1994 (12) TMI 52 - HC - Income Tax

Summary

Issues:
Validity of assessment completion period based on second return date under section 139(4) of the Income-tax Act, 1961.

Analysis:
The judgment delivered by the High Court of Kerala involved the assessment year 1976-77, where the assessee questioned the assessment's validity and claimed it was barred by limitation. The Income-tax Officer determined the income at Rs. 1,01,820, including an addition of Rs. 85,000 from unexplained sources. The Commissioner of Income-tax (Appeals) found the assessment within time but referred the matter back for further examination. The Tribunal was approached by the assessee, arguing that the assessment was time-barred. The key issue was the validity of the assessment completion period based on the date of the second return filed under section 139(4) of the Income-tax Act, 1961.

The assessee initially filed a return on May 10, 1978, and later submitted another return on January 5, 1979. The assessment was eventually completed on January 4, 1980, exceeding the normal completion period up to March 31, 1979. The question arose whether the assessment was validly completed within one year from the second return's date, i.e., January 5, 1979. The court noted that the assessee did not file returns under section 139(1) or 139(2) but under section 139(4) of the Act, which precludes the filing of a revised return under section 139(5). Citing precedents, the court emphasized that subsequent returns under section 139(4) are not permitted, and only original returns under section 139(1) or 139(2) allow for revised returns under section 139(5).

The court referred to Eapen Joseph v. CIT and CIT v. A. Yunus Kunju to support its interpretation that the Act prohibits subsequent or revised returns under section 139(4) and only allows them for returns filed under section 139(1) or 139(2). As the assessee filed the return under section 139(4) on May 10, 1978, without the option for a revised return, the return on January 5, 1979, was deemed invalid. Consequently, the Income-tax Officer could not base the assessment completion period on the second return date. The court ruled in favor of the assessee, answering the question in the negative and against the Department.

In response to the Revenue's request to consider an alternative contention, the court declined, stating that only the referred question needed an answer. The judgment favored the assessee, and a copy was to be forwarded to the Tribunal as per legal requirements.