1988 (1) TMI 36 - HC - Income Tax

Summary

Issues Involved:
1. Whether the assessment order dated November 23, 1981, was made after the expiry of the period of limitation and was, therefore, invalid.

Summary:

Issue 1: Validity of Assessment Order with Respect to Limitation Period

The Income-tax Appellate Tribunal, Indore Bench, referred the question of whether the assessment order dated November 23, 1981, was made after the expiry of the period of limitation and was, therefore, invalid, to the High Court for its opinion u/s 256(1) of the Income-tax Act, 1961.

The assessee filed a return u/s 139(4) on March 22, 1979, and later filed another return on March 11, 1981, as a revised return. The assessment order was passed on November 23, 1981. The assessee contended that the assessment should have been completed by March 22, 1980, as per section 153(1)(c) of the Act, making the assessment order time-barred. The Department argued that the limitation period should start from March 11, 1981, the date of the revised return, making the assessment order valid.

The Tribunal accepted the assessee's plea, but the Department sought the High Court's opinion. The High Court considered various precedents, including decisions from the Calcutta High Court in Mst. Zulekha Begum v. CIT and Kumar Jagadish Chandra Sinha v. CIT, which supported the Department's view that a revised return replaces the original return for assessment purposes.

The High Court also reviewed contrary decisions from the Allahabad High Court in Dr. S. B. Bhargava v. CIT and the Rajasthan High Court in Vimalchand v. CIT, which held that a return filed u/s 139(4) cannot be revised u/s 139(5), and thus, a revised return does not extend the limitation period.

However, the High Court found that the principle allowing successive returns u/s 139(4) within the limitation period, as discussed in the Special Bench decision of the ITAT in ITO v. Bohra Film Finance, was more reasonable. The Court concluded that a subsequent return filed within the limitation period should be considered for assessment purposes, thus making the assessment order dated November 23, 1981, valid.

Conclusion:

The High Court answered the referred question in the negative, in favor of the Department and against the assessee, holding that the Tribunal was not right in declaring the assessment order dated November 23, 1981, invalid due to the expiry of the limitation period. No order as to costs was made.