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TMI Blog1991 (4) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... n issue in this appeal. At the time of hearing the assessee's learned counsel did not press ground Nos. 2, 4 and 5. At the time of hearing the assessee has also filed a petition dated 14-3-1991 stating that in ground No. 3 there was same typographical error and the same should be read as rectified as below : " 3. For that an assessment which is already bad in law cannot be set aside with a direction to make a fresh assessment. " The case of the assessee is that the CIT(Appeals) failed to consider the question of limitation as per ground No. 1 taken before him. The assessment having been based on the return filed on 11-9-1987, was bad in law. Briefly speaking, the facts of the case were as under : 2. The assessment year involved is 1985-86. The status of the assessee has been shown in the assessment order as a domestic company in which the public are substantially interested. The assessment was made under section 144 on 7-9-1988. In the assessment order the assessing officer noted that the assessee is a Government of Meghalaya Undertaking engaged in the development and sale of various forest products like timber, pine, teak, seeds etc. The assessee filed its return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... salary as expenditure was also a debatable issue. The assessing officer, therefore, concluded on the reasoning recorded by him that it was clear that there was no discovery of any omission or mistake necessitating revision of the return of income but due to change in the procedure of accounting in respect of certain charges. The assessing officer noted that in the case of Deep Narain Nagu Co. v. CIT [1986] 157 ITR 37 the Hon'ble M.P. High Court had held in similar circumstances that the return could not be revised. 4. The assessing officer accordingly proceeded to compute the income of the assessee on the basis of the first return filed on 11-9-1987. The income was computed at Rs. 13,84,731. Admissible depreciation etc. were considered separately. 5. Amongst other things, the assessee took up before the CIT(A) in appeal against such action of the assessing officer. The CIT(A) looked into the various aspects of the matter. He noted that in ground Nos. 1, 2 and 3 the assessee submitted that the return filed on 11-9-1987 was an incomplete return and it was the duty of the assessing officer to allow the assessee to rectify the defects within the meaning of section 139(9). The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht for extension of time by filing Form No. 6 which the assessing officer had not disposed of and, therefore, it could be presumed that the assessing officer had already granted time to the assessee as applied for till 30-9-1987, following the decision in the case of Lachman Chaturbhuj Java v. R.G. Nitsure [1981] 132 ITR 631 (Bom.). He, therefore, held that the return filed on 11-9-1987 was to be treated as a return within the meaning of section 139(1) and the assessee had right to revise such return and the assessing officer should have issued notice under section 143(2) on the basis of the revised return which he had failed to do. 8. The CIT(A) also considered the contention of the assessee that the notices under sections 143(2) and 142(1) had not been served on the assessee. He verified this point and noted that the service of the notices had not been mentioned in the assessment order. He, therefore, set aside the order of the assessing officer giving direction to him to frame the assessment afresh after giving reasonable opportunity of being heard to the assessee. He, therefore, set aside the assessment without adjudicating other grounds of appeal raised by the assessee befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as no question of failure of the CIT(A) to annul the assessment. It is pointed out that the first appellate authority has the duty not only to set aside such order found to be irregular, defective etc. but also has the duty to direct that the proceeding should be recommenced from the stage at which such irregularity or illegality has crept in. Reference is made to a decision of the Hon'ble Supreme Court in the case of Kapurchand Shrimal v. CIT [1981] 131 ITR 451. In short, it is urged that there is no merit in the submissions of the assessee and, therefore, the same may be dismissed. 11. In reply, the assessee's learned counsel reiterates the submissions made earlier while highlighting the contentions that the CIT(A) should not have set aside the assessment order which had already been barred by limitation. 12. We have heard both the sides and have gone through the orders of the authorities below along with the various papers placed before us for our consideration. From the reading of the order of the CIT(A) it is seen that he had considered the ground No. 1 amongst other grounds while dealing with the appeal by the assessee. The CIT(A) might not have decided categorically in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 139(4) and, therefore, the same cannot be revised under section 139(5) of the Act. 14. As mentioned earlier only the ground Nos. 1 and 3 before the Tribunal are pressed at the time of hearing of this appeal. Of course, in respect of ground No. 3 the assessee has filed an application for verification as earlier stated. The first ground of appeal by the assessee is that the CIT(A) failed to consider the question of limitation as per ground No. 1 of the grounds of appeal taken by the assessee that the assessment based on the return submitted on 11-9-1987 was bad in law. The first ground of appeal by the assessee before the CIT(A) was that the assessment was bad in law inasmuch as the same was based on the provisional return submitted on 11-9-1987 and not on the basis of the subsequent valid return on the basis of audited accounts lawfully filed on 15-3-1988. From the order of the CIT(A) it is seen that the contention of the assessee was sustained and that was why the CIT(A) on the basis of other grounds also set aside the assessment for fresh disposal by the assessing officer after giving the assessee an opportunity of being heard. Before the CIT(A) apparently there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to redo the assessment after giving the assessee proper opportunity of hearing and that the prejudice caused to the assessee was remedied by the CIT(A) by setting aside the assessment and directing fresh assessment and, therefore, the Hon'ble High Court concluded that the assessee did not have any grievance. 17. In the case of CIT v. Chitranjali [1985] Tax LR 1252, the Hon'ble Calcutta High Court, on the facts of that case, held that the limitation under section 153(1)(a) or 153(1)(c) would not apply where the assessing officer completed the assessment on the basis of original return ignoring the revised return after considering the account books and other necessary evidence within the period of limitation. 18. In the present case before us the original return filed by the assessee is a return in all essential aspects, except that such return was not accompanied with the audited accounts and auditor's report. Thus, the revised return has cured such defects contained in the original return and, therefore, the revised return did not obliterate the original return. In the case of Rajendra Nath reported in 120 ITR 14 at page 19 the Hon'ble Supreme Court has dealt with the expressi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Allahabad High Court in the case of CIT v. Sri Baldeoji Maharaj Trust [1983] 142 ITR 584 held that the return filed under section 139(4A) should be treated as return under sub-section (1) of the said section. It was observed that when the return is filed under sub-section (4A), it has to be accompanied by an auditor's report and since the original return filed by the assessee was not accompanied by an auditor's report, there was a clear omission in that return. 22. Thus, having regard to the facts of the case and the provisions of section 153(1)(c) as well as the decisions of various Courts, we are of the opinion that the direction of the CIT(A) in the present case was quite valid and the assessment made by the assessing officer cannot be said to have been barred by limitation as sought to be made out by the assessee. Thus, the assessment made by the assessing officer was not bad in law and in such a situation the direction given by the CIT(A) to the assessing officer for fresh assessment, was maintainable. 23. In the circumstances of the case as mentioned above, both the grounds of appeal by the assessee pressed before us are decided against the assessee. 24. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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