1980 (12) TMI 2 - HC - Income Tax

Summary

Issues Involved:
1. Whether the return filed on October 5, 1968, could be construed as a return under section 139(5) of the I.T. Act, 1961.
2. Whether the assessment made on September 22, 1969, for the assessment year 1964-65 is barred by limitation.

Detailed Analysis:

Issue 1: Whether the return filed on October 5, 1968, could be construed as a return under section 139(5) of the I.T. Act, 1961.

The assessee, a firm, was served with a notice under section 139(2) on July 20, 1964, for the assessment year 1964-65, requiring the submission of the return by August 19, 1964. The return was filed late on December 14, 1964, disclosing an income of Rs. 26,593, and a revised return was filed on October 5, 1968, admitting an income of Rs. 27,900. The assessment was completed on September 22, 1969.

The assessee contended that the return filed on December 14, 1964, being late, should be treated as a return under section 139(4), and the revised return filed on October 5, 1968, could not be considered under section 139(5) since section 139(5) applies only when the original return was filed within the time allowed under section 139(1) or 139(2). Therefore, the assessment made on September 22, 1969, was argued to be barred by limitation under sections 153(1)(a) and 153(1)(b).

The Tribunal held that the return filed on December 14, 1964, could be treated as a belated return under section 139(1) or 139(2), and the revised return filed on October 5, 1968, furnished a starting point of limitation. Thus, the assessment was required to be completed within one year from the revised return and was valid.

The court emphasized that section 139(4) is an enabling provision allowing an assessee to submit a return after the due date but before the end of four assessment years from the end of the relevant assessment year. Section 139(5) allows an assessee to revise a return filed under section 139(1) or 139(2) if any omission or wrong statement is discovered. The court concluded that the return under section 139(4) takes the character of a return under section 139(2) when the assessee was required to submit a return but delayed filing it. Therefore, the revised return filed on October 5, 1968, is valid under section 139(5), and the assessment made within one year from this date is valid.

Issue 2: Whether the assessment made on September 22, 1969, for the assessment year 1964-65 is barred by limitation.

Section 153(1) provides the time limits for making assessments, including the expiry of four years from the end of the assessment year under section 153(1)(a), eight years in cases falling under section 271(1)(c) under section 153(1)(b), and one year from the date of filing a return or revised return under section 139(4) or 139(5) under section 153(1)(c).

The court held that the return filed on December 14, 1964, although late, is considered a return under section 139(2) read with section 139(4). The revised return filed on October 5, 1968, is valid under section 139(5), and the assessment completed on September 22, 1969, is within the one-year period allowed by section 153(1)(c).

The court also considered the applicability of section 153(1)(b), which allows an eight-year period for assessments involving concealment of income under section 271(1)(c). The court noted that the ITO had initiated penalty proceedings for concealment of income, making the assessment valid within the eight-year period.

In conclusion, the court answered the questions in favor of the Revenue, holding that the return filed on October 5, 1968, is valid under section 139(5), and the assessment made on September 22, 1969, is not barred by limitation. The assessment is valid under both sections 153(1)(b) and 153(1)(c). The Revenue was entitled to its costs.