1986 (3) TMI 44 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the return filed without enclosing copies of the balance-sheet and profit and loss account.
2. Whether non-filing of the profit and loss account and balance-sheet is a procedural or technical defect.
3. Applicability of interest u/s 139(8) till the date of submission of the balance-sheet and profit and loss account.

Summary:

Issue 1: Validity of the Return
The Tribunal held that the return filed by the assessee on October 6, 1971, without enclosing the balance-sheet and profit and loss account, was valid. The Income-tax Officer (ITO) accepted and acted upon this return, indicating it was treated as legally valid. The Tribunal found that the balance-sheet and profit and loss account were supporting evidence and not part of the return itself. The High Court affirmed this view, stating that the return was not invalid or non-existent, as it did not contain any defect on its face and was accepted by the ITO.

Issue 2: Procedural or Technical Defect
The Tribunal concluded that the non-filing of the profit and loss account and balance-sheet was a procedural or technical defect, which was cured when the documents were submitted later. The High Court agreed, noting that the ITO permitted the assessee to file the return without these documents initially and accepted them later. The defect did not invalidate the return, as it was not so incomplete or defective that it could not be regarded as a return in law.

Issue 3: Interest u/s 139(8)
The Tribunal found that there was no provision in the Income-tax Act to charge interest u/s 139(8) up to the date of submission of the balance-sheet and profit and loss account. The High Court upheld this, stating that the return filed on October 6, 1971, was valid for the purpose of section 139(8). The Commissioner of Income-tax's direction to charge interest from October 1, 1971, to June 8, 1973, was set aside, and the original order of the ITO was restored.

Conclusion:
The High Court answered all questions in favor of the assessee, affirming the Tribunal's decision that the return was valid, the defect was procedural, and no additional interest was payable u/s 139(8) beyond the initial period. There was no order as to costs.