Regards
INTRODUCTION
1. The issue whether an assessee can file a Revised Return under section 139(5) even after issue of Intimation has been discussed in this article. Some people have the misconception that an Intimation is as good as an assessment order. It is found in some of the cases that the CPC or the A.O. makes adjustments in the returned income and thereafter even if the taxpayer furnishes a valid revised return the CPC is not acting on the same.
REVISED RETURN UNDER SECTION 139(5)
2. Provisions of section 139(5) regarding revised return are as under :
"If any person having furnished the return under sub-section (1), or in pursuance of a notice 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 relevant assessment year or before the completion of assessment, whichever is earlier."
For example, an assessee filed his original return electronically for assessment year 2012-13 on 3rd September, 2012 and an Intimation was issued to him by CPC on 15th July, 2013 after making some adjustments/additions. In the same case revised return was filed by the assessee on 23rd September, 2013, i.e., before one year from the end of assessment year 2012-13 (which falls on 31st March, 2014) and no assessment was completed before filing of revised return. In such a case the CPC is supposed to act on the revised return.
3. INTIMATION – WHETHER AN ASSESSMENT ORDER ?
3.1 Relevant case laws
3.1.1 Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500/161 Taxman 316 (SC): In this case the Hon'ble Supreme Court dealt with the issue of difference between an intimation and an assessment order in detail. It was held that an intimation under section 143(1)(a) cannot be treated to be an order of assessment. Substantial changes have been made to section 143(1) with effect from June 1, 1999. Up to March 31, 1989, after a return of income was filed the Assessing Officer could make an assessment under section 143(1) without requiring the presence of the assessee or the production by him of any evidence in support of the return. Where the assessee objected to such an assessment or where the officer was of the opinion that the assessment was incorrect or incomplete or the officer did not complete the assessment under section 143(1), but wanted to make an inquiry, a notice under section 143(2) was to be issued to the assessee requiring him to produce evidence in support of his return. After considering the material and evidence produced and after making necessary inquiries, the officer had power to make an assessment under section 143(3).
3.1.1.1 SUBSTANTIAL CHANGES IN THE PROVISION FROM 1ST APRIL, 1989
With effect from 1st April, 1989, the provisions under went substantial and material changes. A new scheme was introduced and in the new substituted section 143(1), prior to the subsequent substitution with effect from 1-6-1999, in clause (a) a provision was made that where a return was filed under section 139 or in response to a notice under section 142(1), and any tax or refund was found due on the basis of such return after adjustment of tax deducted at source, any advance tax or any amount paid otherwise by way of tax or interest, an intimation was to be sent without prejudice to the provisions of section 143(2) to the assessee specifying the sum so payable and such an intimation was deemed to be a notice of demand issued under section 156. The first proviso to section 143(1)(a) allowed the Department to make certain adjustments in the income or loss declared in the return. They were as follows :
| (a) | an arithmetical error in the return, accounts and documents accompanying it were to be rectified; | |
| (b) | any loss carried forward, deduction, allowance or relief which on the basis of the information available in such return, accounts or documents, was, prima facie admissible but which was not claimed in the return was to be allowed; | |
| (c) | any loss carried forward, relief claimed in the return which on the basis of the information as available in such returns accounts or documents were, prima facie inadmissible and were to be disallowed. |
What was permissible under the first proviso to section 143(1)(a) was correction of errors apparent on the basis of the documents accompanying the return. The Assessing Officer had no authority to make adjustments or adjudicate upon any debatable issues. In other words, the Assessing Officer had no power to go behind the return, accounts or documents, either in allowing or in disallowing deductions, allowance or relief.
In para 13 of the said decision it was observed that one thing further to be noticed was that intimation under section 143(1)(a) was to be given without prejudice to the provisions of section 143(2). Though technically the intimation issued was deemed to be a demand notice issued under section 156, that did not per se preclude the right of the Assessing Officer to proceed under section 143(2). That right was preserved and was not taken away. Between the period from 1-4-1989 to 31-3-1998, the second proviso to section 143(1)(a), required that where adjustments were made under the first proviso to section 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 section 143(1)(a) was substituted by the Finance Act, 1997, which was operative till 31st May, 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 section 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 an intimation under section 143(1)(a) was mandatory.
3.1.1.2 'INTIMATION' SUBSTITUTED FOR 'ASSESSMENT' – EMERGENCE OF TWO DIFFERENT CONCEPTS
Thus, the legislative intent was very clear from the use of the word "intimation" as substituted for "assessment" that two different concepts had emerged. While making an assessment, the Assessing Officer is free to make any addition after grant of opportunity to the assessee. By making adjustments under the first proviso to section 143(1)(a), no addition which is impermissible by the information given in the return can be made by the Assessing Officer. The reason is that under section 143(1)(a) no opportunity is granted to the assessee and the Assessing Officer 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 section 143(1)(a) indicates that the Assessing Officer has to proceed accepting the return and making the permissible adjustments only. As a result of insertion of the Explanation to section 143 by the Finance (No. 2) Act of 1991 with effect from 1-10-1991, and subsequently with effect from 1-6-1994, by the Finance Act, 1994, and ultimately omitted with effect from 1-6-1999, by the Explanation as introduced by the Finance (No. 2) Act of 1991 an intimation sent to the assessee under section 143(1)(a) was deemed to be an order for the purposes of section 246 between 1st June, 1994, to 31st May, 1999, and under section 264 between 1st October, 1991 and 31st May, 1999. 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 in which 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". The distinction is also well brought out by the statutory provisions as they stood at different points of time. Under section 143(1)(a), as it stood prior to 1st April, 1989, the Assessing Officer 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 Central Board of Direct Taxes 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 in Apogee International Ltd. v. Union of India [1996] 220 ITR 248/87 Taxman 198 (Delhi). It may be noted that under the first proviso to the newly substituted section 143(1), with effect from 1st June, 1999, except as provided in the provision itself, the acknowledgement 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. The acknowledgement is not done by any Assessing Officer, 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 section 143(1)(a) was deemed to be a notice of demand under section 156 for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such an application only recovery indicated to be payable in the intimation became permissible and nothing more could be inferred from the deeming provision. Therefore, there being no assessment under section 143(1)(a), the question of change of opinion, as contended, does not arise.
The above case was basically in respect of reopening of assessment and in that context the issue, whether an intimation is an assessment order has been also dealt with in details and the Court decided that intimation is not an assessment order.
3.1.2 Hill Top Holdings India Ltd. v. CIT [2005] 278 ITR 501/147 Taxman 404 (Cal.): It was held at page 515 of the report in the said decision, that by no stretch of imagination an intimation/acknowledgement under section 143(1)(a) can be treated as an order, except as contemplated in the Explanation under section 143 thereof in view of the fiction created thereunder. The Legislature has made a distinction between an order and an intimation. The intention of Legislature was clear in creating the fiction through the Explanation to section 143 treating an intimation/acknowledge to be an order within the confined meaning of sections 246 and 264.[It may be noted that the said explanation was in force upto 31st May, 1999 and thereafter it was omitted].
ANALYSIS
4. After the decision of the Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra)the issue is settled and it leaves no room for any controversy. The department is legally duty bound to act on the said revised return and not on the original return once a revised return under section 139(5) has been filed in time and before completion of assessment by the assessee. As already explained an Intimation is not an assessment order.
4.1 Where valid revised return is filed what happens to earlier Intimation - The Intimation on the basis of original return or demand raised against the assessee in pursuance thereof, being inconsistent with law, is invalid and cannot be enforced. As a matter of fact the CPC or the A.O. should process the revised return and fresh intimation on the basis of such revised return is required to be issued in lieu of the earlier Intimation. The new Intimation issued on the basis of revised return will subsist and in a sense the earlier intimation will merge into the new intimation.
4.2 What to do if CPC or A.O. does not act on a valid revised return - In such circumstances one should write to the CPC and A.O. One may also bring the matter to the notice of Jt. CIT and CIT. Even then if appropriate action is not taken by such authorities, it is advisable to file an appeal before the CIT (Appeals). In appropriate cases filing of a writ in the High Court may be an option.
4.3 No tax shall be levied or collected except by authority of law - It will be appropriate to mention that there is one categorical and specific provision under Article 265 of the Constitution of India that, "No tax shall be levied or collected except by authority of law".
The Hon'ble Supreme Court of India in the case of Chotabhai Jethabhai Patel & Co. v. Union of India AIR 1962 SC 1006 has held that the this provision under Article 265 of the Constitution of India is applicable not only for levy but also for the collection of taxes and the expression "assessment" within its compass covers both the aspects carried out by the executive functionary. This provision has withstood the tests of legality in later judgment. Therefore, it is required that whole of the process of taxation must follow the procedures which are valid under the law and must adhere to law, i.e., substantive one as well as procedural one. Therefore, in other words it is provided in the Constitution of India that every step should be taken to ensure that levy and collection of the taxes is strictly in accordance with law – not only substantive one but the procedural law as well. The Hon'ble Supreme Court also held in this case that Constitutional right of citizens should not be watered down, however desirable the end result of a particular case may be and denial of right to recover unlawfully collected tax is denial of the protection given to a citizen by Article 265 of the Constitution.
The Hon'ble Supreme Court of India in the case of Mafatlal Industries Ltd. v Union of India 1997 (89) ELT 247 has also held that an act done in violation of constitutional mandate is void and no right flows out of that void act to the State.
4.4 Substantial justice vis-à-vis technical considerations - Without prejudice to other submissions, the author like to refer to the decision in the case of Collector Land Acquisition v. Mst. Katiji [1987] 167 ITR 471 (SC), in which Hon'ble Justice M.P. Thakkar observed - When substantial justice and technical considerations are pitted against each other cause of substantial justice deserves to be preferredfor the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. The Court also observed that the expression "Sufficient Cause" employed by the Legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which subserves the ends of justice, that being the life purpose for the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in the Court. But the message does not appear to have percolated down to all the other Courts in the hierarchy. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
Therefore, in case a valid revised return has been filed by a taxpayer, the department should act on such revised return.
CONCLUSION
5. Nowadays filling up of e-Return is quite a complex job. A mistake in filling such return may result into adjustment by CPC. For example, in case of particulars required to be given in respect of related party transactions in Form No. ITR 4, if a taxpayer fills up the amount in Column 9(a) of Part A-OI (i.e., Other information), it may cause adjustment and result into huge tax burden. Column 9 of Part A-OI of ITR 4 deals with "Amounts debited to the profit & loss account, to the extent disallowable under section 40A" and one is required to fill up in its sub-item (a) "amount paid to persons specified in section 40A(2)(b)." In some of the cases there are purchases/sale transactions with relatives but these are not necessarily disallowable under section 40A(2)(b). It has come to the notice that some people commit errors and show the amount of purchases/sale transactions with relatives in the said Column 9(a) of Part A-OI while filling up the ITR 4 online. People may commit similar mistakes. Insuch cases, based on information in the return, the CPC makes adjustment and makes addition to the income of the assessee. It is advisable that in case any error has been committed in filing e-Return, then in such cases the taxpayer must furnish a revised return. A revised return must be filed within one year from the end of assessment year or before the completion of assessment, whichever is earlier. As already held by the Hon'ble Supreme Court, the Intimation is not an assessment order.
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