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General Mechanical Works Vs. Third Income-tax Officer, Hubli Circle, Hubli - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberWrit Petition No. 8026 of 1977
Judge
Reported in(1981)23CTR(Kar)122; ILR1981KAR915; [1981]131ITR273(KAR); [1981]131ITR273(Karn)
ActsIncome Tax Act, 1961 - Sections 142(1), 144 and 146
AppellantGeneral Mechanical Works
RespondentThird Income-tax Officer, Hubli Circle, Hubli
Excerpt:
.....return of income or the assessment year 1974-75. in the result, a notice under s. the trading and profit and loss account filed along with the return contained an application duly typed praying that the return was being filed and the failure to respond to the notice under s. 142(1) of the act was due to unavoidable circumstances, as one of the partners was not well and there was no mala fide failure to produce the accounts. 146 of the act and dispose of the same on merits, having failed to get departmental redress. having failed to do so, he has failed to discharge the legal duty case upon him under the act. 8. before parting with this case it must be observed that in these matters assessee sometimes without the assistance of trained personnel like chartered accountants, advocates or..........there is no dispute that the assessment order dated march 13, 1975, was served on the petitioner-firm on march 21, 1975. there is no dispute that a prayer has been made to set aside the assessment order dated march 13, 1975, for the reasons given therein at the end of the trading and profit and loss account filed by the firm along with its belated return. therefore, the question is whether this court should hold that a bit of typewriting in the trading and profit and loss account as an application made under s. 146 of the act. it is significant to notice that no form for an application under s. 146 of the act has been prescribed under the act or the rules made thereunder. no doubt, there is a dispute as to whether that application has been duly signed, while at the same time, the 3rd.....
Judgment:

Chandrakantaraj Urs, J.

1. In this petition, the short question that calls for an answer is whether the purported application made by the petitioner admittedly received by the revenue on March 26, 1975, can be construed as an application made under s. 146 of the I.T. Act, 1961. (hereinafter referred to as 'the Act').

2. The facts leading to this petition may be briefly stated as follows :

3. The petitioner is a partnership firm consisting of five partners. It was registered under the Act up to the assessment year 1973-74. For the assessment year 1974-75, the petitioner filed a declaration in Form No. 12 for continuing the registration with the department. But the firm, however, failed to file the return of income or the assessment year 1974-75. In the result, a notice under s. 142(1) of the Act was issued and served on the petitioner on February 5, 1975. Even then no return was filed. In the result, on March 13, 1975, respondent, 3rd ITO, Hubli Circle, Hubli, proceeded to assessee the petitioner-firm under s. 144 of the Act. It is claimed for the petitioner that on March 14, 1975, itself on coming to know of the ex parte assessment order under s. 144 of the Act, a return for the relevant assessment year 1974-75, together with the trading and profit and loss account, was filed before the respondent. The trading and profit and loss account filed along with the return contained an application duly typed praying that the return was being filed and the failure to respond to the notice under s. 142(1) of the Act was due to unavoidable circumstances, as one of the partners was not well and there was no mala fide failure to produce the accounts. There was prayer to set aside the ex parte order and reopen the case so that the petitioner could be heard in regard to the assessment of the firm for the relevant assessment year 1974-75. For some time, no order was passed on the return and the application filed by the petitioner-firm as stated above. However, with reference to the letter dated July 23, 1975, written by he firm to the respondent, a letter came to be addressed to the firm stating that the purported application under s. 146 of the Act which was typed on the right hand side of the manufacturing and trading and profit and loss account for the year ended March 31, 1974, had not been signed by the firm, though the trading and profit and loss account itself had been signed by one of the partners at the bottom of the contents of the application. The 2nd respondent in the said letter stated that the application had been typed in the trading the profit and loss account sheet because the managing director had signed at the bottom. He further stated that the trading and profit and loss account was signed on march 14, 1975, whereas the assessment order under s. 144 of the Act was made on March 13, 1975, which was served on the firm only on March 21, 1975. Therefore, he informed the firm that an application under s. 146 of the Act could not be anterior to the date of service of the assessment order made under s. 144 of the Act. The petitioner-firm was informed that there was no application under s. 146 of the Act of which the 2nd respondent could take cognizance. Therefore, the question of passing an order did not arise. Aggrieved by the letter dated July 29, 1975, issued by the respondent, the petitioner-firm has moved this court under art. 226 of the Constitution for issue of a writ of mandamus or a direction or an order in the nature of mandamus directing the respondent to treat what has been filed as an application under s. 146 of the Act and dispose of the same on merits, having failed to get departmental redress.

4. The learned counsel appearing for the respondent-revenue has made available the records to the court. There is no dispute regarding the passing of the assessment order ex parte under s. 144 of the Act. There is also no dispute that no return was filed till March 26, 1975. There is no dispute that the assessment order dated March 13, 1975, was served on the petitioner-firm on March 21, 1975. There is no dispute that a prayer has been made to set aside the assessment order dated March 13, 1975, for the reasons given therein at the end of the trading and profit and loss account filed by the firm along with its belated return. Therefore, the question is whether this court should hold that a bit of typewriting in the trading and profit and loss account as an application made under s. 146 of the Act. It is significant to notice that no form for an application under s. 146 of the Act has been prescribed under the Act or the Rules made thereunder. No doubt, there is a dispute as to whether that application has been duly signed, while at the same time, the 3rd respondent admits that at the bottom of the typewritten matter there is a signature of the managing partner which bears the date March 14, 1975. I have earlier stated that no application could have been made before March 26, 1975, because the seal of the ITO, Hubli Circle, Hubli (rubber stamp), bears that date evidencing the receipt of that return together with the enclosures thereto. That should be believed because the return itself has been dated March 20, 1975, and it could not have been filed on March 14, 1975. It this position is made clear what follows from that is that an application was made in one of the documents attached to the return filed on March 26, 1975, under s. 146 of the Act. The fact that it has not been separately signed in the trading and profit and loss account in itself will not render the application a bogus one as long as the firm itself claims that it has make such an application. It may be a matter of convenience that the application was typed out at the end of the trading and profit and loss account and only one signature was affixed at the appropriate place marked for the signature. This is itself would not constitute sufficient ground for the respondent to hold that there was no property signed application. It is true that the application could have been made on a separate sheet of paper. But once something is put in writing and the statement of facts or the prayer made are clear and with reference to a particular object that s. 146 of the Act contemplates, I find it difficult to accept the reasoning of the respondent ITO that he could not construe it as an application under s. 146 of the Act validly made.

5. Similarly, the argument is that it has been presented before the assessment order was made. That is belied by the fact that the return itself was received in the office on march 26, 1975, and, therefore, anything attached to the return also must have been received on that date only. Hence, to imagine that the application was presented on March 14, 1975, the date borne on the trading and profit and loss account is to over-look actual facts.

6. I have already given the reasons that the return itself is dated March 20, 1975. Therefore, it could not have been presented before that date, i.e., march 14, 1975. Whatever may be the merits of the application, since there is substantial compliance with the requirements of s. 146 of the Act, inasmuch as there is a prayer to set aside the assessment order for the reasons given in the application or in the writing, the officer should have disposed of that application on merits, as it was a duly made application. Having failed to do so, he has failed to discharge the legal duty case upon him under the Act. Even an improperly made application must be rejected by an order made under s. 146 of the Act for reasons to be stated. Such rejection cannot assume the form of a communication as at Ex. A.

7. In the result, ignoring Ex. A, the 1st respondent is directed to consider the application which is to be found in the trading and profit and loss account annexed to the return filed on March 26, 1975, in the office of the 3rd respondent, within two months from the date of receipt of this order, on its merits and by a formal order made under s. 146 of the Act.

8. Before parting with this case it must be observed that in these matters assessee sometimes without the assistance of trained personnel like chartered accountants, advocates or tax practitioners may many a time present the documents involving complicated questions of law to the ITO and other authorities under the Act without realising the gravity of their mistake or need for caution and proper advice and guidance. That should not be taken serious notice of by the authorities functioning under the Act. The object is that justice must be done which the authorities under the Act are required to disponse. Therefore, one could not look at these acts of untrained individuals even if it be a firm, as in the instant case, but must look to the substance of the matter. If there is sufficient and substantial compliance o the requirements of law, then the application should be disposed of on merits.

9. Rule is made absolute. A direction will issue as indicated above. There will be no order as to costs.


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