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Commissioner of Income-tax Vs. M.K. Gupta - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 965 of 1972
Judge
Reported in(1978)7CTR(All)36; [1988]113ITR473(All)
ActsIncome Tax Act, 1961 - Sections 139, 274(1) and 292B
AppellantCommissioner of Income-tax
RespondentM.K. Gupta
Appellant AdvocateAshok Gupta, Adv.
Respondent AdvocateK.B. Bhatnagar, Adv.
Excerpt:
- .....he had private practice also. on 28th august, 1962, he filed a return in form no. 4 disclosing his total income as rs. 21,680 out of which a total sum of rs. 18,000 was disclosed as the income from profession. the department received information that the assessee's income was much more. the income-tax officer issued a notice under section 274(1) of the income-tax act, 1961, on 28th september, 1962. the assessee then filed a return in form no. 2 on 29th november, 1962. in this return he disclosed a total income of rs. 43,930, out of which rs. 40,000 was declared as income from private practice.2. the income-tax officer computed his total income at rs. 67,944, which included a sum of rs. 64,014 as income from private practice. in appeal, the appellate assistant commissioner reduced the.....
Judgment:

Satish Chandra, J.

1. Dr. M.K. Gupta, the assessee, was employed as a physician in P.L. Sharma Hospital, Meerut. During the relevant assessment year 1962-63, he was an authorised medical attendant for Central Government employees. He had private practice also. On 28th August, 1962, he filed a return in Form No. 4 disclosing his total income as Rs. 21,680 out of which a total sum of Rs. 18,000 was disclosed as the income from profession. The department received information that the assessee's income was much more. The Income-tax Officer issued a notice under Section 274(1) of the Income-tax Act, 1961, on 28th September, 1962. The assessee then filed a return in Form No. 2 on 29th November, 1962. In this return he disclosed a total income of Rs. 43,930, out of which Rs. 40,000 was declared as income from private practice.

2. The Income-tax Officer computed his total income at Rs. 67,944, which included a sum of Rs. 64,014 as income from private practice. In appeal, the Appellate Assistant Commissioner reduced the taxable income by Rs. 9,000. In further appeal, the Tribunal reduced the income from private practice to Rs. 40,000.

3. As the minimum penalty imposable exceeded Rs. 1,000, the Income-tax Officer referred the case to the Inspecting Assistant Commissioner. The Inspecting Assistant Commissioner rejected the contention raised by the assessee and ultimately levied a penalty of Rs. 10,000. The assessee preferred an appeal against this order.

4. The Tribunal held that the original return filed by the assessee on 28th August, 1962, not being in the prescribed form, was an invalid return and it call be ignored by the Income-tax Officer. Hence, no valid proceedings could be undertaken on the basis of that return. The imposition of penalty was consequently illegal.

5. At the instance of the department, the Tribunal has referred the following question for our opinion :

'Whether, on the facts and in the circumstances of the case, the penalty imposed on the assessee was invalid for the reason that the assesseehad filed a return in the wrong form and that, therefore, no assessment proceedings was pending before the Income-tax Officer and consequently there was no scope for taking penalty proceedings under Section 271(1)(c) of the Income-tax Act, 1961 ?'

6. The short question which requires our consideration is whether the return filed on 29th August, 1962, in Form No. 4 was a valid return.

7. Section 139 of the Income-tax Act, 1961, provides that the return of income 'shall' be in the appropriate prescribed form. Rule 12 of the Income-tax Rules also gives a mandatory direction. It provides that the return of income shall be furnished, of the various categories of clauses mentioned, in the form prescribed for it. For an individual having professional income besides salary, the prescribed form was Form No. 2. In view of the provisions of the Act and the rules, it was mandatory for the assessee to have filed a return in Form No. 2. The original return was in Form No. 4. Prima facie it can be said that it was not a return in accordance with the provisions of the Act and the rules. It could be ignored by the Income-tax Officer and he should not have persisted to compute the total income of the assessee according to his judgment. This view is supported by a decision of this court in Abhey Ram Chunni Ltd. In re : [1933]1ITR126(All) . In that case, an incomplete return was filed. It was held that it could not be said to be a return under Sub-section (2) of Section 22, as it was not a return of the total income, and so the Income-tax Officer could ignore it and compute the income under Sub-section (4) of Section 23. In Lal Mohammed Sardar Mohammad v. Commissioner of Income-tax the assessee filed a return without complying with the requirement of note 5(a) in the form. It was held that the return was invalid and could be ignored by the Income-tax Officer. To the same effect is the decision of the Nagpur High Court in Waman Padmanabh Dande v. Commissioner of Income-tax . We are, therefore, in agreement with the view taken by the Tribunal that the earlier return filed by the assessee on August 28, 1962, was liable to be ignored and so the penalty was not imposable.

8. Learned counsel for the department has invited our attention to the case of Director of Inspection of Income-tax v. Pooran Mall & Sons : [1974]96ITR390(SC) . That case was on Section 132(5) of the Income-tax Act, which prescribes limitation. It was held that since it is for the benefit of the person whose property has been seized, he could waive it. No such situation arises in this case. On the other hand, the assessee in the present case was quick enough to file a return in the proper form.

9. Learned counsel also drew our attention to Section 292B of the Income-tax Act, 1961, which says that no return of income furnished under this Act shall be invalid merely by reason of any mistake, defect oromission in such return of income, if it, in substance and effect, is in conformity with or according to the intent and purpose of this Act. This section was introduced into the Act with effect from 1st October, 1975. To us it appears that this section is not retrospective in its operation. It will hence not govern the return filed prior to its coming into force. Prior to the introduction of this section the legal position, as expressed by various High Courts, was that a defective return was an invalid return and could be ignored by the Income-tax Officer. This provision makes a clear departure from the pre-existing legal position. For that reason also it cannot be held that this section is retrospective in its operation.

10. In the result we answer the question referred to us in the affirmative, in favour of the assessee and against the department. The assessee will be entitled to his costs, which are assessed at Rs. 200.


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