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TMI Blog1982 (10) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier should be treated as a return in response to notice under section 148 of the Act. The ITO thereafter issued notice under section 143(2) of the Act and from the records it is seen that he went into the source of introduction of capital of each of the partners and eventually completed the assessment on a total income of Rs. 18,200. He gave credit for tax deducted at source of Rs. 2,922. This deduction of tax at source was made by various persons who paid amounts on account of contract work as enjoined by the provisions of section 194C of the Act. Eventually, the balance refundable was computed at Rs. 2,469 and refund voucher was also issued. The assessment order was dated 24-4-1979. Registration was also granted to the firm. 2. For the assessment year 1975-76, again, the return of income was filed on 2-1-1979. This return also carried the notation : 'Under section 139(1)'. The income shown was Rs. 14,600. For this year, Form No. 12 had been filed as early as 9-6-1975. For this assessment year, a valid return under section 139(4) had to be filed on or before 31-3-1978. For this year, the order-sheet contains the following noting dated 17-1-1979 : "Voluntary return of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of proceedings, the ITO had found that there was no loss of revenue, he should have dropped the proceedings under section 147 and he should not have proceeded to complete the assessment and thereby grant a refund to the assessee. In support of this view, the Commissioner referred to the decisions of the Bombay High Court in the cases of S. Inder Sing Gill v. CIT [1963] 47 ITR 284 and Kevaldas Ranchhodas v. CIT [1968] 68 ITR 842. The Commissioner then went on to elucidate how in his view, the assessments made were erroneous, by emphasising that the assessee could not claim refunds after the stipulated date when a return could have been voluntarily filed. Finally the Commissioner stated that even if on the ground of equity there was excess deduction of tax and hence a refund was due to the assessee, the only proper course would have been to apply to the Board for condonation of the delay in filing the returns and since this was not done, the assessee could not expect to get the refunds. He, therefore, cancelled the assessments and directed the ITO to recover the refunds already issued to the assessee. There was no action taken under section 263 in relation to the orders granting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal under this rule : Provided that the Tribunal shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of being heard on that ground." Normally, therefore, it would be open to the Tribunal, in deciding an appeal, even to render its decision with reference to a ground which the Tribunal itself may suo moto take up. The point still survives whether, when the appeal is against an order under section 263 passed by the Commissioner, the powers of the Tribunal in this regard get restricted in any manner. 8. In our view, the observations in the judgment of the Punjab and Haryana High Court in Jagadhri Electric, which is the only pronouncement of a High Court on the point, which are as under, provide a complete answer : "The jurisdiction vested in the Commissioner under section 263(1) of the Act is of special nature or, in other words, the Commissioner has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to proceed in the matter and, therefore, it is his satisfaction according to which he may pass necessary orders thereunder in accordance with law. If the grounds which were available to him at the time of the passing of the order do not find mention in his order appealed against, then it will be deemed that he rejected those grounds for the purpose of any action under section 263(1) of the Act. In this situation, the Tribunal while hearing an appeal filed by the assessee cannot substitute the grounds which the Commissioner himself did not think proper to form the basis of his order." Where the Commissioner exercise his powers of revision under section 263(1), the view of the Court is that it would not be open to the Tribunal to decide the appeal on any grounds other than those taken by the Commissioner himself. The Court has distinguished appeals from orders under section 263 from other appeals by stating that in this case no appeal is permitted to the revenue and the appeal is only permitted to the assessee and, further, if the Tribunal is permitted to decide the appeal on grounds other than those taken by the Commissioner, the Tribunal would be transgressing into the exclusiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to tax had escaped assessment. We are unable to agree with the broad proposition sought to be canvassed by the learned departmental representative that it should be construed that when there was adequate deduction of tax at source, there was no escapement from assessment of income chargeable to tax. Even if there has been excess deduction of tax at source, if the income was above the taxable limit, then the provisions of section 139 in unmistakable terms require a person to file his return of income and where such return has not been filed and consequently no assessment has been made, there would be escapement from assessment of income chargeable to tax. The provisions of section 271(3)(a) provide exemption from levy of penalty only in the case of those persons whose income did not exceed the maximum amount not chargeable to tax by Rs. 1,500 if they failed to furnish the return under section 139(1). When we go to the provisions dealing with prosecutions, we find that certain immunities are granted and the proviso to section 276CC of the Act reads as under : "Provided that a person shall not be proceeded against under this section for failure to furnish in due time the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to seek to be allowed credit in respect of some item which was over-assessed. The ratio of these decisions (except perhaps where the result is a loss computed or the figure of income is below taxable limit), in our view, does not have application to cases where an original assessment is being made for the first time by invoking the provisions of section 147. The right to the assessee to request for dropping of proceedings under section 147 as provided in section 152(2) is also confined to cases under section 147(b) where a reassessment is to be made. 12. The present is not a case where the assessee was making a claim for refund of tax while making an application under the provisions of section 239. We come to this conclusion because, for making a claim under that section, the application has to be made in Form No. 30 which should accompany the return of income and in the present case there is no application made in Form No. 30 in either of the assessment years and, therefore, there was no compliance with the requirements of rule 41. Apart from this, the superscription to each of the returns states it was filed under section 139. Therefore, factually, the returns which were filed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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