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income-tax Officer Vs. Smt. A. Brahmaramba - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Hyderabad
Decided On
Judge
Reported in(1984)8ITD232(Hyd.)
Appellantincome-tax Officer
RespondentSmt. A. Brahmaramba
Excerpt:
.....is aggrieved before us. the submission of the learned departmental representative was that since return filed on 25-2-1976 showed as previous year the period ending on 31-3-1976, it was a return for the complete previous year ended 31-3-1976 and since the return was already on record and remained undisposed of though it was filed prior to the commencement of the financial year, it was a valid return and had to be considered as return under section 139 by the ito. therefore, his processing of the said return by issue of a notice under section 143(2) later was in order and the completion of the assessment was also in order. in support of his contention, the learned departmental representative relied on the judgment of the supreme court in cit v. s.raman chettiar [1965] 55 itr 630. yet.....
Judgment:
1. This appeal relates to the assessment year 1976-77 and is by the revenue. The name of the assessee as shown in the assessment order is as under: 1. Smt. Alapati Brahmaramba, wife and legal representative of late Shri Alapati Bhaskara Ramaiah.

2. Shri A. Shantaram, son and legal representative of Late Shri Alapati Bhaskara Ramaiah.

The status mentioned is that of HUF (specified). The ITO had on 5-2-1976 issued a notice under Section 175 read with Section 144 and Section 139(2) of the Income-tax Act, 1961 ('the Act') addressed to 'Smt. Alapati Brahmaramba, wife of late Alapati Bhaskara Ramaiah'. A return was filed on 25-2-1976 in the name in which the notice was issued. The status was shown as HUF. The ITO made an endorsement in the order sheet dated 25-2-1976 mentioning 'assessee's letter stating that the sale of the properties is not yet confirmed. In this view of the matter, no further action is considered necessary as the things stand'.

The matters were left to lie there for sometime.

2. Thereafter the ITO took up the assessment for the year 1977-78 and found that Bhaskara Ramaiah had been assessed in the status of HUF consisting of himself and his wife and that the assessee had filed an insolvency petition in the Court of First Additional District Judge and in the meanwhile Bhaskara Ramaiah died and the Court appointed an official receiver to look after the properties of the deceased insolvent. One of the properties, i.e., 'Syamala Talkies' was sold in the Court auction on 29-12-1975 for a total consideration of Rs. 12,46,732 including a mortgage debt on the property. The sale was confirmed on 17-7-1976. Thereafter it is mentioned in the assessment order for 1977-78 that the wife of Shri Bhaskara Ramaiah had replied to the notice under Section 175 that she thought all the properties were vested with the official receiver and notice under Section 175 had been issued to the official receiver on 9-8-1976 and in response thereto the official receiver also filed a nil return on 16-10-1976. In view of the date of confirmation of sale, i.e., 17-7-1976, the ITO brought to tax capital gain for the assessment year 1977-78. That order of assessment dated 17-5-1977 for the assessment year 1977-78 was set aside by the Commissioner (Appeals), since the date of transfer was held to be 29-12-1975, i.e., the date of Court auction and not the date of confirmation.

3. In this background the ITO took up the matter for the assessment year now under consideration, i.e., 1976-77 and issued a notice under Section 143(2) of the Act and eventually completed the assessment for this year including the capital gains. The total income assessed was Rs. 6,39,840.

4. The assessee appealed and it was contended before the Commissioner (Appeals) that the assessment as made was invalid because there was no jurisdiction to invoke the provision of Section 175. The Commissioner (Appeals) held the order passed by the ITO under Section 175 to be invalid and cancelled the same for the following reasons: (i) There is no evidence to show that the appellant was likely to alienate its property for avoiding any tax liability and, therefore, the provisions of Section 175 are not applicable in this case; (ii) The ITO had closed the action under Section 175 on 25-2-1976 by his endorsement in the order sheet and, therefore, he could not have once again proceeded under that action without issue of a fresh notice; and (iii) The ITO should have taken recourse to the normal provisions of Section 139 or Section 147 of the Act read with Section 139 if he wanted to assess the capital gains after the commencement of the assessment year 1976-77, i.e., after 1-4-1976.

5. The revenue is aggrieved before us. The submission of the learned departmental representative was that since return filed on 25-2-1976 showed as previous year the period ending on 31-3-1976, it was a return for the complete previous year ended 31-3-1976 and since the return was already on record and remained undisposed of though it was filed prior to the commencement of the financial year, it was a valid return and had to be considered as return under Section 139 by the ITO. Therefore, his processing of the said return by issue of a notice under Section 143(2) later was in order and the completion of the assessment was also in order. In support of his contention, the learned departmental representative relied on the judgment of the Supreme Court in CIT v. S.Raman Chettiar [1965] 55 ITR 630. Yet another contention put forth by the learned departmental representative was that even if there was any procedural mistake then, the provisions of Section 292B of the Act would come into play on the facts of the present case and the return would have to be considered as a valid return. He also urged that the assumption of jurisdiction under Section 175 was valid.

6. The learned counsel for the assessee relied on the findings of the Commissioner (Appeals) and stressed that as initiation of proceedings under Section 175 was invalid, the entire assessment would fall to be cancelled.

7. We have considered the rival submissions. Resort could be had to the provisions of Section 175 only if it appeared to the ITO during the current assessment that a person was likely to charge, sell, transfer, dispose of, or otherwise part with any of his assets with a view to avoiding payment of any liability under the provisions of the Act. The present was a case where a property of the assessee was being brought to sale in a Court auction for payment of certain debts. The sale was confirmed by the Court eventually. In the circumstances such sale could never have been with a view to avoiding payment of any tax liability.

Hence, the requirement which is a presequisite for initiation of action under Section 175 was not satisfied and the assumption of jurisdiction by issue of a notice dated 5-12-1976 by the ITO for the year 1976-77 was void. When the assumption of jurisdiction was void, proceedings pursuant thereto would also be void. On this ground, the Commissioner (Appeals) was justified in cancelling the assessment.

8. Coming to the other contentions of the learned departmental representative, the judgment of the Supreme Court in the case of S.Raman Chettiar (supra) was a case where the notice issued under Section 34 of the Act was invalid and the assessee filed a return dated 4-9-1948 for the assessment year 1944-45 which was acted upon and the Court held that it was a return within the meaning of Section 22(3) of the Indian Income-tax Act, 1922, and was, therefore, not an invalid return. It is clear that the said return was filed subsequent to the assessment year to which it related.

9. In the present case, the return was filed on 25-2-1976. This date fell prior to 31-3-1976. Therefore, even if the assessee had mentioned the last date of the previous year as 31-3-1976, income for the period subsequent to the filing of the return and till 31-3-1976 could at best have been returned only on estimate. One can file any return of income on estimate only if the provisions for accelerated assessment come into play and not otherwise. In the present case we have held that such provisions were not validly invoked. Under the provisions of Section 139(4), a person who has not furnished a return within time allowed to him under Sub-section (1) or Sub-section (2) of Section 139 can file a return before the assessment is made. The present is not a case where the assessee had not furnished the return within the time allowed under Section 139(1) or 139(2), the assumption of jurisdiction under Section 175 having been held to be void by us. Since the assumption of jurisdiction under Section 175 has been held to be void by us, it would not be open even to presume that the provisions of Section 174 of the Act would come into play and even to raise the contention in the light of Section 174(4) that the return has to be construed as one filed under Section 139(2) and if it is so construed, the provisions of Section 139(4) will apply. Our conclusion, therefore, is that the Commissioner (Appeals) was justified in cancelling the assessment made in the present case as without jurisdiction.

10. Coming to the provisions of Section 292B, the said provisions read as under: No return of income, assessment, notice, summons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.

This is not a case where there has been any mistake, defect or omission in the return of income nor is there any mistake, defect or omission in the notice issued under Section 175. This is because notice so issued cannot be construed to be in substance or effect in conformity with or according to the intent or purpose of the Act. The intent or purpose of Section 175 is only to permit an accelerated assessment if the ITO consider that a transfer of property was likely to take place with a view to avoid payment of any liability. Such is not the intention here.

11. The result is, the order of the Commissioner (Appeals) is upheld and the appeal of the revenue is dismissed.


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