1992 (1) TMI 98 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the return filed by the petitioner under section 139(3) of the Income-tax Act, 1961.
2. Applicability of Circular No. 469 dated September 23, 1986, and Board's Instruction No. 1744 dated January 21, 1987.
3. Opportunity to be heard before passing the impugned order under section 264 of the Income-tax Act, 1961.

Detailed Analysis:

1. Validity of the Return Filed by the Petitioner:
The petitioner, an assessee, filed a return claiming a carry forward of loss for the assessment year 1986-87 on October 31, 1986, after requesting extensions. The second respondent deemed the return as belated under section 139(10) of the Income-tax Act, 1961. The petitioner argued that the return was filed within the extended time and should be considered valid under section 139(3) as it stood prior to the amendment by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986.

2. Applicability of Circular No. 469 and Board's Instruction No. 1744:
The petitioner claimed entitlement to the benefit of Circular No. 469, which stated that the amended provisions for furnishing returns showing loss would apply to the assessment year 1987-88 and subsequent years. The second respondent, however, relied on Board's Instruction No. 1744, which indicated that the amended provisions would apply to returns filed on or after April 1, 1986, making the petitioner's return invalid. The petitioner was not informed about Board's Instruction No. 1744, nor given an opportunity to contest its applicability.

3. Opportunity to be Heard:
The court emphasized the quasi-judicial nature of the power exercised by the first respondent under section 264 of the Income-tax Act. It highlighted that the petitioner was not given a personal hearing before the revision application was dismissed. Citing principles of natural justice and fairness, the court referenced the Supreme Court's decision in Neelima Misra v. Harinder Kaur Paintal, which underscored the necessity of affording an opportunity to present one's case in administrative decisions involving civil consequences.

Conclusion:
The court concluded that it was unnecessary to delve into the merits of whether the return was filed within the time, whether an extension was granted, or the applicability of Circular No. 469 and Board's Instruction No. 1744. The primary issue was the lack of opportunity given to the petitioner to be heard before the impugned order was passed. The court set aside the impugned order and remitted the matter to the first respondent for fresh disposal on merits, ensuring the petitioner is given a chance to present their case. The writ petition was allowed without costs.