Demand should not be forced where No Intimation u/s 143(1)
The CBDT has also issued Instruction No. 04/2013 dated
05.07.2013 with regard to the directive issued by the Delhi High Court in Court
on Its Own Motion vs. UOI 352 ITR 273 that the demand should not be
enforced in cases where no intimation u/s 143(1) was sent by the field
authorities in respect of returns which were processed prior to 31.03.2010.
In this directive CBDT has issued that an AO cannot enforced
a demand order unless he served an intimation u/s 143(1). If AO did so that demand
is not maintainable. These directives also cleared that the onus to show that
the order was communicated and was served on the assessee is on the Revenue and
not upon the assessee. It is very clear that in case an order under Section
143(1) Is not communicated or served on the assessee, the return as
declared/filed is treated as deemed intimation and unorder under Section
143(1), Therefore, (If an assessee does not receive or is not communicated on
order under Section 143(1). he will never know that some adjustments on account
of rejection of TDS or tax paid has been made. While deciding applications
under Section 154, or passing an order under Section 245, the A O should follow
these directives.
INSTRUCTION NO.4/2013 [F.NO.225/76/2013/ITAT.II], DATED 5-7-2013
Hon’ble Delhi High Court vide judgment in case of Court
On its Own Motion vs. UOI and Ors- in W.P. (C) 2659/2012 dated 14.03.2013
has issued Seven Mandamus for necessary action by income-tax Department one of
which is regarding non-enforcement of Demand where no intimation under section
143(1) of Income-tax Act,1961 was sent by field-authorities in respect of
returns which were processed prior to 31.03.2010.
2. On this issue, Court has observed as under:
“33. The second grievance of the assessee is with
regard to the un-communicated intimations under Section 143(1) which remained
on paper/file or the computer of the Assessing Officer. This is serious challenge
and a matter of grave concern. The law requires intimation under Section 143(1)
should be communicated to the assesses, if there is an adjustment made in the
return resulting either in demand or reduction in refund. The un-communicated
order/ intimations cannot be enforced and are not valid. Respondents in the
counter affidavit have not dealt with this problem on the assumption that the
Assessing Officer who had manually processed the returns and passed the
order/intimations under Section 143(1) would have necessarily followed the
statute and communicated the said orders/intimations. In case the said
orders/intimations under Section 143(1} were communicated or dispatched to the
assessees, the directions given by us below would not be a cause for any
grievance and will not be a matter of concern for the Revenue, We also accept
the contention of the Revenue that where an order under Section 143(1) was sent
and communicated to the assessee but could not be served due to
non-availability/change of address or other valid reasons, should not be
treated at par with case where there is no communication or no attempt is made
to serve the order whatsoever. But when there is failure to dispatch or send
communication/intimation/ to the assessee consequences must follow. Such
intimation/order prior to 31st March, 2010, will be treated as non est or
invalid for want communication/service within a reasonable time- This exercise,
it is desirable should be undertaken expeditiously by the Assessing Officers.
CBDT will issue instructions to the Assessing Officers.
34. The onus to show that the order was communicated and was
served on the assessee is on the Revenue and not upon the assessee. We may note
in case an order under Section 143(1) Is not communicated or served on the
assessee, the return as declared/filed is treated as deemed intimation and
unorder under Section 143(1), Therefore, (If an assessee does not receive or is
not communicated on order under Section 143(1). he will never know that some
adjustments on account of rejection of TDS or tax paid has been made. While
deciding applications under Section 154, or passing an order under Section 245,
the Assessing Officers ore required to know and follow the said principle. Of
course, while deciding application under Section 154 or 245 or otherwise, if
the Assessing Officer comes to the conclusion and records a finding that TVS or
tax credit had been fraudulently claimed he will be entitled to take action as
per law and deny the fraudulent claim of TDS etc. The Assessing Officer,
therefore, has to make a distinction between fraudulent claims and claims which
have been rejected on ground of technicalities, but there is no communication
to the assessee of the order/intimation under Section 143(1). In the later
cases, the Assessing Officer cannot turn around and enforce the demand created
by uncommunciated order/intimation under Section 143(1). This is fifth mandamus
which we have issued.”
3. In view of the direction of Hon’ble Court, I am directed
to convey that the exercise desired by the Hon’ble High Court in respect of
intimations/orders prior to 31.03,2010 as mentioned in Para 33 above may be
carried out by 31st August, 2013 positively. Further, the observations made by
Hon’ble High Court in Para 33 and Para 34 mentioned above relating to
intimations u/s 143(1) and disposal of applications u/s 1S4 and also passing of
order u/s 245r as applicable, may be strictly kept in mind by the Assessing
Officer while dealing with such matters.
4. This may be brought to notice of all Officers working
under your jurisdiction for necessary and strict compliance within the
time-frame prescribed above.
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