Ruma Pal, J.

(1) THE issue in this case relates to the validity of an intimation under Section 143 (1) (a) and the constitutionality of the provisions of Section 143 (1) (a) and Section 143

(1a) of the Income-tax Act, 1961 (referred to as " the" ).

(2) THE issue arises in the background of the following facts.

(3) PETITIONER No. 1 is a company (referred to as "the company" ). The company exports diverse goods. In respect of its export, the company became entitled to receive cash compensatory support from the Government of India. For the assessment year 1989-90, the company received cash compensatory support amounting" to Rs. 7,99,144 from the Government. The company filed its return for the assessment year in question claiming that the amount received by it on account of cash compensatory support was not taxable. However, in the return, the company stated that in case the amount was considered as taxable it may be assessed subject to the companys right of appeal or other remedy available under the law. The stand of the company that the cash compensatory support was not taxable was based on the decision of the Special Bench of the Income-tax Appellate Tribunal in the case of Gedore, Tools (India) (P.) Ltd. v. IAC [1988] 25 ITD 193 (Delhi ).

(4) IN the companys return, the company disclosed business loss on the ground that cash compensatory support was not taxable. Even if cash compensatory support was treated as taxable, the company would still have suffered a loss for the assessment year.

(5) SUBSEQUENT to the company submitting its return, the Finance Act, 1990, was enacted by which the provisions of Section 28 of thewere amended with effect from April 1, 1967, making cash compensatory support taxable.

(6) ON June 22, 1990, the Deputy Commissioner of Income-tax, Special Range, respondent No. 1, issued notice under Section 143 (2) of theto the company for the assessment year 1989-90. The company prayed for an adjournment and the hearing was fixed on July 24, 1990. The hearing in fact took place on July 27, 1990.

(7) ON July 31, 1990, the Deputy Commissioner of Income-tax, respondent No, 1, herein issued an intimation to the company under Section 143 (1) (a) of therecomputing the loss suffered by the company on the basis of the amended provisions of Section 28 of the. Although the total income for the assessment year continued to remain a loss figure, additional tax was levied under Section 143 (1a) of theand a demand of Rs. 80,691 was raised against the company for the assessment year in question.

(8) THE company then filed a revised return for the assessment year in question in view of the amendment of the law.

(9) ON September 7, 1990, the company filed an application under Section 154 of theagainst the intimation under Section 143 (i) (a) of theand the claim for additional tax under Section 143 (1a) of the. The next day, i. e. , September 10, 1990, the company filed an application under Section 264 of thebefore the Commissioner of Income-tax, respondent No. 2, herein, objecting to the impugned intimation and the levy of additional tax.

(10) THE companys application under Section 154 was dismissed on November 12, 1990, by respondent No. 1. The company preferred an appeal before respondent No. 3 from such order of dismissal. Respondent No. 3 dismissed the companys appeal on December 27, 1991. The company then preferred a further appeal before the Income-tax. Appellate Tribunal. The appeal is still pending.

(11) AS far as the companys application under Section 264 of theis concerned it was also rejected by respondent No. 2 on July 30, 1991.

(12) THE only other fact which needs stating is that the company has filed an application before respondent No. 1 for stay of realisation of the demand of Rs. 80,691 for the assessment year in question which does not appear to have been disposed of.

(13) THIS writ application was filed on July 11, 1992, challenging the constitutionality of Section 143 (1) (a) read with Section 143 (1a) and Section 4 as well as the intimation dated July 31, 1990, the order under Section 134 dated November 12, 1990, the appellate order of dismissal dated December 27, 1991, and the order under Section 264 dated July 30, 1991, and the recovery of additional tax. An interim order was passed restraining the respondents from taking any further step against the company under the impugned provisions or the impugned intimation or orders, The interim order is still operative.

(14) THE petitioners have challenged the constitutionality of Section 143 (1) and Section 143fla) of the on the ground that they are violative of Articles 14, 19 and 265 of the Constitution. It is submitted that the nature of the provisions were determinable with reference to a circular issued by the Income-tax Department being Circular No. 549 (see [1990] 182 ITR (St.) 1, 23) dated October 31, 1989, in which the amendments made in Section 4 of theand the insertion of Section 143 (1a) were sought to be explained. The passages in the circular which have been highlighted by the petitioners in support of their arguments read as follows :

"the new Section 143, as substituted by the Amending Act, 1987, while dispensing with the necessity of passing assessment orders in all cases, did not contain any deterrent provision against filing of incorrect returns to show lesser tax liabilities. Consequently, the new scheme of assessment was liable to be misused by unscrupulous taxpayers, who might return lesser income by making obvious mistakes or by claiming obviously incorrect deductions and taking a chance that if the same are detected by the Department, they would have to pay the correct tax only. The Amendment Act, 1989, has, therefore, inserted a new Sub-section (1a) in the section to provide for the levy of 20 per cent. additional tax in such cases. Besides its deterrent effect, the purpose of this levy is also to persuade all the tax payers to fill their returns of income carefully to avoid mistakes. It is thus a sort of negligence tax on the assessee and compensates the Department for the effort involved in detecting the obvious mistakes committed by the taxpayers in their returns of income or -loss. . . The Explanation in the said Sub-section (1a) applies in the case of loss returns only. These provisions are on the same lines as the provisions for the levy of penalty under Section 271 (1) (c) for concealment of income in the case of loss returns, as contained in Clause (a) of Explanation 4 to Section 271 (1), "

(15) ON the basis of these passages, the nature of the levy and the amendment to Section 271 it has been contended that Section 145 (1a) was intended to be a penalty, or a deterrent, or a tax on negligence or a fee. It is said :

(1) The additional tax was a penalty and was unconstitutional for the following reasons : (a) The levy is automatic, conduct or circumstances are not at all considered ; (b) no provision for granting any hearing or considering the representation of the assessee ; (c) there was no provision for appeal from an intimation ; (d) the impugned provisions operated contrary to the provisions of Sections 139 (5) and 139 (9) of the ; (e) even for genuine claims deduction was disallowed for procedural lapse and tax thereon is levied. Apart from tax--additional tax was also claimed for genuine claims ; (f) the existing provisions for interest and penalty were more than adequate to deal with the problem sought to be met by the impugned provisions ; (g) the impugned provisions were more onerous than the existing penalty provisions for the self-same act and/or omission, namely, Section 271 (1) (c) ; (h) the impugned provisions were discriminatory as on the same facts the Assessing Officer can invoke the provisions of either Sections 143 (1) and 143 (1a) or 271 (1) (c ). No guidelines had been laid down for exercise of the power by the Assessing Officer ; (i) no penalty can be imposed retrospectively.

(2) It is also submitted that the impugned provisions cannot be justified on the basis that they had deterrent effect because this would presume that only wilful defaulters were being subjected to the levy of additional tax. To treat the provisions as deterrent would be to ignore cases where an assessee may have bona fide and innocently made a mistake in their return as filed.

(3) The petitioners have also submitted that the impugned provisions could not be justified as a tax on negligence as sought to be done as the tax not being an income could not be justified with reference to entry 82 of List I of the Second Schedule to the Constitution. It is further submitted that a tax on negligence could not be justified with reference to the residuary entry 97 of List I. Negligence would be a wrongful act or omission which could be penalised by subjecting the perpetrator of the negligent act to damages or fine but could not be a subject-matter of taxation, In any event, the taxable event and the subject-matter of tax would be vague, indefinite and uncertain.

(4) It is then contended that if the imposition was sought to be justified on the basis of it being a fee even then the impugned provisions would be unconstitutional as a fee could only be levied for any services rendered. The performance of statutory duties under the to collect tax, according to the petitioners, was no service to the taxpayer, but a service to the Government itself in the matter of tax collection. It is pointed out that no fee was payable when regular assessment took place and that the scrutiny under the impugned provisions invariably took place even for initiating proceedings under Section 143 (2 ). Finally, it is submitted that a flat rate of 20 per cent. as sought to be imposed by Section 143 (1a) of thewould have no relation to the services rendered in respect of the different returns.

(5) It is then argued that the impugned provisions were unreasonable, since the department had the right to make a regular assessment, but the assessee had no right to insist on one under Section 143 (3 ). It is further submitted that the impugned provisions have nullified the rights given to the assessee under Sections 154, 246 and 264 of theand sought to collect and retain something not legitimately due as tax as no refund was permissible on any ground whatsoever.

(16) THE various decisions which have been cited by the petitioners in support of the challenge to the impugned provisions will he noted at the time of consideration of the same at a subsequent stage of the judgment, if necessary.

(17) IT is submitted by the petitioners that the impugned provisions may be saved by giving a reasonable interpretation to them and by reading in safeguards such as the opportunity of being heard and the right of the assessee to file a revised return under Section 139 (5) or to produce documents under Section 139 (5) and by allowing the assessee to demand assessment under Section 143 (3 ).

(18) ON the merits, the petitioners have submitted that the impugned levy of additional tax cannot be sustained on the grounds :

(i) that proceedings under Section 143 (1) cannot be initiated after proceedings had been initiated under Section 143 (2) for making an assessment under Section 143 (3) of the; and (ii) that the adjustments referred to in Section 143 (1) were limited to adjustments which were in the nature of errors apparent on the face of the record and did not apply to a claim which necessitates consideration ; (iii) that the adjustments could be made after considering Section 139 (4) and (9) ; (iv) that the question of prima facie adjustment would have to be considered with reference to the date on which the return is filed and not with reference to events subsequent to the filing ; and (v) that having regard to the object of the imposition of additional tax, the respondents should have given the assessee an opportunity of being heard before making the adjustment ; and " (vi) that no adjustment could, in any event, be made in the facts of the case as the question of adjustment would have to be considered on the basis of the law as it stood when the return was filed and when the company had filed the return cash compensatory support was not taxable as income at all.

(19) BEFORE countering the petitioners submissions, the respondents have strenuously contended that the writ application was not maintainable not only because the company had an alternative remedy under the but was actively pursuing such alternative remedy. The submission is made with reference to the appeal pending before the Tribunal from the impugned order dated December 27, 1991, and the application for stay pending before respondent No. 1. Reliance has been placed on the decisions reported in Sheo Nath Singh v. AAC of I. T. [1968] 67 ITR 254 (Cal) [fb] ; Laxmi Industries and Cold Storage. Co. (P.) Ltd. v. ITO and Purshottam Thackersey v. K. N. Anantarama Ayyar, CWT [1985] 154 ITR 395 (Bom ).

(20) ON the question of the constitutionality of the impugned provisions it is contended that there was a presumption in favour of constitutionality. The respondents have said that no circular could be relied upon for construing the impugned provisions. It is said that the imposition of the additional tax was neither a fee, nor a tax on negligence nor a penalty and, therefore, the challenge based on such an assumption was not sustainable. It is submitted that there was no question of the principles of natural justice being incorporated as the adjustments were made on the basis of the assessees return. The decision of the Madhya Pradesh High Court in the case of Kamal Textiles v. ITO [1991] 189 ITR 339 [LQ/MPHC/1990/465] has been cited as an authority for this purpose. It is said that there were ample provisions available under the to challenge an intimation, viz. , Sections 154 and 264.

(21) ON the merits, the respondents have submitted that the issuance of a notice under Section 143 (2) did not preclude the income-tax authorities from making an adjustment under Section 143 (1 ). It was pointed out that there was a six-month time-limit prescribed for issuance of a notice under Section 143 (2) and also that the issuance of such a notice was discretionary. In contrast, issuance of an intimation under Section 143 (1) was compulsory and had to be given, within two years. It is, therefore, submitted that by sending notice under Section 143 (2) the exercise of the power under Section 143 (1) was not affected. It has also been submitted that the amendment to Section 28 of thein 1990 making, inter alia, cash compensatory, support taxable had been made with retrospective effect from April 1, 1967. Therefore, when the return for the assessment was filed the cash compensatory support must be deemed to have been taxable. It is also said that by virtue of the Finance Act, 1993, Section 143 (1a) had been amended so that additional tax can be imposed even if after the adjustment the assessee would suffer loss. This amendment, it is pointed out, had not been challenged by the petitioners. It is also argued that there was no question of the company insisting on its revised return being considered at the time of adjustment as the intimation was sent on July 31, 1990, and the revised return was filed on September 11, 1990. It is disputed by the respondents that Section 143 (1) nullified rights under Section 139 (5) or (9 ). It is said that the objects of the sections were different and that there was no question of the one nullifying the other.

(22) AS the question of alternative remedy raised by the respondents is in the nature of a demurrer, that issue is taken up at the outset. There can be no doubt that once a petitioner has exercised his option to proceed with the alternative remedy, he cannot be permitted to proceed under Article 226 at the same time. But this principle proceeds on the basis that the authority before which the alternative remedy had been invoked had the jurisdiction to determine the issues raised in the application under Article 226. In this case, the petitioners have challenged the constitutionality of various provisions of. the and have asked that they be struck down. Now, the Tribunal before which the companys appeal is pending, is a creature of the and the does not envisage the Tribunal determining such issues. The courts have refused to entertain writ applications only when the alternative remedy is truly alternative, i. e. , equally efficacious. The remedy prayed for by the petitioners in this case not being wholly grantable by the Tribunal, there would be no justification in refusing or dismissing the writ petition on the ground of alternative remedy. The submission of the respondents to this effect is accordingly rejected.

(23) A point was also raised by the respondents that as notice had not been issued to the Attorney-General, the question of the validity of any provision of the Income-tax Act, 1961, could not be determined. It may be noted that the Union of India is a party to the proceedings before this court and has been represented by counsel. The Supreme Court in State of Gujarat v. Kasturchand Chhotalal Shah, has held that in such event the requirement of service on the Attorney-General under Order 27a of the Code of Civil Procedure was not necessary. This argument of the respondents is thus rejected.

(24) IN view of the established position in law that the courts will not consider the question of constitutionality of a statutory provision unless the petitioners cannot be granted relief otherwise, I proceed to take up the petitioners case on the merits first, and in order to determine the petitioners case on the merits the nature of and limits on the power under Section 143 (1) (a) are considered.

(25) SECTION 143 is contained in Chapter XIV of the which provides for the procedure for assessment. Section 143 (1), in so far as it is relevant, provides :

"143. (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 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 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. "

(26) THE jurisdiction of the Assessing Officer under Section 143 (1) (a) to make an adjustment and to issue an intimation is, in my view, limited not only to the obvious but also to that which is deducible from the return as filed, without doubt or debate. This is clear from the language of the section and is supported by the authority as well as the circulars issued by the Central Board of Direct Taxes in this connection.

(27) IN the case of Khatau Junkar Ltd. v. K. S. Pathania [1992] 196 ITR 55 [LQ/BomHC/1992/100] , a Division Bench of the Bombay High Court held that (at page 71) :

"this is because the scope of the powers to make prima facie adjustments under Section 143 (1) (a) is somewhat coterminous with the power to rectify a mistake apparent from the record under Section 154. . . . In its literal sense, prima facie means on the face of it, Hence, on the face of the return and the documents and accounts accompanying it, the deduction claimed must be inadmissible. Only then can ii be disallowed under the proviso to Section 143 (1) (a ). If any further enquiry is necessary, or if the Income-tax Officer feels that further proof is required in connection with the claim for deduction, he will have to issue a notice under Subsection (2) of Section 143. "

(28) SEE also S. R. F. Charitable Trust v. Union of India [1992] 193 ITR 95 (Delhi ).

(29) IN Circular No. 581 (see [1990] 186 ITR (St.) 2) dated September 28, 1990, issued by the Central Board of Direct Taxes, it has been said that the scope of the powers to make prima facie adjustments under Section 143 (1) (a) is "somewhat coterminous with the power to rectify a mistake apparent from the record under Section 154". The nature of the remedy, therefore, circumscribes the power under Section 143 (1) (a),

(30) IN fact the nature of the power under Section 143 (1) (a) has been conceded by the respondent to be limited to those adjustments in respect of which Section 154 would provide an adequate remedy.

(31) HOWEVER, the similarity between the power under Section 143 (1) (a) and Section 154 is to the extent stated, viz. , the determination of liability as ascertainable from the return as filed. The likeness ends there. The differences are many.

(32) THE power under Section 143 (1) may be exercised only in the circumstances mentioned in the proviso. Section 154 is not so limited.

(33) THEN again under Section 154 an opportunity is given to the assessee of being heard, there is no such opportunity provided under Section 143 (1) (a) (See Kamal Textiles v. ITO [1991] 189 ITR 339 (MP) [LQ/MPHC/1990/465] ).

(34) THIRDLY, the consequences of a rectification under Section 154 do not result in the payment of additional tax whereas an adjustment under Section 143 (1) (a) does.

(35) THE power under Section 143 (1) (a) though described as a prima facie determination is not a temporary one in the sense that an interlocutory order is passed which is subject to a final order on further scrutiny. The intimation as far as the Assessing Officer is concerned is final and it entails immediate and drastic consequences unless corrected or revised by a higher authority under Section 154 or Section 264, as the case may be.

(36) THE exercise of power under Section 143 (1) (a) is, therefore, required to be scrutinised carefully and kept strictly within the bounds of the statute, any dispute being resolved in favour of the assessee.

(37) NOW the question is whether there was such a clear case on the basis of the return which justified the making of an adjustment under Section 143 (1 ).

(38) IN the original return filed by the petitioner-company on December 29, 1989, the computation of business income for the assessment year in question was made as follows :

(39) THE adjustment in this case has been sought to be made under the first proviso to Section 143 (1), which provides for the circumstances under which adjustments can be made. It was not an arithmetical error which was sought to be adjusted. The adjustment has been sought to be justified on the basis that it fell within Clause (iii) of the first proviso to Section 143 (1 ). In other words, that the adjustment had to be either in respect of a loss carried forward, or deduction or allowance or relief.

(40) THE cash compensatory support was not claimed as a loss carried forward. Did the assessee then claim the cash compensatory support as a deduction or allowance or relief

(41) THE petitioners claim that the receipt of the cash compensatory support did not come within the three categories mentioned and was not income at all. A claim for deduction, allowance or relief, according to the petitioner is not one which can be equated with a claim that a receipt was not income at all. A sum in respect of which deduction, allowance or relief is claimed proceeds on the basis that the amount is otherwise taxable, If, it is argued by the petitioner, the receipt was not income at all, it would amount to saying that no tax was payable at all. It may be that by virtue of Section 28 being retrospectively amended cash compensatory support is income. But, it is argued that the claim of the petitioner still does not come within the four categories of claims in respect of which adjustments are permissible under Section 143 (1) (a ).

(42) DEDUCTIONS, allowances and reliefs have been dealt with under separate headings under the. Deductions are covered by Chapter VI-A, Sections 30, 31 et sequitur. The word allowance has been used interchangeably with the word deduction and is referred to in Section 33a and the sections following. Chapters VIII, IX and XVIII deal with relief.

(43) THE respondents have submitted that the claim relating to cash compensatory support fell within the category of loss carried forward or relief. It is not necessary for this court to determine the issue. Suffice it to say that the point raised is a debatable one and not one which could or should have been decided prima facie or summarily by the Assessing Officer in exercise of the power under Section 143 (1) (a) of the.

(44) THERE is a second limitation on the power under Section 143 (1) (a) and that is the Assessing Officer must determine the question of adjustment thereunder by applying the law prevailing when the return was filed.

(45) THIS follows first from the nature of the obligation to which an assessee is subjected in filing his return and second from the object sought to be achieved by the introduction of Section 143 (1a) and Section 143 (1) (a ).

(46) THE obligation in this case is to file a correct return within the time specified, that is to say a return which is correct according to the law in force when the return is required to be filed. The assessee is required under Section 139 to file his return "on or before the due date". The due date for the assessment year in question was December 31, 1989. The, assessee filed its return on December 29, 1989. The statement of taxes being Part 3 of the return which contains the verification relating to the correctness and completeness of the return would indicate that the position regarding the adjustment must be considered when the return is filed. This is borne out by the instructions regarding the verification set out :

"before signing the declaration, the signatory should satisfy himself that this return and the accompanying annexures and statements are correct and complete in all respects. Any person making a false statement in this return or the accompanying annexures or statements will be liable to prosecution under Section 277 or the Income-tax Act, 1961, and on conviction be punishable under that section with rigorous imprisonment and with fine. "

(47) IT is not in dispute that the return of the assessee when filed could not be termed out of hand as an incorrect return in view of the decision in Gedores case [1988] 25 ITD 193 (Delhi ).

(48) IN 1990, Section 28 of thewas amended with retrospective effect from April 1, 1967, so that Section 28 which deals with profits and gains of business or profession, now reads :

"the following income shall be chargeable to income-tax under the head profits and gains of business or profession,- -. . . . (iiib) cash assistance (by whatever name called) received or receivable by any person against exports under any scheme of the Government of India ;"

(49) AN assessee cannot be imputed with clairvoyance. When the return was filed, the assessee could not possibly have known that the decision on the basis of which cash compensatory support had been claimed as not amounting to the assessees income ceased to be operative by reason of retrospective legislation.

(50) AGAIN the determination of the Assessing Officers powers under Section 143 (1) (a) must be with reference to the object sought to be achieved by the section. One of the objects of the introduction of Sections 143 (1a) and 143 (1) (a), having regard to Circulars Nos. 549 (see [1990] 182 ITR (St.) 1) and 581 (see [1990] 186 ITR (St.) 2) appears to be to put assessees on guard against filing incorrect returns.

(51) IN the decision of C. B. Gautam v. Union of India, for the purpose of elucidating the object for the introduction of Section XXC of the, the Supreme Court referred to an instruction issued by the Central Board of Direct Taxes in this context. There may also be some substance in the petitioners arguments that the object of the provisions was penal in nature. It is to be noted that in the decision of Indo-Gulf Fertilizers and Chemicals Corporation Ltd. v. Union of India, it was argued by the respondents-income-tax authorities that additional income-tax was indeed charged by way of penalty.

(52) WITHOUT going into the question as to whether the provisions are penal in nature, but keeping in mind the consequences of an adjustment made and the insistence upon the assessee filing a correct return, it would follow that the date for judging the question of adjustment must be the actual date of the return in the light of the law then prevailing. To hold otherwise, manifestly shocks ones sense of justice that an act, correct at the time of doing it, should become incorrect by some new enactment (see Midland Railway Company v. Pyre [1861] 142 ER 419, 424 ). The injustice in my view is more shocking in this case having regard to the fact that the assessee had itself, in its return, drawn the attention of the income-tax authorities to the basis upon which the cash compensatory support had not been included as income and had clearly offered to include the same in any assessment if the basis is shown to exist.

(53) ADDITIONALLY, the change in the law by amendment of Section 28 took place several months after the return was filed by the assessee. This court is not determining the validity of the amendment of Section 28, but is merely determining the scope of the power under Section 143 (1) (a ). The assessees return could have been taken up by the Assessing Officer under Section 143 prior to the amendment. In that event, no adjustment would have been made and no intimation would have been sent. An assessees liability cannot be made to depend upon such a fortuitous circumstance.

(54) TO sum up : the obligation on the assessees part to file a correct return corresponds with the power of the Assessing Officer under Section 143 (1) (a) to determine the correctness of the return as and when filed.

(55) THE third aspect of the matter is the issuance of notice under Section 143 (2) of the. Section 143 (2) reads :

"(2) Where a return has been made under Section 139, or in response to a notice under Sub-section (1) of Section 142, the Assessing Officer shall, if he considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not underpaid the tax in any manner, serve on the assessee, a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return ; provided that no notice under this Sub-section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished. "

(56) AT the lowest the notice under Section 143 (2) was issued, because the Assessing Officer was unable to decide the matter on the basis of the return. The issuance would, therefore, amount to admission of the debatability of the claim made by the petitioner in its return.

(57) THE notice issued under Section 143 (2) dated June 22, 1990, required the assessee to produce further information because the Income-tax Officer found certain points in connection with the return of income submitted-by the assessee for the assessment year in question. It appears from the copy of the notice which was scheduled to be held on June 28, 1990, was adjourned twice.

(58) THE income-tax authorities explanation for issuing, the notice under Section 143 (2) appears to be a submission that the notice under Section 143 (2) is issued as a matter of course, without any application of mind merely because the period for limitation for issuing the notice was liable to expire at an early date. The court cannot act on a submission which is not borne out from the records nor will it accept reasoning other than that given in the notice under Section 143 (2 ). That more information was in fact required before the assessment of the petitioners return could be made must be taken to have been conceded.

(59) IN my view, apart from the concession in this case, generally, this is the third limitation on exercise of power under Section 143 (1) (a) of the Act, namely, once the notice under Section 143 (2) has been issued there is no scope for the authorities either to make prima facie adjustment on the basis of the return as filed or issue an intimation under Section 143 (1) (a ).

(60) THE only ground taken in the assessees application under Section 154 of thewas that once notice under Section 143 (2) had been issued there was no scope for issuing an intimation under Section 143 (1) (a ). The Deputy Commissioner in rejecting the application took into consideration, the language of Section 143 (1) (a) and Section 143 (2) and came to the conclusion that the provision of Section 143 (1) (a) was compulsory but those of Section 143 (2) were optional and that in the circumstance even though a notice under Section 143 (2) had been issued an intimation under Section 143 (1) (a) could be made,

(61) THIS reasoning has been adopted by the respondents at the hearing. Further, the respondents have relied upon the decision of the Madhya Pradesh High Court in Kamal Textile v. ITO [1991] 189 ITR 339 [LQ/MPHC/1990/465] in this connection.

(62) THE reasoning of the Deputy Commissioner equally with the reasoning of the respondents regarding the effect of issue of a notice under Section 143 (2) is fallacious.

(63) THE language of Section 143 (1) (a) plainly says that an intimation can be issued without prejudice to Section 143 (2), but not that a notice under Section 143 (2) can be issued without prejudice to Section 143 (1) (a ).

(64) IN the case of Kamal Textile v. ITO [1991] 189 ITR 339 [LQ/MPHC/1990/465] , the Division Bench of the Madhya Pradesh High Court was called upon to consider a situation where notice under Section 143 (2) had been issued subsequent to the issue of an intimation under Section 143 (1) (a) and not prior to the intimation as in this case.

(65) THE contention in that case was that the proceedings under Section 143 (2) were tantamount to proceedings for reassessment. The court negatived this submission on the basis of the language of Section 143 (1) (a) of thethat issuance of an intimation under Section 143 (1) (a) would be without prejudice to the provisions of Section 143 (2 ). Therefore, the question in issue before this court was not before the Madhya Pradesh Bench.

(66) THE omission by the Legislature to make the issuance of a notice under Section 143 (2) without prejudice to an intimation under Section 143 (1) (a) while specifically providing that the issuance of an intimation under Section 143 (1) (a) would be without prejudice to Section 143 (2) was, in my view, deliberate because of the difference in the nature of the jurisdictions exercised by the Assessing Officer under the two sections. The jurisdiction under Section 143 (1) (a) as already seen is a summary one, whereas Section 143 (2) precedes an assessment under Section 143 (3) or what has been described as the scrutiny or regular assessment. The language of Section 143 (3) shows the object of the issuance of notice under Section 143 (2) and reads :

"on the day specified in the notice issued under Sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him on the basis of such assessment. "

(67) THE respondents submission that the issuance of an intimation is compulsory is incorrect. To accept the submission would be to read the provisions of Section 143 (1) (a) in a manner not warranted by the language. It is true that the word "shall" has been used in connection with the issuance of an intimation but it is well-established that the construction of the expression "shall" depends upon the provisions of the, the setting in which the direction is given and the consequences that would follow from the infringement of the direction and other such considerations, (See CIT v. Rai Bahadur Bissesswarlal Motilal Malwasie Trust. The context in which the word "shall" has been used in Section 143 (2) has to be read in the background of the proviso to the section and that is where there is no scope for any adjustments in terms of the proviso, there would be no scope for sending any intimation.

(68) ONCE having found the return not immediately determinable or summarily, the Assessing Officer cannot discard this view and determine the matter under Section 143 (1) (a) without there being any change in law or fact between the issuance of the notice under Section 143 (2) and the adjustment under Section 143 (1) (a ).

(69) THERE may be other limitations on the power under Section 143 (1) (a ). But for the purposes of this writ application, the limitations considered in this judgment are sufficient to grant the petitioner the immediate relief claimed in respect of the impugned adjustment and intimation.

(70) HAVING decided the issue on the limited basis, it is not necessary to determine the wider question as to the constitutionality of the impugned provisions of Section 143 (1) (a) read with Section 143 (1a) which are accordingly left open.

(71) FOR the reason aforesaid it must be held that impugned adjustment and intimation in respect of the assessment year in question were ultra vires the section and must accordingly be set aside.

(72) THE writ application is accordingly allowed to the extent that the impugned intimation and adjustment under Section 143 (1) (a) are set aside and quashed. Consequently, the order under Section 153 dated November 12, 1990, the appellate order dated December 27, 1991, the revisional order dated July 30, 1991, and any purported recovery of additional tax in respect of the assessment year in question arc also quashed and set aside. Stay of operation of the order is prayed for and the same is granted for three weeks from date.