1993 (9) TMI 22 - HC - Income Tax

Summary

Issues Involved:

1. Refusal to accept the third revised return by the Income-tax Officer.
2. Interpretation of "assessment" under Section 139(5) of the Income-tax Act, 1961.
3. Impact of filing a revised return after a draft assessment order under Section 144B.
4. Procedural implications of Section 144B on the assessment process.

Issue-wise Detailed Analysis:

1. Refusal to accept the third revised return by the Income-tax Officer:

The petitioner challenged the order dated March 5, 1980, by the Income-tax Officer, who refused to accept the third revised return filed by the petitioner-assessee. The Income-tax Officer's refusal was based on the fact that he had already passed a draft assessment order on December 12, 1979, under section 143(3) read with section 144B of the Income-tax Act, 1961, and the assessee had already been heard by the Inspecting Assistant Commissioner regarding objections to the draft assessment order. The refusal to accept the third revised return was the focal point of the petition.

2. Interpretation of "assessment" under Section 139(5) of the Income-tax Act, 1961:

The petitioner contended that the Income-tax Officer erroneously refused to exercise his jurisdiction by not accepting the third revised return. It was argued that under Section 139(5), an assessee has the right to submit a revised return at any time before the assessment is made if any omission or wrong statement is discovered in the earlier return. The petitioner argued that since no final assessment order had been passed, the Income-tax Officer was obligated to accept the third revised return. The court examined the interpretation of "assessment" and noted that it involves determining the total income or loss of the assessee and the sum payable as tax. The court highlighted that "assessment" under Section 139(5) should be interpreted in the context of the entire assessment process.

3. Impact of filing a revised return after a draft assessment order under Section 144B:

The court analyzed the procedural implications of filing a revised return after a draft assessment order under Section 144B. It was noted that Section 144B requires the Income-tax Officer to forward a draft assessment order to the assessee if any variation in the income or loss returned is proposed, which is prejudicial to the assessee. The assessee can file objections to the draft order, and the Inspecting Assistant Commissioner will issue directions based on those objections. The court observed that the draft order represents a tentative decision regarding the total income and tax payable by the assessee, but it is not the final assessment order. However, the court concluded that once a draft order is made, the assessee cannot file a revised return, as it would disrupt the assessment process and lead to delays.

4. Procedural implications of Section 144B on the assessment process:

The court emphasized the procedural implications of Section 144B on the assessment process. It noted that if the assessee is allowed to file a revised return after the draft order, it would undermine the steps taken by the Income-tax Officer under Section 144B and lead to uncertainty and delays in finalizing the assessment. The court highlighted that the draft order serves as a basis for completing the assessment, and any revised return filed after the draft order would necessitate reconsideration of the entire assessment process, potentially conflicting with the directions given by the Inspecting Assistant Commissioner. The court concluded that the words "at any time before the assessment is made" in Section 139(5) should be interpreted to mean before the draft order is made under Section 144B.

Conclusion:

The court ruled that once a draft order is made by the Income-tax Officer under Section 144B, the assessee cannot file a revised return. The petition was dismissed, and the rule was discharged with no order as to costs. The interim relief was vacated.