2012 (5) TMI 132 - HC - Income Tax

Validity of notice under Section 148 issued after filing of revised return under Section 139(5) Held that - The revised return was filed on 28.5.2002 and was processed under Section 143(1) on 24.3.2004 - Rs.1,00,000 as the gift amount was surrendered to be taxed and tax amount was also deposited - the revised return filed on 28.5.2002 was the only return which substituted the original return thus it was not a case of escapement of income wrong conclusion that revised return can be filed only when there is bonafide mistake as Section 139(5) enables an assessee to file revised return on the discovery of any omission or wrong statement initiation of reassessment taking recourse of Section 148 was not warranted - in favour of assessee.

Summary

Issues:
Validity of notice under Section 148 of the Income Tax Act
Legality of filing a revised return under Section 139(5) of the Act
Justification of quashing reassessment proceedings

Validity of notice under Section 148 of the Income Tax Act:
The judgment revolves around a case concerning the validity of a notice issued under Section 148 of the Income Tax Act. The Tribunal held that the notice, issued after the filing of a revised return under Section 139(5) of the Act, was not valid. The Assessing Officer contended that the revised return was a malafide action taken by the assessee to evade inquiry proceedings initiated by the Department. However, the assessee argued that the revised return was filed promptly upon discovering errors in the original return, and it was accepted by the Department, processed, and tax was assessed accordingly. The Court analyzed whether the reassessment notice was justified based on the original return and the subsequent actions of the assessee.

Legality of filing a revised return under Section 139(5) of the Act:
The Court delved into the legal aspects of filing a revised return under Section 139(5) of the Income Tax Act. Section 139(5) allows an assessee to file a revised return if any omission or wrong statement is discovered in the original return. The Court cited the case of Dhampur Sugar Mills vs. C.I.T., emphasizing that a revised return supersedes the original return for assessment purposes. In this case, the revised return was filed before the assessment order was made, and it was accepted and processed by the Department. The Court concluded that the revised return, surrendering a specific amount as income, was the valid return and should be considered for assessment purposes.

Justification of quashing reassessment proceedings:
The crux of the matter was whether there was an escapement of income warranting the initiation of reassessment proceedings. The Court highlighted that the revised return, filed before the initiation of reassessment proceedings, had been accepted and processed by the Department. Therefore, the Court found that there was no justification for the reassessment proceedings as the income in question had not escaped assessment. The Tribunal's decision to quash the reassessment proceedings was deemed legally justified, and the Court dismissed the appeal, upholding the Tribunal's judgment.