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Balish Singh and Co. Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 331 of 1977
Judge
Reported in[1987]165ITR575(Cal)
ActsIncome Tax Act, 1961 - Section 139(1), 139(2), 139(4) and 139(5)
AppellantBalish Singh and Co.
RespondentCommissioner of Income-tax
Appellant AdvocateDebi Pal and ;P.K. Bhowmick, Advs.
Respondent AdvocateB.K. Bagchi and ;A.N. Bhattacharyya, Advs.
Excerpt:
- .....the present case had not attached the profit and loss account and the balance-sheet in the first return filed on august 17, 1970, the income-tax officer, in our opinion, was perfectly justified in ignoring the said return as no return. in our view, the only valid return was the one which was filed on february 22, 1973, which was accompanied by the profit and loss account and the balance-sheet. as the income-tax officer has completed the assessment on february 15, 1974, i.e., before the expiry of one year from the date of the filing of a valid return, the appellate assistant commissioner was not justified in holding that the assessment was barred by limitation. we accordingly set aside the order of the appellate assistant commissioner under appeal and restore that of the income-tax.....
Judgment:

Suhas Chandra Sen, J.

1. The Tribunal has referred the following question of law under Section 256(1) of the Income-tax Act, 1961 ('the Act') :

'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessments made by the Income-tax Officer on February 26, 1970, and February 15, 1974, respectively, for the two years under reference were not barred by limitation ?'

2. The relevant assessment years are the assessment years 1964-65 and 1970-71 and the corresponding accounting years ended on November 15, 1963, and November 9, 1969, respectively.

3. The assessee is a registered firm.

4. The facts as found by the Tribunal are as under :

For the years under reference, the assessee did not file its returns of income as contemplated under Section 139(1) of the Act nor was the assessee required to file its returns of income as contemplated under Section 139(2). On September 10, 1965, and August 17, 1970, the assessee suo motu filed its first set of returns of income respectively, for the two years under reference which were not accompanied by the profit and loss account and balance-sheet as required under the Act and the Rules made thereunder. Thereafter, on March 30, 1969, and February 22, 1973, the assessee filed second set of returns respectively, for the two years under reference which were accompanied by the profit and loss account and balance-sheet. Since the first set of returns filed on September 10, 1965, and August 17, 1970, were not accompanied by the profit and loss account and balance-sheet, the Income-tax Officer ignored the same and completed the assessment on February 26, 1970, and February 15, 1974, on the basis of the second set of returns filed by the assessee on March 30, 1969, and February 22, 1973, respectively, for the two years under reference.

5. On appeal before the Appellate Assistant Commissioner, it was contended on behalf of the assessee that the Income-tax Officer should not have ignored the first set of returns which were filed on September 10, 1965, and August 17, 1970, and if that contention of the assessee was accepted, then the assessments made by the Income-tax Officer on February 26, 1970, and February 1 5, 1974, were time-barred and deserved to be cancelled. The Appellate Assistant Commissioner, in his orders, held that since both the returns were filed beyond the time stipulated in Subsection (1) of Section 139 and since no notice under Sub-section (2) of Section 139 was issued to the assessee requiring it to file its returns of income for the years under reference, the Income-tax Officer was justified in treating all the returns as returns filed under Section 139(4). He, however, was of the view that the Income-tax Officer should not have ignored the first set of returns which were filed on September 10, 1965, and August 17, 1970, and since the assessments for the years under reference were made on February 26, 1970, and February 15, 1974, respectively, the same were clearly barred by limitation. He, accordingly, cancelled the assessment orders of the Income-tax Officer dated February 26, 1970, and February 15, 1974.

6. The Tribunal further held : 'On a plain reading of the aforesaid provisions, we have no doubt in our mind that an assessee, like the one with which we are concerned in the present appeal, has to attach the profit and loss account and the balance-sheet with the return of income. Since the assessee in the present case had not attached the profit and loss account and the balance-sheet in the first return filed on August 17, 1970, the Income-tax Officer, in our opinion, was perfectly justified in ignoring the said return as no return. In our view, the only valid return was the one which was filed on February 22, 1973, which was accompanied by the profit and loss account and the balance-sheet. As the Income-tax Officer has completed the assessment on February 15, 1974, i.e., before the expiry of one year from the date of the filing of a valid return, the Appellate Assistant Commissioner was not justified in holding that the assessment was barred by limitation. We accordingly set aside the order of the Appellate Assistant Commissioner under appeal and restore that of the Income-tax Officer.'

7. There were certain miscellaneous proceedings before the Tribunal which are not relevant for the purpose of the present reference.

8. The assessee has come up in reference against the order of the Tribunal. On behalf of the assessee, it has been argued that there was no discrepancy between the income that was shown in the first return and the income that was shown in the second return for the assessment year 1970-71. There was only a minor discrepancy in the income that was shown in the first return for the assessment year 1964-65 from that shown in the second return. It was argued that even if a return is not accompanied by the profit and loss account and the balance-sheet, the return could not be regarded as invalid. The Income-tax Officer was competent to act upon the first return. There was no scope for filing a revised return under Section 139(4) and, therefore, the second return was void.

9. The period of limitation should be computed from the date of filing of the first return and the assessment orders that were passed were clearly barred by limitation.

10. The assessee could file a revised return only (1) if he had furnished a return under Sub-section (1) or Sub-section (2) of Section 139, and (2) discovered any omission or wrong statement in the return. Both the conditions had to be fulfilled before a revised return could be filed under Section 139(5).

11. The argument of the assessee is that the second set of returns in the facts of this case must be regarded as non est in law and, therefore, the assessment must be regarded as having been made on the basis of the first set of returns and as such were clearly barred by limitation.

12. We are unable to uphold this contention. Section 139(1) requires 'every person whose total income is chargeable to income-tax to file a return of income in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed '. The assessee, a partnership-firm, was required to file its balance-sheet and profit and loss account along with its return. This was required by the prescribed form. The assessee in this case first filed a return without the balance-sheet and profit and loss account. This return must be regarded as incomplete. It may be that a valid assessment order could have been passed on the basis of this return. The assessee had an option to file a complete return before any assessment order was passed on the basis of the return that was originally filed by the assessee. The assessee exercised that option and filed another return annexing the profit and loss account and the balance-sheet. This was done by the assesses voluntarily. The assessee must have thought that the returns were incomplete and, therefore, came forward with the second set of returns. I fail to see why an assessee cannot file a complete and correct return of income when he discovers that his first return is incomplete or incorrect.

13. There is a clear finding that in the assessment year 1964-65 the income that was shown in the first return was at variance with the income that was disclosed in the second return. It must also be pointed out that the Tribunal has not found as a fact that the incomes shown in the two returns for the assessment year 1970-71 were identical. The Tribunal has not given any finding at all on this aspect of the case. In any event, it cannot be said that the returns were complete in all respects in spite of the omission to annex the profit and loss account and the balance-sheet.

14. The argument that a revised return can be filed only in cases where a return was filed within the time allowed under Section 139(1) or Section 139(2) is also without any merit. Section 139(1) imposes a duty and also prescribes a time-limit for furnishing the return of income. Every person who has income chargeable to tax is required to file a return within the time specified in Section 139(1). Section 139(2) empowers the Income-tax Officer to issue a notice to any person who, in the opinion of the Income-tax Officer, is assessable under the Act and require him to furnish a return within 30 days from the date of service of the notice. The notice under Section 139(2) may be served even before the expiry of the time to file a return under Section 139(1) or after that time has expired. If a person assessable to tax does not file any return at all under Section 139(1) or even pursuant to a notice under Section 139(2), the Income-tax Officer may pass an assessment order under Section 143(3) or under Section 144 of the Act within the period of limitation set out in Section 153 of the Act. The assessee, however, has a right to file a return of income at any time before an order of assessment is passed.

15. Sections 139(4)(a) and 139(5) are as follows :

(4)(a) Any person who has not furnished a return within the time allowed to him under Sub-section (1) or Sub-section (2) may, before the assessment is made, furnish the return for any previous year at any time before the end of the period specified in Clause (b), and the provisions of Sub-section (8) shall apply in every such case ;

(5) If any person having furnished a return under Sub-section (1) or Sub-section (2), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the assessment is made.'

16. Section 139(4)(a) is an enabling section. It merely enables a person to file belatedly a return which he should have filed within the time allowed to him under Section 139(1) or Section 139(2).

17. Section 139(4) does not cast any duty to file a return of income upon the assessee. The duty to file a return under Section 139(1) or pursuant to a notice under Section 139(2) can be discharged by filing a return belatedly even after expiry of the time specified therein by virtue of the provisions of Section 139(4)(a). There may be different consequences of penalty and interest but the position in law is that by filing a return within the extended time under Section 139(4)(a), the assessee has discharged its duty to file a return which was cast upon it by Section 139(1).

18. Section 139(5) enables the assessee to file a revised return at any time before the assessment is made if he discovers any omission or wrong statement in the return of income that was originally filed. In the instant case, the assessee had to file a return of his total income in the prescribed form and verified in the prescribed manner under the provisions of Section 139(1). No notice under Section 139(2) had been issued to the assessee. The assessee belatedly filed a return before the assessment was made. Section 139(4) does not lay down the manner or form in which a return has to be filed. These requirements have been specifically laid down in Section 139 (1) and (2) under which returns have to be filed ' in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed '.

19. The procedure and the manner in which a return has to be filed have been laid down in Section 139(1) and Section 139(2). Section 139(4) does not speak of any procedure or manner or form under which a return has to be filed. The belated return that was filed by the assessee was in the prescribed form and verified in the prescribed manner as required by Section 139(1).

20. Therefore, the returns that were filed in this case originally by the assessee were nothing but returns that were required to be filed under Section 139(1). These were filed beyond the time-limit prescribed by Section 139(1) but before the assessments were made by virtue of the enabling provision of Section 139(4). Therefore, the second set of returns, in my judgment, are nothing but returns under Section 139(1) which were filed belatedly under the enabling provision of Section 139(4).

21. I was referred to two judgments of this court. In the case of Mst. Zulekha Begum (Khatoon) v. CIT : [1981]129ITR560(Cal) , it was held by a Division Bench presided over by my learned brother, Dipak Kumar Sen J., that if the assessee, after having filed a return under Section 139(4), files another return subsequently, it is to be assumed that he has given a go-by to the return filed previously and that so far as he is concerned, the return filed subsequently is the correct and proper return. When the Income-tax Officer accepts the return filed subsequently and proceeds to assess thereunder without any objection from the assessee, it would not be open to the assessee to contend later that the return filed subsequently was invalid.

22. It was specifically argued in that case that a revised return under Section 139(5) could only be filed where a person had filed a return either under Sub-section (1) or Sub-section (2) of Section 139. This argument did not find favour with the court in that case.

23. In another judgment of this court in the case of Kumar Jagadish Chandra Sinha v. CIT : [1982]137ITR722(Cal) , it was held by a Division Bench of this court that the Act contemplates the filing by the assessee of a correct and complete return. The law gives him a right to substitute and bring on record a correct and complete return if he discovers any omission or wrong statement in the return originally filed by him. The law cannot contemplate the making of an assessment on the basis of a return which even the assessee claims contains wrong statements. When an assessee files a revised return, he, in fact, admits that the original return filed by him was not correct or complete and substitutes the same by a revised return which, according to him, is correct and complete. The effective return for the purposes of assessment is thus the return which is ultimately filed by an assessee on the basis of which he wants his income to be assessed.

24. Section 139(4) and Section 139(5) give the assessee a right to file a belated return and also a revised return. It is the assessee's right to do so. In this case, the assessee thought that the first set of returns were not complete. He filed the second set of returns and invited the Income-tax Officer to act upon it. The Income-tax Officer passed the order of assessment on the second set of returns. The assessee cannot be heard to say that the second iset of returns was non est and the limitation should be computed from the date of the filing of the first set of returns.

25. On the facts of this case and in view of the principles laid down by this court in the two judgments referred to hereinabove, the question must be answered in the affirmative and against the assessee. There will be no order as to costs.

Dipak Kumar Sen, J.

26. I agree.


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