1984 (3) TMI 156 - AT - Income Tax

Summary

Issues:
- Consideration of revised return filed after draft assessment order under section 143(3) and section 144B of the Income-tax Act.

Analysis:
1. The case involved a departmental appeal against the order of the Commissioner (Appeals) regarding the assessment year 1978-79. The primary issue was the consideration of a revised return filed by the assessee after the issuance of a draft assessment order under section 143(3) and section 144B of the Income-tax Act.

2. The assessee, a private limited company, filed a return declaring a loss on30-8-1979. Subsequently, a revised return was filed on3-3-1981, claiming further loss incurred in certain consignments sent to West Germany. However, the Income Tax Officer (ITO) did not consider this revised return while making the assessment on2-9-1981, leading to the dispute.

3. The Commissioner (Appeals) accepted the assessee's contention that the revised return should have been considered by the ITO and held that its non-consideration was unjustified under the law. The Commissioner directed the ITO to take into account the revised return and pass a fresh assessment order.

4. The departmental representative argued that once the draft assessment order was sent to the Income-tax Appellate Commissioner (IAC), the ITO could not consider any revised return. Reference was made to a Delhi High Court decision and the limitations under section 153 of the Act to support this argument.

5. The departmental representative also cited a case where it was held that the ITO must incorporate the IAC's directions after forwarding the draft assessment order, indicating that the assessment is not pending for the purpose of considering revised returns post the draft order submission.

6. The counsel for the assessee contended that the ITO's draft order submission did not conclude the assessment process, and the right to file a revised return remained until the final assessment order. Reference was made to Tribunal decisions emphasizing the assessee's right to file a revised return before the assessment is finalized.

7. The Tribunal analyzed the legal provisions under section 139 and section 144B, emphasizing that the assessment remains pending until the final order is passed by the ITO. The Tribunal highlighted that the ITO must consider a revised return filed within the specified time frame and extended the limitation period for assessment completion after a revised return is filed.

8. The Tribunal differentiated the cases cited by the departmental representative, clarifying that the filing of a revised return is a crucial part of the assessment process and must be considered by the ITO before finalizing the assessment.

9. Ultimately, the Tribunal upheld the Commissioner (Appeals) order directing the ITO to consider the revised return filed by the assessee, emphasizing the importance of following the prescribed procedures for assessment completion.

10. The departmental appeal was dismissed, affirming the decision to consider the revised return and highlighting the significance of adhering to the legal provisions governing assessment procedures.