1991 (8) TMI 145 - AT - Income Tax

Assessing Officer, Assessment Order, Delay In Filing Form No. 12, Partnership Deed, Previous Year, Registration Of Firm

Summary

Issues involved:
1. Applicability of Circular No. 493 dated 21-8-1987 versus Circular No. 469 dated 23-9-1986.
2. Validity of the assessment made by the Assessing Officer under section 143(3).
3. Jurisdiction of the Assessing Officer to take up the return for assessment.
4. Interpretation of section 139(10) and its applicability to returns showing a loss.
5. Authority and impact of Circulars issued by the CBDT on the assessment process.

Issue-wise Detailed Analysis:

1. Applicability of Circular No. 493 dated 21-8-1987 versus Circular No. 469 dated 23-9-1986:
The revenue argued that the CIT(A) should have considered Circular No. 493, which is posterior to Circular No. 469 relied upon by the CIT(A). The revenue contended that the CIT(A) committed an error by not considering the various aspects of the matter and the facts of the case in view of the later circular. The CIT(A) had annulled the assessment based on Circular No. 469, which stated that a return of loss furnished after 31st July of the assessment year shall be deemed never to have been furnished. However, the tribunal noted that the Circulars cannot override the provisions of the Act and maintained that the interpretation of the statute should prevail over departmental instructions.

2. Validity of the assessment made by the Assessing Officer under section 143(3):
The assessee filed a return showing a loss of Rs. 18,280 for the assessment year 1988-89. The Assessing Officer completed the assessment under section 143(3) and assessed the total income at Rs. 9,03,720. The CIT(A) annulled the assessment, stating that the return was non est in law based on Circular No. 469. However, the tribunal observed that section 139(10) deals with returns showing a total income below the taxable limit and not with returns showing a loss. Therefore, the assessment made by the Assessing Officer was legally valid.

3. Jurisdiction of the Assessing Officer to take up the return for assessment:
The revenue argued that the assessee did not challenge the jurisdiction of the Assessing Officer during the assessment proceedings and, therefore, could not raise this issue before the CIT(A). The tribunal agreed with the revenue, noting that the assessee had filed a return showing a loss and the Assessing Officer had issued notices under section 143(2), which were complied with by the assessee. Therefore, the jurisdiction of the Assessing Officer was not in question.

4. Interpretation of section 139(10) and its applicability to returns showing a loss:
Section 139(10) provides that a return showing total income below the maximum amount not chargeable to tax shall be deemed never to have been furnished. The tribunal noted that this sub-section deals exclusively with returns showing positive income below the taxable limit and does not apply to returns showing a loss. The tribunal further clarified that section 139(3) deals with returns showing a loss and allows for the carry forward of such loss. Therefore, the return filed by the assessee showing a loss was valid and could not be ignored under section 139(10).

5. Authority and impact of Circulars issued by the CBDT on the assessment process:
The tribunal emphasized that Circulars issued by the CBDT are meant for the guidance of departmental authorities and cannot override the provisions of the Act. The tribunal cited several judicial decisions, including State Bank of Travancore v. CIT and CIT v. Swedish East Asia Co. Ltd., which held that Circulars cannot alter the statutory provisions. Therefore, the CIT(A)'s reliance on Circular No. 469 to annul the assessment was misplaced.

Conclusion:
The tribunal set aside the order of the CIT(A) and remanded the matter for fresh disposal in accordance with the law. The tribunal directed the CIT(A) to consider the relevant provisions of the Act and the facts of the case, and to provide both parties an opportunity of being heard. The appeal by the revenue was allowed for statistical purposes.