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JUDGEMENTS                                          I.T.R 7/1979                                                Back To Index

HIGH COURT OF JAMMU AND KASHMIR AT SRINAGAR.
I.T.Ref.No.7 of 1979

Date of decision: June , 2000

The Commissioner of Income-tax Amritsar. v M/S Alkeensons Agencies,Anantnag, Kashmir.
Coram:
The Hon’ble Mr. Justice Dr. B.P. Saraf, Chief Justice.
The Hon’ble Mr. Justice N. A. Kakru, Judge.

Whether approved for reporting: Yes.
For the petitioner: Mr. Anil Bhan, Senior Central Government Standing Counsel.
For the respondent: None appears.

JUDGEMENT AND ORDER

Per Dr. B. P. Saraf, Chief Justice.

By this reference under section 256(1) of the Income-tax Act,1961 ("Act") , the Income-tax Appellate Tribunal ,Amritsar Bench, Amritsar ("Tribunal") has referred the following two questions of law to this Court for opinion at the instance of the revenue:

"1. Whether, on the facts and in the circumstances of the case and particularly in view of the fact that it was brought to the notice of the Tribunal that the tax payable had been determined by the Income-tax Officer himself on a Form called ITNS-150 simultaneously along with the determination of taxable income, the Tribunal is right in law in holding that the assessment order is invalid

2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the assessment order in this case was invalid and the tax on the income determined could not be recovered?"

The material facts of the case, giving rise to this reference, are as follows. The assessee, M/S. Alkeensons Agencies, Srinagar, was assessed by the Income-tax Officer Srinagar for the assessment year 1973-74 under section 143(3) of the Income-tax Act, 1961. In the said assessment, the Income-tax Officer made an addition of Rs.26,508 to the disclosed income of the assessee. The assessee challenged the above addition before the Appellate Assistant Commissioner of Income- tax. The Appellate Assisstant Commissioner rejected the challenge and sustained the addition on the ground that the assessee itself had agreed to the impugned addition. The assessee appealed to the Tribunal. Before the Tribunal, the assessee did not argue the merits of the addition but, relying upon the decision of this Court in S. Mubarak Shah Naqshbandi v. CIT (1977) 110 ITR 217, raised a fresh legal objection that the assessment order was illegal ,in as much as ,the tax demanded from the assessee was not computed in the assessment order itself. This contention of the assessee was opposed by the revenue. The case of the revenue was that the decision of this Court in S.Mubararik Shah Naqshbandi v. CIT had no application to the facts of the present case because here ,the tax payable by the assessee had been properly calculated in Form I.T.N.S. 150 ,which was prepared along with the assessment order and formed part of the same.. It was contended that in that view of the matter, it cannot be said that the tax payable was not calculated in the assessment order. The Tribunal did not accept the contention of the revenue and held that as tax had not been calculated in the body of the assessment order , the decision of this Court in S. Mubarik Shah Naqshbandi v. CIT (Supra) was applicable and the impugned assessment was invalid. The Tribunal deleted the additions made by the Income- tax Officer on that count. Aggrieved by the above decision , revenue sought reference of the questions of law arising out of the order of the Tribunal to this Court under section 256(1) of the Act. Hence this reference.

We have heard Mr. Anil Bhan , learned counsel for the revenue, who submits that the controversy in this case now stands concluded in favour of the revenue by the decision of the Supreme Court in Kalyankumar Ray v.CIT (1991) 191 ITR 634. The decision of this Court in S.Mubarik Shah Naqshbandi v. CIT (supra), according to the learned counsel, has no application to the facts of the present case where tax payable has been determined in Form I.T.N.S. 150 which is signed by the Income-tax Officer.

We have considered the submissions of the learned counsel and perused the decision of the Supreme Court in Kalyankumar Ray v. CIT (supra). In that case, the Supreme Court considered the question whether it is incumbent on the Income-tax Officer to make the computation of income as well as of the sum payable in the assessment order form itself. On perusal of the scheme of

the Act and the language of section 143(3), the Supreme Court accepted the contention of the assessee that the Income-tax Officer has to determine, by an order in writing, not only the total income but also the net sum which will be payable by the assessee for the assessment year in question and demand notice under section 156 has to be issued in consequence of such an order. The Supreme Court, however, rejected the further contention of the assessee that both the computations( i.e., of the total income as well as of the sum payable) should be done on the same sheet of paper ,namely, the assessment order. The Court observed :

" The statute does not, however, require that both the computations (i.e., of the total income as well as of the sum payable) should be done on the same sheet of paper, the sheet that is superscribed ‘assessment order’. It does not prescribe any form for the purpose. It will be appreciated that once the assessment of the total income is complete with indications of the deductions, rebates, reliefs and adjustments available to the assessee, the calculation of the net tax payable is a process which is mostly arithmetical but generally time-consuming. If, therefore, the Income/tax Officer first draws up an order assessing the total income and indicating the adjustments to be made, directs the office to compute the tax payable on that basis and then approves of it, either immediately or some time later, no fault can be found with the process, though it is only when both the computation sheets are signed or initialled by the Income-tax Officer that the process described in section 143(3) will be complete".

The Supreme Court also took note of the practice of calculating the tax payable in form I.T.N.S. 150 and observed:

"In this context, one may take notice of the fact that, initially, rule 15(2) of the Income-tax Rules prescribed Form No.8, a sheet containing the computation of the tax, though there was no form prescribed for the assessment of the income. This sub-rule was dropped in 1964.

Thereafter, the matter has been governed by departmental instructions. Under these, two forms are in vogue. One is the form of what is described as the ‘assessment order’ (I.T.30 or I.T.N.S.65). The other is what is described as the ‘Income-tax Computation Form’ or ‘Form for Assessment of Tax/Refund’ (I.T.N.S.150). The practice is that, after the ‘assessment order’ is made by the Income-tax Officer, the tax is calculated and the necessary columns of I.T.N.S.150 are filled up showing the net amount payable in respect of the assessment year. This form is generally prepared by the staff but it is checked and signed or initialled by the Income-tax Officer and the notice of demand follows thereafter . The statute does not , in terms , require the service of the assessment order or the other form on the assessee and contemplates only the service of a notice of demand. It seems that while the ‘assessment order’ used to be generally sent to the assessee, the other form was retained on file and a copy occasionally sent to the assessee. I.T.N.S.150 is also a form for determination of tax payable and when it is signed or initialled by the Income-tax Officer, it is certainly an order in writing by the Income-tax Officer, determining the tax payable, within the meaning of section 143(3). It may be, as stated in CIT v. Himalaya Drug Co. {1982} 135 ITR 368 (All), only a tax calculation form for departmental purposes as it also contains columns and code numbers to facilitate computerisation of the particulars contained therein for statistical purposes but this does not detract from its being considered as an order in writing determining the sum payable by the assessee. We are unable to see why this document, which is also in writing and which has received the imprimatur of the Income-tax Officer, should not be treated as part of the assessment order in the wider sense in which the expression has to be understood in the context of section 143(3). There is no dispute in the present case that the Income-tax Officer has signed the Form I.T.N.S.150. We, therefore, think that the statutory provision has been duly complied with and that the assessment order was not, in any manner vitiated."

It is clear from the above decision of the Supreme Court that section 143(3) of the Act does not require that both the computations ,that is of the total income as well as of the sum payable ,should be done on the same sheet of paper, which is superscribed as "assessment order". It does not prescribe any form for that purpose. If the Income-tax Officer first draws up an order assessing the total income and indicating the adjustments to be made ,directs the office to compute the tax payable on that basis and then approves of it , either immediately or some time later, no fault can be found with the process ,though it is only when both the computation sheets are signed or initialled by the Income-tax Officer that the process described in section 143(3) will be complete. Form I.T.N.S. 150 is also a form for determination of the tax payable and when it is signed or initialled by the Income-tax Officer, it is certainly an order in writing by

the Income-tax Officer determining the tax payable, within the meaning of section 143(3) of the Act.

The ratio of the above decision of the Supreme Court is squarely applicable to the facts of the present case. The uncontroverted factual position in this case is that the tax payable has been calculated in form I.T.N.S. 150 which is duly signed by the Income-tax Officer along with the assessment order. The statutory requirement of calculating the tax payable has thus been complied with . There is, therefore, no illegality in the assessment order on that count.

The decision of this Court in S. Mubarik Shah Naqshbandi v. CIT (Supra) has no application to the facts of the present case .In that case, the assessment order did not determine the tax payable and there was no other paper or form containing the computation except the notice of demand. No tax calculation had been made in Form I.T.N.S.150 or on any other sheet of paper signed or initialled by the Income-tax Officer.. It was in such factual situation that in that case the assessment order was held to be invalid. The above decision is not an authority for the proposition that the assessment will be vitiated if the calculation of tax payable is not done in the assessment order itself.

In the premises, we are of the clear opinion that in the instant case, the tax payable having been determined by the Income-tax Officer himself on form I.T.N.S.150 simultaneously with the determination of income, the Tribunal was not justified in law in holding that the assessment order was vitiated.

In view of the above, we answer both the questions referred to us in the negative ,i.e., in favour of the revenue and against the assessee.

This reference is disposed of accordingly with no order as to costs.