counsel for the petitioner would submit that if there had been no notice u/s 143(2) of the Act, then, within the period of limitation of
four years, the intimation u/s 143(1)(a) of the Act can be amended by the Assessing Authority u/s 154 of the Act. But, if once, after the said
intimation, a notice is issued u/s 143(2) of the Act and an assessment order is passed u/s 143(3) of the Act, the intimation u/s 143(1)(a) of the Act
merges with the order u/s 143(3) of the Act. Therefore, after such merger, Section 143(1)(a) of the Act does not survive for rectification u/s 154
of the Act.
But the learned Senior Standing Counsel (Income Tax) appearing for the respondents would submit that there is no legal impediment for the
Assessing Authority to invoke his jurisdiction u/s 154 of the Act to rectify the intimation u/s 143(1)(a) of the Act notwithstanding the fact that
subsequent to the said proceeding, a final assessment order has been passed u/s 143(3) of the Act.
The learned Counsel for the petitioner would rely on a judgment of the Hon''ble Supreme Court in Commissioner of Income Tax Vs. Gujarat
Electricity Board, wherein, it has been held as follows:
Even otherwise, the view taken by the Gujarat High Court seems to be correct on principle. There is no dispute that Section 143(1)(a) of the Act
enacts a summary procedure for quick collection of tax and quick refunds. Under the scheme if there is a serious objection to any of the orders
made by the Assessment Officer determining the income, it is open to the assessee to ask for rectification u/s 154. Apart therefrom, the provisions
of Section 143(1)(a) indicate that the intimation sent u/s 143(1)(a) shall be without prejudice to the provisions of Sub-section (2). The Legislature,
therefore, intended that, where the summary procedure under Sub-section (1) has been adopted, there should be scope available for the Revenue,
either suo motu or at the instance of the assessee to make a regular assessment under Sub-section (2) of Section 143. The converse is not
available; a regular assessment proceeding having been commenced u/s 143(2), there is no need for a summary proceeding u/s 143(1)(a).
(Emphasis supplied)
A glance through the said judgment would make it clearly understandable that if once an assessment order is made u/s 143(3) of the Act,
preceded by due notice u/s 143(2) of the Act, then there is no scope at all to proceed u/s 143(1)(a) of the Act.
The learned Counsel for the petitioner nextly relied on a judgment of the Kolkatta High Court in C.E.S.C. Ltd. and Another Vs. Deputy
Commissioner of Income Tax and Others, wherein, the High Court had an occasion to consider the judgment of the Hon''ble Supreme Court in
Commissioner of Income Tax v. Gujarat Electricity Board (cited supra) case, besides the judgments of various other High Courts. The relevant
portion of the said judgment is extracted below:
A further question therefore arises whether ""summary assessment or the provisional assessment or to be more precise, the assessment made on the
basis of the return itself u/s 143(1)(a) of the Act accepting appropriation to contingency reserve as an allowable expenditure merged in the order
passed u/s 143(3) of the Act wherein the aforesaid appropriation to contingency reserve was disallowed? What was accepted in the intimation has
been reversed in the regular assessment and the assessee has preferred an appeal which is pending. I am firmly of the view that this is a case where
the theory of merger is bound to apply because the intimation issued u/s 143(1)(a) is no longer operative in respect of the assessment years 1990-
91 and 1992-93. The only order which is effective and operative is the one passed u/s 143(3) of the Act.
To hold that the intimation made u/s 143(1)(a) of the Act merged with the order made u/s 143(3) of the Act, the Gujarat High Court has relied
on the following judgments: ""(1) Commissioner of Income Tax Vs. Arihant Industries Ltd., ; (2) Gujarat Poly-Avx Electronics Ltd. Vs. Deputy
Commissioner of Income Tax, and (3) C.I.T. v. Punjab National Bank 2001(249) ITR 763 (Delhi).
The Kolkatta High Court after having analysed many more judgments and also after having a scientific analysis of all the relevant provisions of
the said Act, has ultimately held as follows:
It follows that the effective and operative order is the one u/s 143(3) of the Act and therefore the question of seeking to rectify the order u/s
143(1)(a) of the Act can never arise.
In view of the law laid down by the Hon''ble Supreme Court in Commissioner of Income Tax v. Gujarat Electricity Board (cited supra), after
passing of an order u/s 143(3) of the Act, intimation u/s 143(1)(a) of the Act gets merged with the said order u/s 143(3) of the Act and the
intimation u/s 143(1)(a) of the Act does not any more independently survive for rectification by the Assessing Authority u/s 154 of the Act. To put
it precisely, after an order has been passed in terms of Section 143(3) of the Act, no rectification order u/s 154 could be passed to rectify the
intimation u/s 143(1)(a) of the Act. Thus, I agree with the law laid down by the Kolkatta High Court in Commissioner of Income Tax v. Gujarat
Electricity Board (cited supra). In such view of the matter, since the rectification is wholly without jurisdiction, I hold that the impugned order
passed by the second respondent and confirmed by the first respondent is liable to be interfered with.
In the result, the writ petition is allowed and the impugned order is set aside. No costs.