1975 (5) TMI 21 - AT - Income Tax

Summary

Issues:
Challenge to Appellate Assistant Commissioner's decision to set aside assessment and issue fresh notices based on revised return; Validity of original return versus revised return; Jurisdiction of Appellate Assistant Commissioner in setting aside assessment order; Compliance with time limits for assessment based on revised return.

Analysis:
The appeal involved a challenge by an assessee firm against the decision of the Appellate Assistant Commissioner (AAC) to set aside the assessment and direct the Income Tax Officer to frame a fresh assessment based on revised returns. The original assessment was completed by the Income Tax Officer based on the original return filed, disallowing certain amounts from the total income. The AAC found that revised returns were filed by the assessee, curing omissions in the original return, and directed the assessment to be based on the revised returns. The assessee contended that the AAC exceeded jurisdiction by setting aside the assessment after the time limit had expired. The assessee relied on provisions of the Income Tax Act granting the right to file revised returns and argued that the AAC should have cancelled the assessment order as illegal. The Revenue argued that the original return still subsisted and the assessment should be based on the revised return. The AAC's decision was supported by the Revenue citing precedents and jurisdiction over assessment matters.

The Tribunal found that the AAC erred in setting aside the assessment and directing a fresh assessment based on the revised returns. It was noted that the assessee had filed multiple returns of income, and the Income Tax Officer had chosen to act on the original return despite the availability of revised returns. The Tribunal emphasized the validity of revised returns under the law and cited Supreme Court decisions to support this position. The Tribunal also highlighted the time limit for completing assessments based on revised returns, which had expired in this case. Referring to relevant case law, the Tribunal concluded that the impugned assessment order was not legal, and the AAC was not justified in setting it aside. The Tribunal held that the AAC should have cancelled the assessment order as illegal and void.

In a comparison with a cited case where an assessment was set aside for a different reason, the Tribunal found no application of that case's ratio to the present situation. Consequently, the Tribunal allowed the appeal, cancelling the impugned assessment order and ruling in favor of the assessee firm.