1996 (9) TMI 8 - SC - Income Tax

Once the Income-tax Officer has done all that he has to do under the Act and, makes a draft order and then refers to the Inspecting Assistant Commissioner as required by section 144B, permitting the assessee to file a revised return would involve duplication of work and multiplicity of proceedings - held that the said right has to be exercised before the making of draft assessment order in cases where section 144B was applicable

Summary

Issues:
1. Whether an assessee can file a revised return after the Income-tax Officer has made a draft assessment order and referred the matter to the Inspecting Assistant Commissioner.
2. Interpretation of Section 139(5) in conjunction with Section 144B of the Income-tax Act.

Analysis:
1. The primary issue in this case is whether an assessee can file a revised return after the Income-tax Officer has made a draft assessment order and referred the matter to the Inspecting Assistant Commissioner. The High Court held that once the draft assessment order is made, the Income-tax Officer's function is practically over, and there is no scope for entertaining a revised return. The Supreme Court concurred with this view, stating that allowing a revised return at this stage would necessitate redoing the entire assessment process, which is not provided for in the Act. The Court emphasized that the Income-tax Officer's role ends once the draft order is made, and any further changes should be made based on the directions of the Inspecting Assistant Commissioner.

2. The interpretation of Section 139(5) in conjunction with Section 144B was crucial in determining the assessee's right to file a revised return. Section 139(5) allows an assessee to file a revised return before the assessment is made if any omission or mistake is discovered. However, the Supreme Court clarified that this right must be exercised before the draft assessment order is made, especially in cases falling under Section 144B. The Court highlighted that permitting a revised return after the draft order and reference to the Inspecting Assistant Commissioner would lead to duplication of work and multiple proceedings, which is not envisaged by the Act. The judgment emphasized the need for a reasonable interpretation of the provisions in the context of the entire enactment.

3. The Supreme Court also addressed a previous judgment of the Gujarat High Court where a revised return was filed after the draft assessment order, and the Inspecting Assistant Commissioner rejected it. The Court distinguished this case by stating that the view taken in the earlier judgment was not consistent with the provisions of Section 139(5) read with Section 144B. The Court affirmed that the correct interpretation is that once the draft order is made and referred, the assessee's right to file a revised return ceases. Therefore, the appeal was dismissed, upholding the decision of the High Court and emphasizing the importance of following the procedural requirements outlined in the Income-tax Act.