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Harmanjit Trust Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberIncome-tax Reference No. 10 of 1977
Judge
Reported in(1984)44CTR(P& H)223; [1984]148ITR214(P& H)
ActsIncome Tax Act, 1961 - Sections 11(2), 139(1) and 139(2); Income Tax Rules, 1962 - Rules 13 and 17
AppellantHarmanjit Trust
RespondentCommissioner of Income-tax
Appellant Advocate N.K. Sodhi, Adv.
Respondent Advocate Ashok Bhan and; A.K. Mittal, Advs.
Excerpt:
.....ito [1978]113itr772(all) ,a case which arose in writ jurisdiction in the backdrop of a prayer for extension of time for furnishing the return and for continuance of registration of a firm, it was held that when the ito had not communicated any order to the firm on receipt of the application for further extension, the assessee could well have entertained the belief that its request for extension of time had been granted, and since the commissioner had not applied his mind to such a relevant aspect, the order of the commissioner revealing such manifest error of law was quashed. thus, the predominant view in various high courts is that the assessee can well presume that his request for extension of time for furnishing the return had been granted, unless the ito well in time communicates to..........or sub-section (2) of section 139, whether fixed originally or on extension, for furnishing the return of income. and the text of form no. 10 conforms to the time limit as set under rule 17 to convey that before the expiry of the time originally fixed, or the time for which extension had been granted, the return of income shall be furnished by the assessee. in other words, if the assessee is a person who intends to claim benefit under section 11 of the act, he must do so before the time for filing the return stands run out, whether fixed originally or on extension. thus, for the purposes of construing rule 17, the language of rule 13 and the statutory form no. 6 can neither be ignored nor isolated. if the date for furnishing the return of income can be extended retrospectively for the.....
Judgment:

M. M. Punchhi, J.

1. On the direction of this court under Section 256(2) of the I.T. Act, 1961, the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh, has referred the following question of law for settlement:

' Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the order of the income-tax authorities denying exemption under Section 11(2) of the Income-tax Act, 1961, to the assessee on the ground that it had failed to give notice in Form No. 10 within the time prescribed by Rule 17 of the Income-tax Rules, 1962?'

2. The assessee is a trust. It came into existence on March 1, 1962. Up to the assessment year 1970-71, the trust used to derive income from donations and interest but in the succeeding year 1971-72, the assessment year relevant, the assessee had also income from property. In order to claim exemption under Section 11(2) of the said Act, the assessee in the first instance, filed an application on June 28, 1971 (annex. 'D' with the statement), praying to the ITO that for the assessment year in question, return was to be filed before June 30, 1971, but time be extended uptill July 31,1971. It attracted no response from the ITO. Then again on July 28, 1971, a similar request was repeated (annex. 'E' with the statement) whereby time was sought to be extended uptill August 31, 1971. This too solicited no response from the ITO. Suggestedly, a form (annex. ' F ' with the statement) has been prescribed under the Rules to be used by the ITO for intimating to the assessee either granting extension of time up to a particular date or, in the alternative, a regret that time cannot be extended. As said before, no such intimation was sent to the assessee. However, before the expiry of the second afore-referred date, i.e., August 31, 1971, the assessee filed its return and the application for exemption underSection 11(2).

3. The ITO took the view that the notice given by the assessee for exemption of the accumulated income under Section 11(2) read with Rule 17 of the I.T. Rules, 1962, was out of time and as such the assessee could not claim exemption in respect of its accumulated income. On appeal, the AAC affirmed such view of the ITO. On further appeal, the Tribunal took the view that in order to claim exemption in respect of its accumulated income, the assessee should have filed the application in the requisite form before the expiry of the time allowed under Sub-section (1) or Sub-section (2) of Section 139, whether fixed originally or on extension, for furnishing the return of its income. Noting that the time for filing the return under Section 139(1), in the instant case, expired on June 30, 1971, and the assessee had not given any such application in the requisite form before the ITO before that date, the Tribunal held that the authorities below were justified in rejecting the claim of the assessee under Section 11(2)(a). Such view was apparently taken since the assessee had not in its hand the grant of extension of time up to July 31, 1971, as originally prayed for, and further uptill August 31, 1971, as extendedly prayed for. The matter was then brought by the assessee to this court and he succeeded in claiming a mandamus in obedience to which the question above-noted has been referred to this court for answer.

4. As is plain from the proviso to Section 139(1) of the Act, the assessee has been conferred a right to make an application in the prescribed manner to the ITO praying for extending the date for furnishing the return and the ITO may, in his discretion, extend such date. Rule 13 of the I.T. Rules, 1962, prescribed that for the said purpose, Form No. 6 be employed. In the text of Form No. 6 there is an option exercisable by deleting inappropriate words to suit the assessee's needs. The option is between that ' it is not possible ' for the assessee or ' has not been possible ' for the assessee to file the return before the said date. It is plain therefrom that extension of time can be prayed for before or even after the expiry of the date fixed for filing the return. Specifically in Karam Singh v. CIT ,a Division Bench of this court has held that the proviso to Section 139(2) which pari materia is the same as the proviso to Sub-section (1) of Section 139 does not contain any limitation to the effect that an application for extension of time should be filed within the time originally prescribed and that such an application can be made even after the expiry of the prescribed date.

5. In relation to claiming exemption conceived of under Sub-section (2) of Section 11, Rule 17, prescribes that Form No. 10 be employed for the purpose which shall be delivered by the assessee to the ITO before the expiry of the time allowed under Sub-section (1) or Sub-section (2) of Section 139, whether fixed originally or on extension, for furnishing the return of income. And the text of Form No. 10 conforms to the time limit as set under Rule 17 to convey that before the expiry of the time originally fixed, or the time for which extension had been granted, the return of income shall be furnished by the assessee. In other words, if the assessee is a person who intends to claim benefit under Section 11 of the Act, he must do so before the time for filing the return stands run out, whether fixed originally or on extension. Thus, for the purposes of construing Rule 17, the language of Rule 13 and the statutory Form No. 6 can neither be ignored nor isolated. If the date for furnishing the return of income can be extended retrospectively for the purposes of Section 139 and be a legally extended date for furnishing the return of income, it logically follows that notice under Rule 17 to be given to the ITO under Sub-section (2) of Section 11 in Form No. 10 can also be delivered to him before the expiry of the time as extended under Sub-section (1) or (2) of Section 139 for furnishing the return. Thus, the core question before the I.T. authorities was whether the time for furnishing the return of income under Section 139 stood extended. And, in that context, the plea of the Revenue was, and is, that there was no such order by the ITO for the purpose.

6. The matter is not res integra. A Division Bench of this court in Addl. CIT v. Roshan Lal Kuthiala , affirmedly held a pure question of fact, the view taken by the Tribunal that the assessee had reasonable cause for not filing the return up to the period the return remained unfiled, because the assessee's submission asking for time to extend the period remained unreplied by the ITO, and the assessee could be taken to be under a reasonable belief that his request had been acceded to, and, therefore, the assessee was under no obligation to file a return (before that date). In CIT v. Ramdas and Sons : [1980]123ITR889(Patna) , a Division Bench of the Patna High Court took the view that when applications for extension of time were not replied by the ITO, the assessee could presume that his request for extension of time had been granted and thus the assessee had reasonable cause for not filing the return by the due date. And, lastly, the Allahabad High Court in Jan Daood and Co. v. ITO : [1978]113ITR772(All) , a case which arose in writ jurisdiction in the backdrop of a prayer for extension of time for furnishing the return and for continuance of registration of a firm, it was held that when the ITO had not communicated any order to the firm on receipt of the application for further extension, the assessee could well have entertained the belief that its request for extension of time had been granted, and since the Commissioner had not applied his mind to such a relevant aspect, the order of the Commissioner revealing such manifest error of law was quashed. Duty was cast on the ITO to intimate to the assessee whether its request for extension of time for furnishing the return had been granted or refused. Thus, the predominant view in various High Courts is that the assessee can well presume that his request for extension of time for furnishing the return had been granted, unless the ITO well in time communicates to the assessee his refusal. And it is precisely for this reason that Form I.T.N.S. (annex. ' F ' with the statement) has been provided for use of the ITO to convey grant or refusal of extension of time. The lone voice of the Andhra Pradesh High Court in T. Venkata Krishnaiah and Co. v. CIT : [1974]93ITR297(AP) , holding the contrary view that the ITO was not bound under the provisions of any Act or the Rules made thereunder to pass any order on the application for extension of time, received after the expiry of the date given in the notice under Sub-section (2) to Section 139, to our mind, with due aspect to the Hon'ble Judges of that court, is not sound and in line with the predominant and appropriate view taken by a majority of the High Courts and especially by this court. The aforesaid view of the Andhra Pradesh High Court alone was the axis on which the appellate decision of the Tribunal revolved, and to our view not rightly.

7. Thus, for the foregoing reasons, the question referred, as mentioned at the outset, is answered in the negative, i.e., in favour of the assessee and against the Revenue. We, however, make no order as to costs.

Rajendra Nath Mittal, J.

8. I agree.


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