JUDGMENT
S. Sankarasubban, J.
1. Revenue is the appellant. Question that arises for consideration in this case is whether after the notice was issued under Section 143(2) of the IT Act (hereinafter referred to as the Act’), proceedings under Section 143(1)(a) of the Act can continue. The facts leading to the case are as follows :
2. Assesses is a co-operative society running spinning mills. For the asst. yr. 1991-92, the assessee filed the return on 3rd Oct., 1991, showing total loss of Rs. 3,27,12,950, which was after setting off of the unabsorbed business loss of earlier years amounting to Rs. 4,03,72,310. The return was processed under Section 143(1)(a) of the Act by intimation dt. 26th Nov., 1992. Even after this adjustment, the net result was loss. The assessee filed an appeal, before the first appellate authority challenging the said prima facie adjustments and consequential levy of additional tax. The CIT(A) vide his order dt, 21st Aug., 1995, remitted back two items of prima facie adjustments to be considered by the AO in the light of Circular No. 669, dt. 25th Oct., 1993, and confirmed the levy of additional tax. Aggrieved by the above order, the assessee approached before the Tribunal. The only, question is whether the notice under Section 143(2) of the Act bars the proceedings under Section 143(1)(a) of the Act. For this purpose, we have to examine the provisions of the Act.
3. Chapter XIV of the Act deals with the procedure for assessment. Section 139 of the Act says that every person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. Section 143(1)(a) of the Act deals with assessment. The freedom of the assessee is controlled by Section 143(2) of the Act. According to the procedure reopening of the assessment should be kept in the file. Here, the question is whether after the issue of notice under Section 143(2) of the Act, Section 143(1)(a) proceedings can continue. According to us the argument is acceptable. Under Section 143(1)(a) summary assessments are made by the ITO. But under Section 143(2) what is done is a regular assessment. The effect under Section 143(1)(a) is only an assessment on the basis of the records produced. But if the officer feels that further enquiry is necessary he has to issue notice under Section 143(2) of the Act.
4. Thus, we see that there is no necessity for the continuance of Section 143(1)(a) proceedings after the notice under Section 143(2) is issued. To the above effect, there is a decision Modern Fibotex India Ltd. and Anr. v. Dy. CIT and Ors. (1995) 212 ITR 496 (Cal) of Calcutta High Court. In the above decision, the Calcutta High Court held as follows:
“The third limitation on the exercise of the powers under Section 143(1)(a) is that 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). 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 deliberate because of the difference in the nature of the two sections. The jurisdiction under Section 143(1)(a) is a summary one, whereas Section 143(2) precedes an assessment under Section 143(3). 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 Act, the setting in which the direction is given and the consequences that would follow from the infringement of the direction and other such considerations. 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 that where there is no scope for any adjustments in terms of the proviso, there would be no scope for sending any intimation.”
Hence, we dismiss the appeal filed by the Department.