V.K Singhal, J.:— In this writ petition, the petitioners have chal-lenged the intimation received under section 143(1)(a) of the Income-tax Act, 1961 (hereinafter to be called as “the Act”), whereby the petitioner was required to make payment of a sum of Rs. 20,243.
2. The grievance of the petitioners is that the Income-tax Officer has no jurisdiction under section 143(1)(a) of the Act to make variation in the rate of tax and has limited jurisdiction as provided in the said section. The submission of learned counsel for the Department is that the assessment has been made on the same figure as was declared by the petitfoner and it was Only on account of the maximum marginal rate of tax as against the normal rate shown by the assessee that this demand was created. It has further been submitted that, in accordance with the provisions of section 167B of the Act since the shares of the members in the assessee's case were unknown, the Income-tax Officer was justified in applying the maximum marginal rate. The said section was amended by the Direct Tax Laws (Amendment) Act, 1989, with effect from April 1, 1989, and the maximum marginal rate was applied for the years 1989–90 and 1990–91. Since no reasons were shown by the assessee for applying the normal rate in the return, by applying the provisions of section 167B the tax has correctly been levied and charged. It was also submitted that the petitioner has an alternative remedy for submitting an application under section 154 of the Act during the relevant period.
3. I have considered the matter. The provisions of section 143(1)(a) are as under:
“143. Assessment. — (1)(a) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142,—
(i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source or any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly; and
(ii) if any refund is due on the basis of such return, it shall be granted to the assessee:
Provided that in computing the tax or interest payable by, or refundable to, the assessee, the following adjustments shall be made in the income or loss declared in the return, namely:—
(i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified;
(ii) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, is prima facie admissible but which is not claimed in the return, shall be allowed;
(iii) any loss carried forward, deduction, allowance or relief claimed in the return which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed:
Provided further that where adjustments are made under the first proviso, an intimation shall be sent to the assessee, notwithstanding that no tax or interest is found due from him after making the said adjust-ments;
Provided also that an intimation for any tax or interest due under this clause shall not be sent after the expiry of two years from the end of the assessment year in which the income was first assessable.”
4. The provisions of section 167B of the Act are applicable where the shares of the members in the association of persons or body of individu-als are unknown/indeterminate.
5. A bare perusal of section 143(1)(a) contemplates that the Income-tax Officer has to accept the return as it is and in the proviso, three exceptions have been given which confer the jurisdiction on him for making adjustment. Action under this section cannot be taken beyond the power permitted by these three exceptions. The third exception provides that any loss carried forward, deduction, allowance or relief claimed in the return, which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed. This clause contemplates that power could be exercised only: (a)(i) in respect of loss carried forward, (a)(ii) deduction or, (a)(iii) allowance or (a)(iv) relief claimed; (b) the power in respect of the above four items should be on the basis of information available in the return, accounts or documents; (c) that these items are prima facie inadmissible.
6. The Income-tax Officer appears to have exercised his power under this clause. A question arose as to whether the application of the rate of tax could be covered by the term “relief claimed in the return” because the application of a different rate of tax will not fall under the category of loss carried forward, deduction or allowance. There is another provision in clause (i) regarding arithmetical errors in the return. There may be a case where the rate of tax is not disputed but while calculating the tax there is an error which could be corrected under this clause, i.e, while calculating the tax on the normal rate or the maximum marginal rate there is a mistake which could be corrected and will fall in the category of arithmetical mistake, but whether the maximum marginal rate is to be applied or the normal rate is applicable is not covered by any of the two clauses of the proviso to section 143(1)(a) of the Act.
7. The matter has also to be considered from another angle that the word “prima facie” which has been used therein means “on the face of it” and refers to the items on which there cannot be two opinions. If the matter is an arguable one or debatable then the same cannot be disallowed under the proviso referred to above.
8. Earlier, there was a provision under section 141A in the Act, which has since been deleted, under which the Income-tax Officer was required to frame a provisional assessment for refund. The said provision contem-plated the passing of a provisional assessment order on the basis of the return and the Bombay High Court in Synthetic and Chemicals Ltd. v. D.R Chawla, ITO, [1985] 154 ITR 504 has held that the Income-tax Officer has power to make adjustment to the income declared in the return by disallowing any deduction which, on the basis of the information available in such return, accounts and documents, is prima facie not admissible. The Hon'ble Supreme Court in Jaipur Udyog Ltd. v. CIT, [1969] 71 ITR 799, interpreting the provisions of section 141 of the Income-tax Act, has observed (at page 802):
“Section 141 of the Income-tax Act, 1961, authorises the Income-tax Officer to make provisional assessment of the income of the assessee on the basis of the return made under section 139 and the accounts and documents, if any, accompanying the return. The assessment so made is summary and is based only on the return and the accounts and documents filed by the assessee. The Income-tax Officer is not bound to make any enquiry before making a provisional assessment; he is not bound even to give to the assessee any notice of his intention to make a pro-. visional assessment, nor to hear the assessee. He may, if he desires, call upon the assessee to elucidate the return or the entries posted in the accounts and documents, but he is not obliged to do so. Section 141 has been enacted with the object of expediting collection of tax on the basis of the return made by the assessee.”
9. The object of summary assessment proceedings as contemplated under section 143(1)(a) is not only to reduce the work of the Department but is also to minimise litigation and create confidence in taxpayers for submitting true and correct returns. If it appears that the return submitted by the assessee cannot be accepted for the purpose of taking action under section 143(1)(a), then the powers of the Income-tax Officer are not fettered and he can proceed to finalise the assessment after giving an opportunity to the assessee in respect of any arguable point only under section 143(2). Thus, on a proper interpretation of this section, the rights of the Income-tax Officer are restricted with regard to the disallowances which are prima facie inadmissible. Whether the provisions of a particular section are applicable or not, will not be covered under this section. If the provisions of a particular section are applied by the assessee himself and while computing deduction, etc., under that section, there is a mistake, it could be corrected like in the case of a salaried person; in computing the income from salary, if the standard deduction as prescribed under section 16 is claimed at a lesser figure or a higher figure then that mistake could be corrected as it would fall within the category of arithmetical error in the calculation of standard deduction. The second clause of the proviso casts a duty in respect of the deduction, allowances, etc., which have not been claimed in the return, but are prima facie admissible on the basis of information available in the return. A problem may arise in such a situation where the information is not available in the return, but the deduction, allowances, etc., are prima facie admissible then no duty is cast on the Income-tax Officer to allow such a claim under this clause. On the same analogy, if any different interpretation is sought to be taken on which there could be two views or the information in respect thereof is not available in the return, then no such disallowance can be made. The Income-tax Officer should have disallowed the claim if the fact of shares of the members in the assessee's case being indeterminate was evident from the return itself. In the reply submitted by the respondents, it has been mentioned in paragraph 8 that the return of income filed by the assessee for the assessment year 1991–92 did not mention any reason for applying any rate other than those prescribed in section 167B of the Act and, therefore, the tax was charged as prescribed under section 167B. No doubt, the assessee has not mentioned the reasons as explained by the respondents, but has, at the same time, not admitted that the pro-visions of section 167B are applicable. For applying the provisions of section 167B, it was incumbent on the Income-tax Officer to have pro-vided an opportunity to the assessee and then he should have framed the assessment under section 143(3). The provisions of section 143(1)(a) cannot be invoked and the jurisdiction being limited for disallowing only prima facie inadmissible deductions, allowances, etc., the Income-tax Officer was not justified in sending intimation creating the demand by applying a provision the application of which itself was a disputed one.
10. In the aforesaid circumstances, the intimation sent by the Income-tax Officer (annexure 1) is quashed. The Income-tax Officer would be free to proceed in accordance with law by providing an opportunity to the assessee and then frame the assessment under section 143(3) of the Act. The writ petition is allowed accordingly.
11. No order as to costs.