1. This is an appeal by the revenue which is directed against the order of the Deputy Commissioner of Income-tax (Appeals), Range-Ill, Bangalore, dated 14-6-1990, wherein he has entertained the appeal filed by the assessee against the order passed under Section 143(l)(a) of the Income-tax Act, 1961, for the assessment year 1989-90. It appears that the appeal was entertained by the DCIT(A) on the ground that the assessee objected to the change of status adopted by the Assessing Officer as AOP (Trust) as against specific Trust claimed by the assessee with the result tax has been levied on the Trust itself.
Thereafter the DCIT(A) proceeded to consider the appeal on merits of the case and, following the order of the Tribunal, Bangalore Bench, in the case of AS. Chinnaswamy Raju Bros. Family Trust [IT Appeal No. 715 (Bang.) of 1987, dated 15-12-1P88], directed the Income-tax Officer to assess the assessee in the status of specific Trust and thus allowed the appeal filed by the assessee.
(1) The order of the D.C. (IT) (A) is opposed to law and facts of the case.
(2) The D.C. (IT) (A), by admitting the appeal against the order passed under Section 143(l)(a), erred in directing the Assessing Officer to assess the assessee as a specified trust.
(3) The D. C. (IT) (A) ought to have considered the fact that according to the provisions of Section 246 an order passed under Section 143(1) is not an appealable order. Hence the order passed by the D.C. (IT) (A) is ab initio void.
(4) Without prejudice to the above, the D.C. (IT) (A) ought to have appreciated the fact that under the Income-tax Act, there is no status as Trust. The only status that can be assessed is AOP. In any case, the decisions of the I.T.AT., Bangalore Bench in the cases of A.S. Chinnaswamy Family Trust and Hotel Chalukya have not yet become final.
(5) For these and such other grounds that may be urged at the time of hearing it is prayed that the order of the D.C. (IT) (A) may be cancelled and that of the Assessing Officer restored.
3. At the time of hearing the learned departmental representative vehemently urged that the appeal is not at all maintainable against the order under Section 143(l)(a)/143(lA) and relied on the judgment of the Allahabad High Court in the case of Indo-Gulf Fertilizers & Chemicals Corpn. Ltd. v. Union of India[ 1992] 195 ITR 485 wherein the scope of Section 143(1A)has been considered and held that appeal before the Appellate Asstt. Commissioner is not competent against order passed under Section 143(1A). Therefore, he contended that the appeal of the assessee should have been dismissed by the DCIT(A). Shri Devaraj, the learned representative of the assessee, justified the order of the DCIT(A) in entertaining the appeal on the ground that the assessee is aggrieved over the status adopted by the Income-tax Officer as well as the assessee denied its liability to be assessed under this Act or to the amount of tax determined by the Assessing Officer. Therefore, all these aspects of dispute are properly covered by Clause (a) of Sub-section (1) of Section 246 enumerating appealable orders to the DCIT(A) and the CIT(A). His contention was that Clause (a) contains independent provision vis-a-vis the other clauses wherein orders under specific sections are enumerated as appealable. Therefore, he maintained that the appeal was competent before the DCIT(A) and he was justified in giving the direction to treat the status of the assessee as specific Trust. In reply, Shri Gopalan, the learned departmental representative, urged that the order passed by the Income-tax Officer under Section 143(1)(a) is only an intimation which is not appealable and an amendment to Section 143 has been made by Finance (No. 2) Act, 1991, with effect from 1-10-1991 by inserting an Explanation to the effect that an intimation sent to the assessee under Sub-section (1) or Sub-section (1B) shall be deemed to be an order for the purpose of Section 264 of the Income-tax Act, 1961; therefore, he urged that the remedy open to the assessee is to seek revision under Section 264 of the Income-tax Act, 1961, or file a writ against the order of the Income-tax Officer passed under Section 143(1A) but, in no case, an appeal lies to the DCIT(A) or CIT(A).
4. I have duly considered the rival contentions, the impugned orders and the relevant provisions of the Act. At the outset, it is to be pointed out that with effect from 1-4-1989 the relevant section for making adjustment is Section 143(1A) only and not Section 143(1)(a).
Therefore, the section under which the Income-tax Officer made adjustments and sent intimation is not correct. That being the case the Explanation inserted by Finance (No. 2) Act, 1991, with effect from 1-10-1991 is not applicable to such intimation because the Explanation is confined or restricted to an intimation sent under Sub-section (1) or Sub-section (1B) which alone shall be deemed to be an order for the purpose of Section 264. In other words, the assessee cannot resort to or take advantage of the beneficial revision provided under Section 264 of the Income-tax Act, 1961. Further, the aforesaid amendment is directed to be with effect from 1-10-1991. In view of this statutory prescription on which there could be a debate it is a foregone conclusion whether the Commissioner of Income-tax could exercise his beneficial jurisdiction under Section 264 against an intimation given by the Income-tax Officer under Section 143(1A) of the Income-tax Act, 1961 prior to 1-10-1991. Therefore, resort to the remedy under Section 264 postulated by the learned departmental representative is not feasible.
5. As regards recourse to filing of writ, it is left to the discretion of the assessee and I shall not deal with that aspect.
6. Coming to the contentions raised by the learned representative of the assessee, no doubt, at first blush, they appear to be forceful and carry conviction. It is true that Clause (a) of Sub-section (1) of Section 246 provides for various aspects of disputes and does not contain the 'intimation' under Section 143(1A) or Section 143(1)(a) so as to reject the contention of the assessee. Therefore, prima facie, the contentions raised by the learned representative of the assessee appear to be correct. Further, to appreciate the contentions in proper perspective it is necessary to consider Clause (a) of Sub-section (1) of Section 246 which reads as under: 246(1). Subject to the provisions of Sub-section (2), any assessee aggrieved by any of the following orders of an Assessing Officer (other than the Deputy Commissioner) may appeal to the Deputy Commissioner (Appeals) against such order (a) an order against the assessee, where the assessee denies his liability to be assessed under this Act or any order of assessment under Sub-section (3) of Section 143 or Section 144, where the assessee objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed.
A perusal of the aforesaid provision would show that the grievance regarding status adopted by the Income Tax Officer cannot be disputed or denied by the assessee because at the time of hearing the learned representative of the assessee himself fairly conceded that notwithstanding the contentions that would be urged on the merits of the case the status of the assessee is ought to be taken as AOP (Trust) and, therefore, he conceded that the status adopted by the Income-tax Officer is correct. A perusal of the grounds of appeal taken before the DCIT(A) shows that the assessee has challenged the status of AOP adopted by the Income-tax Officer and also levying tax directly on the AOP in view of the fact that the assessee is a private non-discretionary trust, vide ground No. 2 of the grounds of appeal taken before the DCIT(A). Thus one of the limbs of ground No. 2 taken before the DCIT(A), viz., the status of AOP is not correct and valid has rightly conceded by the learned representative of the assessee before me. The order of the DCIT(A) shows that he has entertained the dispute regarding status of AOP adopted by the Income-tax Officer vide para. 2 of the appellate order of the DCIT(A). However, following the written submissions as well as the decision of the Tribunal in the case of A.S. Chinnaswamy Raju Bros. Family Trust {supra) the DCIT(A) directed the Assessing Officer to assess the assessee in the status of specific Trust, vide para. 4 of the impugned order. Thus para. 2 and para. 4 of the impugned order clearly show that the DCIT(A) has entertained the appeal only on the ground of status agitated by the assessee which is evident from the direction given by the DCIT(A) to treat the status of the assessee as specific Trust. Even though the order of the Tribunal in the case of A.S. Chinnaswamy Raju Bros. Family Trust (supra) has been quoted but yet the DCIT(A) has confined his direction to treat the status of the assessee as AOP. In other words, the DCIT(A) has not gone into the merits of the case which, by implication, was not considered necessary. This shows that part of the ground No. 2 taken by the assessee regarding tax levied directly on the Trust was not dealt with by the DCIT(A) in specific terms. In view of the fact that the learned representative of the assessee has conceded the challenge based on status the impugned order of the DCIT(A) is not justified because the appeal on that account is not maintainable.
7. Coming to the next challenge based on the ground that the assessee denied its liability to be assessed under this Act, the contention could be straight away dismissed because what the assessee is seeking to agitate is that the Trust is to be assessed in terms of Section 161 of the Income-tax Act and not in terms of Section 164(1) of the Income-tax Act, 1961. In other words, the trustees are sought to be assessed in their representative capacity and not as a collective unit of assessment. Therefore, it cannot be said that the assessee has denied its liability to be assessed under the provisions of the Income-tax Act, 1961. This contention fails and cannot be entertained.
From this point of view also the appeal was not maintainable before the DCIT(A).
8. Coming to the challenge based on the ground of "the amount of tax determined", a closer look at the section shows that such a challenge could be made validly only against an order of assessment under Sub-section (3) of Section 143 or Section 144 where the assessee could object to the amount of income assessed or the amount of tax determined or the amount of loss computed or the status under which the assessee is assessed. Thus all these four different aspects of dispute should arise only out of a regular assessment under Section 143(3) or Section 144 and not an intimation under Section 143(1)(a) or Section 143(1A) of the Income-tax Act, 1961. Therefore, the contention raised by the learned representative of the assessee on the ground of amount of tax determined also fails. As a consequence the appeal is not maintainable even on that count. Thus the appeal is not maintainable on all the three grounds of contention raised by the learned representative of the assessee and, therefore, it is crystal clear that the DCIT(A) has wrongly entertained the appeal against an order under Section 143(1A) though wrongly styled as under Section 143(1)(a) of the Income-tax Act, 1961. In these circumstances, the grounds taken by the revenue are quite valid and justified in law and, therefore, the impugned order of the DCIT(A) is hereby cancelled as it is unjustified in law and is ab initio void.