1985 (1) TMI 32 - HC - Income Tax

Summary

Issues Involved:
1. Validity of returns filed u/s 139(4) and their compliance with s. 139(1).
2. Whether revised returns filed u/s 139(5) can extend the period of limitation for assessment.
3. Interpretation of s. 153(1)(c) concerning the time limit for completing assessments.

Summary:

Validity of Returns Filed u/s 139(4) and Compliance with s. 139(1):
The Tribunal held that returns filed under s. 139(4) are valid returns and should be considered as compliance with s. 139(1). The Tribunal relied on the precedent set by Kulu Valley Transport Co. [1970] 77 ITR 518 (SC), which interpreted similar provisions under the 1922 Act. The Tribunal concluded that "the provisions of section 139(1) for the purpose of assessments must be held to have been complied with."

Revised Returns Filed u/s 139(5) and Extension of Limitation Period:
The Tribunal determined that the revised returns filed by the assessees under s. 139(5) were valid and extended the period for completing assessments. The assessments were completed within the extended time frame, thus deemed timely. The Tribunal stated, "the Income-tax Officer was within his right to complete the assessments before the expiry of one year from the date of filing of revised returns under sub-section (5) of section 139."

Interpretation of s. 153(1)(c) Concerning Time Limit for Completing Assessments:
The High Court disagreed with the Tribunal's interpretation. The Court analyzed the provisions of s. 139 and s. 153(1)(c) and concluded that returns filed under s. 139(4) cannot be equated with returns under s. 139(1) or (2). The Court referenced multiple cases, including Metal India Products v. CIT [1978] 113 ITR 830 (All) [FB] and O.P. Malhotra v. CIT [1981] 129 ITR 379 (Delhi), to support its view. The Court held, "the return provided for under sub-s. (4) of s. 139 stands in a category different from those provided in sub-s. (1) or sub-s. (2) and such return cannot be revised under sub-s. (5) because such sub-section does not say so."

Conclusion:
The High Court concluded that the assessments were not completed within the period of limitation as the revised returns filed under s. 139(5) did not extend the time limit. The Court answered the referred question in the negative, stating, "on the facts and in the circumstances of the case, the Tribunal was not right in holding that the assessments in question were valid and that they were completed within the period of limitation." The judgment was in favor of the assessee and against the Revenue.