Ita/35/2014 Of M/S Concert Capital Ltd v. The Income Tax Officer

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM & THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI TUESDAY, THE 12TH DAY OF MARCH 2019 / 21ST PHALGUNA, 1940 ITA.No.35 OF 2014 AGAINST THE ORDER IN ITA 118/COCH/2012 OF I.T.A.TRIBUNAL, COCHIN BENCH APPELLANT/RESPONDENT/APPELLANT/ASSESSEE: M/S CONCERT CAPITAL LTDG-28, PANAMPILLY NAGAR, COCHIN-682 036 REPRESENTED BY ITS MANAGING DIRECTOR MATHEW C. ANTHRAPER. BY ADVS.SRI.K.N.SIVASANKARANSRI.SUNIL SHANKER RESPONDENT/APPELLANT/RESPONDENT/ASSESSING AUTHORITY: THE INCOME TAX OFFICERWARD-1(I), KOCHI. OTHER PRESENT: SRI.JOSEPH MARKOS(SR.) FOR APPELLANT, SRI.JOSE JOSEPH, SC, FOR RESPONDENT THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON12.03.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: I.T.A. No.35/2014 ## C.K. ABDUL REHIM &R. NARAYANA PISHARADI, JJ. ----------------------------------------------------- I.T. Appeal No. 35 OF 2014 ------------------------------------------------------- Dated this the 12[th] day of March, 2019 J U D G M E N T Abdul Rehim, J. The appellant-company is challenging an order passed by the Income Tax Appellate Tribunal, Cochin Bench, inI.T.A.No.118/Coch/2012, dated 31.12.2013. With respect to theassessment year 2009-2010, the company claimed set offagainst carried forward business loss and unabsorbed portion ofdepreciation pertaining to the previous years, to the tune of`3,12,20,198/- towards business loss and `72,78,605/- towardsdepreciation loss; totaling to an amount of `3,84,98,803/-. Anintimation under Section 143 (1) of the Income Tax Act 1961 ('theAct' for short) was issued by the Department, disallowing the I.T.A. No.35/2014 entire claim for set off. The matter was taken up in appeal by theappellant-company before the Commissioner of Income Tax(Appeals). The Commissioner (Appeals) accepted thecontentions of the appellant-company, that the disallowancedoes not fall within the scope of 'prima facie adjustment'provided under Section 143(1). It was contended before theappellate authority that, 'prima facie adjustment' is permissibleonly in respect of claims with respect to which the incorrectnessis apparent from any information contained in the return itself,and any debatable claims are not liable for such 'prima facieadjustments', as per Section 143(1). 2.Relying on a decision of this court in 94 STC 234 anda decision of the hon'ble Supreme Court in 82 ITR 50, it wascontended that, in order to make a 'prima facie adjustment' themistake must be patent and obvious, which does not require anylengthy or serious debate to establish it. Referring to theamendment brouogh in to S.143(1), with effect from 01.06.1999,it was pointed out that, there is no room left after 01.06.1999 for I.T.A. No.35/2014 any intimation under Section 143(1) except making arithmeticalconclusion of facts, penalty or interest, payable on the basis ofclaim made by the assessee. Any arithmetical error in thecomputation of tax has only to be corrected by rectification underSection 154(1)(b), was the argument advanced. 2.Relying on a decision of this court in 94 STC 234 anda decision of the hon'ble Supreme Court in 82 ITR 50, it wascontended that, in order to make a 'prima facie adjustment' themistake must be patent and obvious, which does not require anylengthy or serious debate to establish it. Referring to theamendment brouogh in to S.143(1), with effect from 01.06.1999,it was pointed out that, there is no room left after 01.06.1999 for I.T.A. No.35/2014 any intimation under Section 143(1) except making arithmeticalconclusion of facts, penalty or interest, payable on the basis ofclaim made by the assessee. Any arithmetical error in thecomputation of tax has only to be corrected by rectification underSection 154(1)(b), was the argument advanced. 3.Accepting the above contentions, the AppellateAuthority found that, question about the liability has to becomputed as per the return submitted by the assessee, afteraccepting all the claims of deduction, allowance or the existenceof the liability; and if any deviation is required, recourse shall beto regular assessment, which could be the subject matter of aregular appeal. It was found that, section 143(1) as substitutedby the Finance Act, 1999, w.e.f. 1[st] June, 1999, had dispensedwith intimation permitting any 'prima facie adjustment' to thereturned income. Intimation under Section 143 (1), on or after 1[st]June, 1999, will authorize refund or demand of tax strictly on thebasis of return filed by the assessee. Therefore it was held thatthe set off claim will not come under 'prima facie adjustment' and I.T.A. No.35/2014 hence the impugned intimation under Section 143(1) was setaside. 4. The findings of the Commissioner (Appeals) is to theeffect that, the disallowance of the set off claimed, on the groundthat the set off claim pertains to the years which are beyond theperiod for which such set off is permissible, is a question whichneed to have been adjudicated and decided in the process ofassessment, as contemplated under Sections 143 (2) and143(3). It was found that, the claim for set off with respect todepreciation loss to the tune of `72,78,605/- cannot be denied onthe ground of limitation, because the relevant provision does notstipulate any period of limitation with respect to allowing set offagainst unabsorbed portion of depreciation. 5. The Revenue took up the matter in second appealbefore the Income Tax Appellate Tribunal. In the order impugnedherein, the Tribunal found that, the business loss with respect towhich set off was claimed pertains to the assessment years1997-1998 and 1998-1999, which can be carried forward only for I.T.A. No.35/2014 -:6:- a period of 8 years, ie. upto the year 2008-09. Since theassessment year under consideration is 2009-2010, set off withrespect to business loss cannot be granted under Section 72(3)of the Act. Hence it was held that, this is a matter with respect towhich 'prima facie adjustment' can be made under Section143(1) of the Act. Therefore the decision of the CIT (Appeals)with respect to the set off claimed against carried forwardbusiness loss, was set aside. The intimation under Section 143(1) was sustained to that extent. However, with respect to theset off claimed against depreciation loss, the findings of the CIT(Appeals) was upheld. 6.At the time of admitting the above appeal, this court framed the following substantial questions of law:- “1. Is not the Tribunal in error in Ann.H. order inpartly allowing the Appeal of the Revenue, reversingthe order of the Commissioner of Income Tax(Appeals), holding that impugned intimation underSection 143 (1) (Ann.F) is valid in as much as thesame has disallowed the claim of carry forward ofbusiness loss? 2. Is not the Tribunal in error in holding that thecarry forward and and set off provided underSection 41(5) will not be attracted in the case of the appellant? 6.At the time of admitting the above appeal, this court framed the following substantial questions of law:- “1. Is not the Tribunal in error in Ann.H. order inpartly allowing the Appeal of the Revenue, reversingthe order of the Commissioner of Income Tax(Appeals), holding that impugned intimation underSection 143 (1) (Ann.F) is valid in as much as thesame has disallowed the claim of carry forward ofbusiness loss? 2. Is not the Tribunal in error in holding that thecarry forward and and set off provided underSection 41(5) will not be attracted in the case of the appellant? 3. Whether the Tribunal failed to consider the impactof Section 72(1) in the event of the Tribunalinterpreting that Section 41(5) was not attracted inthe instant case? 4. Whether the Tribunal erred in concluding that theclaim for disallowance of business loss, as done inthe case of the appellant, can be the subject matterof prima facie adjustments under Section 143(1)(a)of the Act.” 7. Heard; Sri.Joseph Markos, learned Senior Counsel appearing for the appellant and Sri.Jose Joseph learnedStanding Counsel for Government of India (Taxes). 8.Learned Senior Counsel for the appellant had drawn our attention to the intimation issued under Section 143 (1) fromthe 'Centralized Processing Centre' of the Income TaxDepartment, copy of which is marked as Annexure F along withthe Memorandum of Appeal. It is a computer generated printedform which contains tabulated columns, from which it isdiscernible that the sett off claimed in the return of the assesseewith respect to an amount of `3,84,98,803/- was totallydisallowed, as per the computation made under Section 143(1). The computer generated form under which the intimation was issued does not reflect any reasons for making such 'prima facieadjustment' under Section 143(1) of the Act. 9.Learned Senior Counsel had also furnished for ourperusal a copy of the return filed with respect to the relevantassessment year. Evidently, income to the tune of`3,84,98,803/- was sought to be set off against brought forwardloss and the net income after the set off was shown as 'zero'(0).In the 'scheduled CFL' attached to the return, contains the'details of loss to be carried forward to future years', it is shownthat, there is a total carried forward loss with respect to theyears 2001-2002 and 2002-2003 to the tune of `5,22,43,000/-.Adjustment with respect to the loss in the current year is shownas `3,84,98,803/- and the balance amount of `1,37,44,197/- isshown as total loss to be carried forward to future years.Question is whether the claim made in the return is an incorrectclaim, which is apparent from any information furnished in thereturn. I.T.A. No.35/2014 10.For a better appreciation of the question involved, it is necessary to have a scanning of the provisions contained under Section 143 (1). The said provision as it existed prior to theFinance Act, 1999 which came into force w.e.f June 1,1999,reads as follows:- “(1)(a) where a return has been made under section139,or in response to a notice under sub-section (1) ofsection 142,- (i)If any tax or interest is found due on the basisof such return, after adjustment of any tax deductedat source, any advance tax paid and any amountpaid otherwise by way of tax or interest, then, withoutprejudice to the provisions of sub-section (2), anintimation shall be sent to the assessee specifyingthe sum so payable, and such intimation shall bedeemed to be a notice of demand issued undersection 156 and all the provisions of this Act shallapply accordingly ; and (ii)if any refund is due on the basis of suchreturn, it shall be granted to the assessee : Provided that in computing the tax or interest payableby, or refundable to, the assessee, the followingadjustments shall be made in the income or lossdeclared in the return, namely:- (I)any arithmetical errors in the return, accountsor documents accompanying it shall be rectified; (ii)if any refund is due on the basis of suchreturn, it shall be granted to the assessee : Provided that in computing the tax or interest payableby, or refundable to, the assessee, the followingadjustments shall be made in the income or lossdeclared in the return, namely:- (I)any arithmetical errors in the return, accountsor documents accompanying it shall be rectified; (ii) any loss carried forward, deduction, allowanceor relief, which, on the basis of the informationavailable in such return, accounts or documents, isprima facie admissible but which is not claimed in thereturn, shall be allowed; (iii)any loss carried forward, deduction, allowanceor relief claimed in the return, which, on the basis ofthe information available in such return, accounts ordocuments, is prima facie inadmissible, shall bedisallowed : Provided further that an intimation shall be sent to theassessee whether or not any adjustment has beenmade under the first proviso and notwithstanding thatno tax or interest is due from him;” 11.The provision underwent substantial recasting through Finance Act, 1999 w.ef.1.06.1999, which thereafter read as follows:- (i) if any tax or interest is found due on thebasis of such return, after adjustment of any taxdeducted at source, any advance tax paid, any taxpaid on self assessment and any amount paidotherwise by way of tax or interest, then, withoutprejudice to the provisions of sub-section (2), anintimation shall be sent to the assessee specifyingthe sum so payable, and such intimation shall bedeemed to be a notice of demand issued underSection 156 and all the provisions of this Act shallapply accordingly; and ii) if any refund is due on the basis of suchreturn, it shall be granted to the assessee and anintimation to this effect shall be sent to theassessee: Provided that except as otherwise provided in thissub-section, the acknowledgment of the return shallbe deemed to be intimation under this sub-sectionwhere either no sum is payable by the assessee orno refund is due to him: Provided further that no intimation under this sub-section shall be sent after the expiry of two yearsfrom the end of the assessment year in which theincome was first assessable. 12.Again there occurred a total recasting of the provisions through Finance Act 2008 w.e.f 1.04.2008, which reads now as follows:- “143.Assessment.-(1)where a return has beenmade under section 139, or in response to a noticeunder sub-section (1) of section 142, such returnshall be processed in the following manner,namely:- (a) The total income or loss shall be computedafter making the following adjustments, namely:- (i) any arithmetical error in the return; or (ii) an incorrect claim, if such incorrect claim isapparent from any information in the return; (b) The tax and interest, if any, shall be computedon the basis of the total income computed underclause (a) ; (c) The sum payable by, or the amount of refunddue to, the assessee shall be determined afteradjustment of the tax and interest, if any,computed under clause (b) by any tax deducted atsource, any tax collected at source, any advancetax paid, any relief allowable under an agreementunder section 90 or section 90A, or any reliefallowable under section 91, any rebate allowableunder Part A of chapter VIII, any tax paid on self-assessement and any amount paid otherwise byway of tax or interest; (d) An intimation shall be prepared or generated and sent to the assessee specifying the sumdetermined to be payable by, or the amount ofrefund due to, the assessee under clause ( c);and (e) The amount of refund due to the assessee inpursuance of the determination under clause (c)shall be granted to the asssessee: Provided that an intimation shall also be sent tothe assessee in a case where the loss declared inthe return by the assessee is adjusted but no taxor interest is payable by, or no refund is due to,him: (d) An intimation shall be prepared or generated and sent to the assessee specifying the sumdetermined to be payable by, or the amount ofrefund due to, the assessee under clause ( c);and (e) The amount of refund due to the assessee inpursuance of the determination under clause (c)shall be granted to the asssessee: Provided that an intimation shall also be sent tothe assessee in a case where the loss declared inthe return by the assessee is adjusted but no taxor interest is payable by, or no refund is due to,him: Provided further that no intimation under this sub-section shall be sent after the expiry of one yearfrom the end of financial year in which the returnis made. Explanation.- For the purposes of this sub-section,- (a) “An incorrect claim apparent from anyinformation in the return’’ shall mean a claim, onthe basis of an entry, in the return,- (i) of an item, which is inconsistent withanother entry of the same or some other itemin such return; (ii) in respect of which the informationrequired to be furnished under this Act tosubstantiate such entry has not been sofurnished; or (iii) in respect of a deduction, where suchdeduction exceeds specified statutory limitwhich may have been expressed asmonetary amount or percentage or ratio orfraction;” 13.Contention raised by learned Senior Counsel is that, an adjustment under Section 143 (1) can be made only with respect to an incorrect claim, if such incorrect claim is apparentfrom any information contained in the return, as per Section 143(1) (a) (ii), as per the provision which stood amended w.e.f1.04.2008, which is applicable with respect to the relevantassessment year. Further, he pointed out that, the explanationprovided to Section 143 (1) (a) elaborates the meaning of what is“an incorrect claim apparent from any information in the return”.According to learned Senior Counsel, the explanation (a) (iii)provides that, in respect of a deduction, where such deductionexceeds the specified statutory limit which may have beenexpressed as monetary amount or percentage or ratio orfraction, based on any entry in the return, alone will come withinthe purview of an “incorrect claim apparent from any informationin the return”. It is the contention that, the said provision relatesonly with respect to deductions and it will not pertain to any claimfor set off. Moreover it is contended that the claim made in thereturn for set off exceed the specified statutory limit is not anaspect apparent from any information in the return and therefore I.T.A. No.35/2014 such an adjustment disallowing the claim for set off is not one coming within the purview of Section 143(1). It is contendedthat, instead, if the assessing authority was of the opinion thatthe claim for set off could not be allowed, the appropriate methodwhich could have been adopted is to make an assessment, aftercomplying with the requirements under Section 143 (2) and 143(3) of the Act. 14. Further contention raised by the appellant-company isthat, the company was undergoing winding up before this courtand was not functional, since the year 2000. It is pointed outthat, the income generated in the assessment year concerned isonly out of the sale of immovable property belonging to thecompany, which according to the appellant, was sold aspermitted by this court for the purpose of rehabilitation. Since thecompany was in the business of real estate development, theproceeds out of such sale has to be considered as incomechargeable during the relevant assessment year. It is pointedout that, under Section 41(5) of the Act, the business loss 14. Further contention raised by the appellant-company isthat, the company was undergoing winding up before this courtand was not functional, since the year 2000. It is pointed outthat, the income generated in the assessment year concerned isonly out of the sale of immovable property belonging to thecompany, which according to the appellant, was sold aspermitted by this court for the purpose of rehabilitation. Since thecompany was in the business of real estate development, theproceeds out of such sale has to be considered as incomechargeable during the relevant assessment year. It is pointedout that, under Section 41(5) of the Act, the business loss sustained during the previous year in which the company ceasedto exist, is entitled to be set off as an income chargeable undersub-Sections (1), (3), (4) and 4(A) of the Act. But there was nooccasion for having any adjudication of such a claim, becausethe proceedings issued was only an adjustment contemplatedunder Section 143(1). It was argued that, if the Revenue hadresorted to the process of assessment as contemplated underSection 143(3), definitely the company could have raised all suchcontentions and the assessing authority would becamecompelled to have an adjudication on such contentions. Bydenying such an opportunity, the intimation was issued underSection 143(1), making the adjustment to the extent ofdisallowing the claim for set off. Hence it is liable to beinterfered, because such adjustment made is beyond the scopeof the powers vested under Section 143(1), is the contention. 15.Learned Standing Counsel, per contra, contendedthat, it is not in dispute that the carried forward business losspertains to the assessment years 1997-1998 and 1998-1999, I.T.A. No.35/2014 and the same can be allowed to be carried forward only upto 8 years 'ie: only upto the year 2008-09’. As the assessment yearconcerned is 2009-2010, the carried forward business losscannot be given set off under Section 72(3) of the Act. Withrespect to the set off claimed against unabsorbed portion ofdepreciation, it is fairly conceded that there is no limitation andhence the finding of the CIT(Appeals) allowing set off in thatrespect, which was confirmed by the Tribunal, is correct andsustainable. 16.According to learned Standing Counsel, the claim forset off made in the return is an incorrect claim apparent from thereturn itself. He placed reliance on the explanation (a) (ii) ofSection 143 (1), which provides that, “an incorrect claimapparent from any information in the return” would include aclaim with respect to which information is required to befurnished under this Act in order to substantiate such entry whichhas not been furnished. Therefore the adjustment made issustainable, is the contention. On the facts it is contended that, the assessee had failed to furnish any information relating to the carried forward business loss. It is pointed out that the companyhad failed to furnish information with respect to the carriedforward loss, as to which assessment year it pertains to; or tofurnish any proof to substantiate that such carried forwardbusiness loss is liable to be set off against the income of thecurrent assessment year. 17.Further contention on behalf of the revenue is that,claim of the assessee that the limitation will not apply becausethe income concerned will fall within the purview of Section41(5), cannot be accepted. It is pointed out that, the companyhad never ceased to exist and there was only a temporarysuspension of business due to the winding up proceedingspending before this court. It is also pointed out that, the incomewith respect to which the set off was claimed will not fall underany of the categories provided under sub Section (1), (3), (4) and(4)(a) of section 41(5). Therefore it is contended that theadjustment made in the return is perfectly legal and valid. I.T.A. No.35/2014 17.Further contention on behalf of the revenue is that,claim of the assessee that the limitation will not apply becausethe income concerned will fall within the purview of Section41(5), cannot be accepted. It is pointed out that, the companyhad never ceased to exist and there was only a temporarysuspension of business due to the winding up proceedingspending before this court. It is also pointed out that, the incomewith respect to which the set off was claimed will not fall underany of the categories provided under sub Section (1), (3), (4) and(4)(a) of section 41(5). Therefore it is contended that theadjustment made in the return is perfectly legal and valid. I.T.A. No.35/2014 18.As already pointed out in the forgoing paragraphs,the provision had undergone drastic changes through FinanceAct, 2008. The premise under which an adjustment withrespect to the computations contained in the return can bemade is in fact streamlined under different provisions introducedthrough the amendment. In the circular issued as ExplanatoryNote to the Finance Act, 2008(Circular No.1/2009 dated27.03.2009) it is mentioned that, intention behind introduction ofthe amended sub-section(1) of Section 143 is to effectcorrections of arithmetical mistakes and adjustments ofincorrect claims, through centralized processing of the returns.Under Clause 28.2 of the above Circular it is mentioned that,under the existed provision of Section 143(1), there was noprovision for correcting the arithmetical mistakes or internalinconsistencies, which led to unavoidable revenue loss. It iswith an object to reduce such revenue loss, sub-Section(1) ofSection 143 of the Income Tax Act was amended to providethat, the total income of an assessee shall be computed under I.T.A. No.35/2014 sub-section (1) of Section 143, after making the adjustments asprovided. 19.In Clause 28.4 of the Circular it is clarified that, suchadjustments shall be made only in the course of computerizedprocessing, without any human interface. It is explained that, inother words, the software would be designed to detectarithmetical inaccuracies and internal inconsistencies and tomake appropriate adjustments in computation of the totalincome. It is to facilitate such process that the amendments areintroduced by incorporating sub-sections (a), (b) and (c) toSection 143(1). 20.As argued by learned Senior Counsel for theappellant, the legislative intention in bringing the drasticamendments to Section 143(1) itself was to streamline scope ofthe adjustments and the disallowances which could be effectedwhile scrutinizing the return through the computerized processknown as 'Centralized Processing of Returns', without anyinterference of the assessing authority. I.T.A. No.35/2014 21.Confronting the arguments of the Standing Counselwith respect to the failure to furnish information to substantiatethe claim for set off, learned Senior Counsel for the appellantpointed out that, there exists no statutory requirement orobligation to furnish any information or supporting documentsfor establishing such a claim, while submitting the return.Therefore the claim cannot be termed as an incorrect claimapparent from any information contained in the return, fallingwithin the categories provided in sub-section (a)(ii) of Section143(1). He placed a decision of the High Court of Madras inCommissioner of Income-Tax v. C.S. Kothari[(2006) 286 ITR397(Mad). While upholding the findings of the Tribunal withrespect to the scope of Section 143(1)(a), in a matter ofexclusion made with respect to the interest payable underSections 234A, 234B and 234C, that court observed that,determination of such question ought to have been made by theAssessing Officer only under Section 143(2) of the Act and notunder Section 143(1)(a). It was observed that, it may be true I.T.A. No.35/2014 I.T.A. No.35/2014 that after exhausting procedure contemplated under Section143(2) of the Act, the consequence may be the same. But theissue is whether the Assessing Officer can make the adjustmentunder Section 143(i)(a), especially when the same is adebatable one. It was found that, the Tribunal had correctly setaside the order of the Assessing Officer issued under Section143(1)(a). 22.While evaluating the rival contentions, this courttakes note of the fact that, the disallowance of the claim for setoff was made as an adjustment coming within the purview ofSection 143(1), on the basis that it is an incorrect claim made,which is apparent in the information contained in the return.But, from the return, it is not discernible as to which period thecarried forward business loss pertains to. It is admitted by theappellant that, information furnished in the schedule attached tothe return, with respect to the year for which the carried forwardbusiness loss pertains to, is incorrect. But at the same time it isnot apparent from any information contained in the return as to which exactly is the year with respect to which the business losswas accrued. Further we cannot accept the contention of therevenue that there occurred any failure on the part of theassessee to furnish any information in order to substantiatesuch an entry of the claim for set off. This is specificallybecause, no statutory provision can be pointed out whichmandates the assessee to furnish any such information, apartfrom furnishing details in the return itself. Therefore, we are notin a position to hold that, there exists an incorrect claimapparent from any information contained in the return itself, withrespect to which an adjustment could be made by invokingSection 143(1) of the Act. The learned Standing Counsel hadpointed out that, the assessee had to concede that the carriedforward business loss pertains to an year beyond the statutoryperiod of 8 years and the claim is unsustainable. But the crucialquestion is as to whether it is a debatable point upon whichdetermination through a process of adjudication is required ornot. In other words, whether it is a matter which is falling within any of the stipulated categories under Section 143(1) of the Act,is the question. As pointed out in the decision of the MadrasHigh Court in C.S. Kothari(cited supra), even by exhausting theprocedure prescribed under Section 143(2) of the Act, theconsequences may be the same. But whether the adjustmentmade by disallowing the claim, categorizing it as an incorrectclaim apparent from the return itself, is correct or not, is thequestion to be decided. The question can only be answeredwith a big 'no'. This is more so because, the appellant companyhad also placed a claim under Section 41(5) of the Act.Learned Standing Counsel had pointed out that, the AppellateTribunal had already considered the contention of the assesseebased on Section 41(5) and found it to be not sustainable. It isargued that the appellant is not in a position to impugn such afinding successfully, even before this court. But the crucialquestion in deciding the appeal is not as to whether the claim ofthe assessee under Section 41(5) is sustainable or not. On theother hand, the issue is with respect to sustainability of the I.T.A. No.35/2014 intimation issued under Section 143(1). For reasons elaborated as above, we are persuaded to find that, the intimation issuedunder Section 143(1) suffers from legal infirmity and cannot be sustained. The reasoning mentioned by the appellate Tribunalto reverse the findings of the CIT(Appeals) cannot be sustained. However, we make it clear that this judgment will not stand inthe way of the revenue taking any steps for assessment underSection 143(3) to the extend permissible under law. Thereforethe questions of law is answered in favour of the assessee andagainst the revenue. In the result, the above appeal is allowed and the I.T.A. No.35/2014 intimation issued under Section 143(1). For reasons elaborated as above, we are persuaded to find that, the intimation issuedunder Section 143(1) suffers from legal infirmity and cannot be sustained. The reasoning mentioned by the appellate Tribunalto reverse the findings of the CIT(Appeals) cannot be sustained. However, we make it clear that this judgment will not stand inthe way of the revenue taking any steps for assessment underSection 143(3) to the extend permissible under law. Thereforethe questions of law is answered in favour of the assessee andagainst the revenue. In the result, the above appeal is allowed and the impugned order of the Income Tax Appellate Tribunal, CochinBench in ITA No.118/Coch/2012 is hereby set aside. Sd/- C.K. ABDUL REHIM, JUDGE. ul/mpm/- Sd/- R.NARAYANA PISHARADI, JUDGE.