B.C. Verma, J.

The petitioners are assessed to Income Tax. They submitted their returns for the year of assessment 1989-90. The Income Tax authority took steps under Section 143 of the Income Tax Act and issued an intimation to the assesses specifying the sum payable as tax in accordance with the returns submitted. Such intimation is to be treated as a notice of demand under Section 156 of the Act. It appears that thereafter the authorities issued notices, annexures 12 to 38, in exercise of powers under Section 143(2) of the Act with a view to assess the income of the assessee for the relevant year. It is these notices which are challenged in this petition. It may be mentioned that such a notice has also been issued in Miscellaneous Petition No. 2697 of 1990 under similar circumstances and for the same assessment year.

Challenging the notices, Shri B. L. Nema, learned counsel for the petitioners, submitted that the intimation sent to the assessees under Section 143(1)(a)(i) is after due assessment on the basis of the returns submitted. This is clear from the terms of that provision which, by a fiction, requires such intimation as notice of assessment under Section 156 of the Act. The submission made, therefore, is that the proceedings under Section 143(2) of the Act are tantamount to proceedings for reassessment which could be taken only in terms of Sections 147 and 148 of the Act. In our opinion, the contention cannot be acceded to. Section 143, so far as relevant for the purposes of this petition, is as follows :

"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, 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 returns, 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."

A reading of Clause (i) to Sub-section (l)(a) of Section 143 makes it clear to us that the giving of intimation in terms of that provision is "without prejudice" to the provisions of Sub-section (2). This expression/phrase is normally used in negotiation of compromise or offers to settle differences cause pacis in order to guard against any waiver of right should they be ineffectual and go off. Thus, where parties in the court agreed that the cause should "stand adjourned and without prejudice to either of the parties" it would only mean that no harm should result to the rights to either of the parties by reason of his consent to the adjournment at that time. Thus understood, in the present context, the expression shall mean only that an intimation sent to the assessee specifying the sum payable by him in terms of that sub-section, although technically a demand issued under Section 156, shall nevertheless not preclude the operation of the provisions of Sub-section (2). By force of this expression as inserted in Sub-section (1)(a)(i), the right of the assessing authority to proceed under Subsection (2) of Section 143 despite intimation to the assessee of the sum payable by him as tax or interest is not taken away. That right is clearly saved and is not in any way curtailed or hampered by the giving of the intimation. It may be noticed that the section has been recast and one of the main changes brought about is that, under Section 143(1), a regular assessment order as such is not to be passed. Power to make an adjustment in terms of its proviso can be invoked only when the claim is prima facie inadmissible, that is, it should be clear or self-evident. A decision on a debatable issue is not envisaged. On the contrary, when proceedings are taken under Section 143(2), it partakes of the nature of a regular assessment and the assessing authority should pass an order under Section 143(3).

Shri Nema also urged that because the intimation is deemed to be a notice of demand of tax under Section 156 of the Act, the proceedings for assessment should be taken as complete in all respects, subject of course to the assessment being reopened in terms of Section 147. This contention also is devoid of any substance. The intimation under Section 143(1)(a)(i) is only fictionally taken as a notice of demand under Section 156. Like all other fictions, to understand the meaning of this fiction so created here, one must look to its purpose. It is only thereafter that the court has to assume all facts and consequences which are incidental or an inevitable corollary to the giving effect to the fiction. One must be cautious to see that the fiction is not extended beyond the purpose for which it is created. See CIT v. Vadilal Lallubhai : [1972]86ITR2(SC) . The apparent purpose of the fiction so created here to treat the intimation as a notice of demand under Section 156 is to make the machinery provision of recovery of tax applicable to the recovery of tax assessed in terms of Section 143(1)(a)(i) and nothing more. A notice of demand under Section 156 is to be served in the prescribed form. The intimation under Section 143(1)(a)(i) is not in any such prescribed form. Nevertheless, by the fiction so created, all incidents of the notice of demand shall become applicable even to that intimation, for any statutory fiction must be carried to its logical conclusion. Such being the limited purpose of the fiction, it is difficult to accept the contention that, on issuance of such intimation, the assessment proceedings can be reopened only in terms of Section 147 and the authority is not entitled to proceed under Sub-section (2) of Section 143.

We are also not impressed with the argument of learned counsel that the issuance of intimation under Sub-section (1)(a)(i) of Section 143 is final because no appeal is provided against the demand of the amount of Income Tax or interest. This contention overlooks the fact that even if not appealable, it is clearly revisable. However, as we have noticed above, the assessment made in proceedings under Section 143(2) shall, for all purposes, be an assessment of tax made under Section 143(3) and, in that event, shall be appealable under Section 246(1)(a) of the Act.

It was, in passing, submitted that the provisions of Section 143(1)(a)(i) are ultra vires being opposed to the principles of natural justice. The argument is that before issuing the intimation which is a demand under Section 143(3), no opportunity is afforded to meet the adverse consequences, if any. The fallacy in the suggestion lies in omitting to see that the intimation is issued on the basis of the assessees own return. What are permissible to be adjusted are (i) only apparent arithmetical errors in the return, accounts or documents accompanying the return, (ii) loss carried forward, deduction, allowance or relief, which is prima facie admissible on the basis of information available in the return but not claimed in the return, and, similarly, (iii) those claims which are on the basis of information available in the return, prima facie inadmissible, are to be disallowed. This only means that, at that stage, as we have seen above, only errors apparent on the face of the record alone may be corrected. It may be further noticed that even this is permissible on the basis of the information accompanying the return. The assessing authority is not permitted under this guise of making adjustment to adjudicate upon any debatable issue. We have, therefore, little hesitation in rejecting this contention.

For the aforesaid reasons, we dismiss this petition.