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TMI Blog1991 (8) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Rs. 18,280. The Assessing Officer scrutinized the accounts and completed the assessment under section 143(3). He did not accept the money claimed by the assessee to have been advanced by the Directors of the company and also did not accept certain securities deposits from the stockists, on the reasons recorded by him in the assessment order in respect of the various items. He completed the assessment on the total income of Rs. 9,03,720. 3. Amongst other things, the assessee took up the matter before the ld. CIT(A). It was contended that the assessment made was bad in law and was void ab initio. According to the assessee, the return for the above year has been filed on 10-1-1-989, showing a loss of Rs. 18,260 and as such it was the return which shall be deemed never to have been furnished in view of the proviso to section 139(10) of the Act. It was submitted that the said return was not a return and non est in law and, therefore, the Assessing Officer was not competent to complete the assessment under section 143(3) as done by him in the present case. The assessee's ld. counsel before the ld. CIT(A) placed reliance on the Board's Circular No. 469 dated 23-9-1986, relevant por ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not chargeable to tax shall be deemed never to have been fumished. Of course, there are exceptions as per proviso to that sub-section. Reference also is made to another decision of the Hon'ble Supreme Court in the case of CIT v. Kulu Valley Transport Co. (P.) Ltd. [1970] 77 ITR 518 in which on the facts of that case and under the provision of the Income-tax Act, 1922, it was held that a return submitted at any time before assessment is made within time sub-section (1) of section 22 must be considered along with sub-section (3) of that section. A return whether it is a return of income, profits or gains or of loss must be considered has having been made within the time prescribed if it is made within the time specified in section 22(3). It was held that in other words if section 22(3) is complied with, section 22(1) must also be held to have been complied with. It was further held that if compliance has been made with the latter provision the requirements of section 22(2A) would stand satisfied. 5. It is further submitted by the ld. departmental representative that the assessee in the present case had filed a return showing a loss and the ITO started the assessment proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 139(10). It is also urged that the CBDT can issue Circular or departmental instructions only under section 119 which cannot govern or supersede the provision of section 139(10). In a paper book filed on behalf of the assessee various papers are placed including opinion expressed by certain experts, in order to strengthen the stand taken by the assessee. Amongst other things, it is submitted that in the case of State Bank of Travancore v. CIT [1986] 158 ITR 102 (SC), it was held that the Circulars which are executive in character cannot alter the provisions of the Act. Circulars which are in the nature of concessions can always be prospectively withdrawn and in the case of Shri Shubhlakxmi Mills Ltd. v. Addl. CIT [1989] 177 ITR 193 (SC) it was held that Circulars do not affect the true position of law even though the same are beneficial to the assessee. The assessee's ld. counsel also refers to a decision of the Hon'ble Calcutta High Court in the case of CIT v. Swedish East Asia Co. Ltd. [1981] 127 ITR 148 in which, on the facts of that case, it was held that ordinarily a Circular containing instructions which are inconsistent with the provisions of statute is of no effect. si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income referred to in section 5, compute in the manner laid down in this Act. Again section 5 deals with scope of total income which is received or deemed to be received, accrued or arisen in India or outside India in certain situation or by a non-resident. This section is a charging section which deals only with income which is positive and not any loss at all. Thus, it could be seen that where a return is filed showing a total income below the maximum amount which is not chargeable to tax would have to be deemed never to have been filed by such assessee. Of course, there are certain exceptions to which this sub-section would not apply, in which amongst other things, as has been provided as per proviso (c) i.e., a return of loss which has been furnished in accordance with the provisions of section (3), referred to by us in the earlier paragraph. Thus provision (c) has clarified and qualified the provision of section 139(10). From whatever angle we may look at the problem it is seen that sub-section (10) deals exclusively with return which shows a total income which is below the taxable limit and which is not chargeable to tax and if the same is filed the same would have to be ig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) in his short order has merely reproduced the Circular No. 469 dated 23-9-1986 and agreed with the assessee's learned counsel that the return in which the assessee has shown the loss should have been deemed to have here been furnished at all in section 139(10). In fact, the ld. CIT(A) has not considered the relevant provisions of this section and other sections as well before he came to the above conclusion in the impugned order. We agree with the assessee's learned counsel that Circular issued by the Board which are executive in character cannot alter the provision of the Act and will not affect the true position of law even though such Circulars are beneficial to the assessee. But as it is and as could be seen from the facts of the case the Circulars repeatedly referred to before us have no applicability at all to the present case as the return was admittedly a return in which a loss was shown and not of the total income which is below the amount chargeable to tax. As indicated by us 'total income' speaks of the positive income as would be dealt with by the charging of section 5 of the Act. Section 5 has no scope to deal with the return of loss. 10. In the case of State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f that case it was held that the machinery section should be so construed as to effectuate the charging section. In the instant case before us, section 139 is a machinery provision which has to be construed so as to effectuate the provision of section 5 being the charging section. If the Rules cannot take away what was conferred by the Act more so Board's Circular cannot take away or whittle down the effect of the provision. 12. In our opinion, Circulars relied on by the ld. CIT(A) cannot be given effect to any case of this type presently before us. In a case where an assessee has filed a loss return and in view of section 139(10), such return would have to be ignored if the Board's Circular is to be carried out to its logical conclusion. But that is not the intendment of the Act and relevant provisions. If a loss returned is filed, the same would have to be processed as per the machinery provision prescribed and whether such loss if computed would be allowed to be carried forward depends on other consideration and other provisions of law as briefly stated by us elsewhere in this order. 13. Thus, having regard to the entire aspect of the matter and after appreciating the variou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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