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TMI Blog1983 (3) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act). The ITO issued notice under section 139(2) on 6-11-1970 (received by the assessee on 11-12-1970), but the return was not filed within the time prescribed under section 139(2). However, the assessee filed return of its income on 20-1-1973 declaring a loss of Rs. 27. On 26-2-1973, a sort of duplicate return was filed. It appears the two returns were filed before two different ITOs, because there was some doubt about the jurisdiction of the assessing officer. On 15-1-1974, the assessee filed another return purporting to be a revised return wherein it declared a profit of Rs. 306. The ITO issued notices both under sections 141(1) and 143(2) of the Act, and, here we are not concerned with the details of such notices. According to the ITO, the assessee did not comply with the requisitions issued by him and, therefore, the ITO proceeded to make an ex parte assessment under section 144 of the Act. In the absence of any other material, the ITO estimated the assessee's total income at Rs. 30,000. This is what the ITO stated in his order : "Having regard to the income receipts of this year at nearly Rs. 72,000 for this year, the past history and the fact that in the absence of B/S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to him, indicate that return under section 139(4) is equated with one under section 139(2). He further pointed out that section 143 speaks of section 139 without reference to any particular sub-section. According to Mr. Koolwal, section 274 also shows that a belated return under section 139(2) is same thing as one filed under section 139(4). Mr. Koolwal next contended that the assessee's case would be covered by the provisions of section 153(1)(b). According to him, provisions of section 271(1)(c) are clearly attracted in this case and at any rate Explanation thereto is attracted particularly in the background of the assessee's conduct in not furnishing details required by the ITO during the assessment proceedings. Secondly, stress was laid on clause (c) of sub-section (1) of section 153. He placed strong reliance on the decision of the Calcutta High Court in the case of Kumar Jagdish Chandra Sinha v. CIT [1982] 137 ITR 722 (Cal.). He invited our attention to the observations of their Lordships at pages 729 to 733. He has also relied on the ratio of the same High Court reported in Mst. Zulekha Begum (Khatoon) v. CIT [1981] 129 ITR 560. He brought to our notice the well-known de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to the provisions of section 139(4)(b)(iii), which specifies that the return cannot be filed beyond the period prescribed therein, whereas the provisions for filing the revised return are somewhat different. In this connection, he has also relied on the decisions of the High Courts in the matter of penalties where revised returns have been filed. Coming to clause (b), at the outset, Mr. Kothari argued that the facts of the case do not justify levy of penalty under section 271(1)(c) at all, as it was a case of mere estimate in the absence of details without any positive material. He has brought to our notice that on identical facts for the assessment year 1969-70, the Tribunal determined the income at nil and for the assessment year 1971-72, the AAC vide order dated 17-3-1978, cancelled the penalty levied by the ITO under section 271(1)(c). (No further appeal has been filed by the revenue). With regard to the Explanation to section 271(1)(c), initially Mr. Kothari argued that section 153(1)(b) does not mention of the Explanation, nor does the notice issued by the ITO mention the same and, therefore, Explanation cannot be invoked. Secondly, he raised a fundamental issue that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Smt. S. M. Muthukaruppi Achi [1977] 109 ITR 345 (Mad.). 8. Mr. Syali, counsel for another intervener, invited our attention to the provisions of section 139(4A) to bring home the point canvassed by his predecessor that whenever a return is treated as one filed under section 139(1) or (2), it is so specifically mentioned and, therefore, in the absence of similar language in section 139(4), it cannot be treated as a return under section 139(1) or (2). Mr. Syali referred to the decision of the Allahabad High Court in CIT v. Baldeoji Maharaj Trust [1982] 10 Taxman 269 and invited our attention to the observations in the decision of the Supreme Court in the case of Brij Mohan v. CIT [1979] 120 ITR 1. According to Mr. Syali, only one return can be filed under section 139(4) and he referred to the decision of the Calcutta High Court in Dhampur Sugar Mills Ltd.'s case, which has been relied on by the learned departmental representative. He also tried to make out some distinction between the return contemplated under section 139(4) and the one under section 139(5) with reference to the use of the article used before the word 'return'. Alternatively, he has pointed out that there may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essary for the ITO to issue any notice calling upon any person to file a return. Once the income exceeds taxable limit, it is the obligation of that person to file the return under section 139(1). Nevertheless the ITO is also empowered to issue notice under section 139(2) calling upon any person to file a return of income. In the case of sub-section (1) it is an obligation on the person whose income exceeds taxable limit while under sub-section (2) it is the obligation of every person who is called upon to file the return irrespective of the fact whether his income exceeds taxable limit or not. In both the cases the obligation is statutory obligation. If a person files a return either under sub-section (1) of section 139 or under sub-section (2) of section 139 in response to the notice issued by the ITO, the assessment proceedings will follow in the normal course. The question that arises is : Suppose a return is not filed under sub-section (1) or (2), can the assessee file a return beyond the period prescribed under either sub-section (1) or sub-section (2) of section 139. There may be statutory liabilities for not complying with the provisions of section 139(1) or (2). Apart from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er under section 139(1) or (2) (without getting extension of time) always maintained even if a return is filed under sub-section (4) of section 139. We are only trying to emphasise the point that the legislature maintained distinct categories of returns filed under each of the sub-sections of section 139, i.e., under section 139(1) or 139(2) and 139(4). Reference to section 144 by the learned departmental representative does not throw much light on the point sought to be canvassed by him. On the other hand, it again indicates that different categories of returns are contemplated under section 139. It does speak of returns under sub-section (4) and a revised return under sub-section (5). Now the only point to be considered is whether the return filed under section 139(4) can be treated as one under section 139(1) or (2) or that section 139(4) should be read as a proviso to section 139(1) or (2) as contended by Mr. Koolwal. We have already indicated by the analysis of the provisions of section 139 and the scheme of the Act, that it is not possible to construe the returns filed under section 139(4) as those filed under section 139(1) or (2) or that section 139(4) can be read as prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read as a proviso to section 22(1). It was only for the limited purpose of treating the loss return as a valid return which has to be processed by the ITO. It has nothing to do with the question that is posed in this appeal. As already pointed out the scheme of the 1922 Act is quite different. Similarly, the case of Dhampur Sugar Mills Ltd. considered an altogether different question as to whether an assessment could be made under the 1961 Act. We will revert back to this decision in considering a different aspect which has been argued. But so far as reliance on this decision by Mr. Koolwal is concerned, we do not find anything to support his stand. 12. Now we look to the decisions directly on the point as to whether a return under section 139(4) can at all be revised. The direct case in favour of the revenue is of the Calcutta High Court. The first one is reported in the case of Jagdish Chandra Sinha. The head-note reads : "The Income-tax Act contemplates the filing by the assessee of a correct and complete return. The law gives him a right to substitute and bring on record a correct and complete return if he discovers any omission or wrong statement in the return originally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention that section 153 prescribes different periods of limitation for completing the assessments. The relevant provisions of section 153 may be reproduced : "153(1). No order of assessment shall be made under section 143 or section 144 at any time after-- (a) the expiry of-- (i) four years from the end of the assessment year in which the income was first assessable, where such assessment year is an assessment year commencing on or before the 1st day of April, 1967 ; (ii) three years from the end of the assessment year in which the income was first assessable, where such assessment year is the assessment year commencing on the 1st day of April, 1968 ; (iii) two years from the end of the assessment year in which the income was first assessable, where such assessment year is an assessment year commencing on or after the 1st day of April, 1969 ; or (b) the expiry of eight years from the end of the assessment year in which the income was first assessable, in a case falling within clause (c) of sub-section (1) of section 271 ; or (c) the expiry of one year from the date of the filing of a return or a revised return under sub-section (4) or sub-section (5) of section 139, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of the Legislature is to permit the assessee to revise a return which he has already filed and the Legislature has just outlined in sub-section (4) one of the circumstances, in addition to those set out is sub-sections (1) and (2) in which the assessee could have filed a return. The reference to section 271(1)(a) does not help because that section deals with the delay in the filing of the return beyond the period contemplated by sections 139(1) or (2) and there can be no question of a delay under section 139(4). Section 139(3) (which permits the filing of a return of loss) and section 139(4A) (introduced subsequently) specifically provide that the returns filed under those sub-sections would attract all the provisions of the Act as if they were returns filed under sub-section (1) while sub-section (4) does not use any such language. It is, therefore, difficult to accept the argument that section 139(5) entitles an assessee to rectify or revise a return filed by him under sub-section (4) unless the return so filed can be fully equated to a return under sub-section (1) or sub-section (2). In principle also, we do not find any incongruity in the above construction. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revise a return filed under sub-section (4), we cannot intend such a provision therein by equating the return filed under sub-section (4) with a return filed under sub-section (1). Now, we can consider this question from yet another aspect and it is that different time-limit for completion of assessment have been provided in respect of cases where a return has been filed under sub-section (4) or a revised return has been filed under sub-section (5). Sub-section (5) does not provide for any separate category of return. It only gives a right to an assessee to revise the return filed under sub-section (1) or sub-section (2). When a revised return is filed the original return stands supplanted or withdrawn. In other words, if the original return is under sub-section (1) and a revised return is filed, then the revised return would be a return under sub-section (1) and so will be the position if the original return was under sub-section (2). In our opinion, therefore, the return provided for under sub-section (4) stands in a category different from those provided in sub-section (1) or sub-section (2) and such a return cannot be revised under sub-section (5) because that sub-section do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e returns filed under section 139(4) but subject to the limit prescribed under section 153 for completing the assessment. This view is fully supported by the observations of the Delhi High Court in Malhotra's case. Now take for instance this very case. The assessee could file another return under section 139(4) as long as the period for completing the assessment under section 153 is not completed. The other view may be that so far as the return under section 139(4) is concerned, there can be no subsequent return under section 139(4). To hold that there should not be any subsequent return under section 139(4) even within the period of limitation is not warranted by the scheme of the Act. If such a view is taken it will lead to practical difficulties. If an assessee, who has filed a return under section 139(4) finds an obvious mistake or omission which is not intended cannot correct it by filing another return under section 139(4) within the period prescribed. We do not think that the Legislature intended such a situation to arise. It is therefore proper to hold that successive returns under section 139(4) can be filed so long as they are ultimately within the prescribed time. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the ITO may get the benefit of extended period of limitation of 8 years, there must be clear finding and reasons for holding that the case attracts levy of penalty under section 271(1)(c). This is totally absent in this case. The period of limitation cannot be extended merely on the basis that a penalty might be levied. In the case of Ram Bilas Kedar Nath the Allahabad High Court had an occasion to consider a similar aspect under the 1922 Act. The Allahabad High Court at page 16 observed : ". . .The period of limitation cannot be extended at the sweet will and pleasure of the Income-tax Officer and the sword of Damocles cannot be kept hanging over the heads of assessees for all time to come, on the off-chance that some concealment or furnishing of inaccurate particulars might come to light at some distant future date." Almost to the same effect are the observations of the same High Court in the case of CIT v. Surajpal Singh [1977] 108 ITR 746. 15. In order that the extended period of limitation of 8 years is available to the ITO, the facts of the case must justify levy of penalty. The wording of section 153(1)(b) clearly shows that the case must fall under section 271(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eads us to the consideration of the facts of the case and whether section 271(1)(c) can be invoked to the facts of the case. 17. In our considered view the provisions of section 271(1)(c) are not attracted. The assessee filed a loss return and on the ground that there is no material or evidence on record, the income was estimated at Rs. 30,000. It is clear from a perusal of the assessment order that the estimate was made in the absence of any material. It does not indicate that there is any material to show that the estimated income is the assessee's income for the year and that the assessee concealed the same within the meaning of section 271(1)(c). Secondly, on identical facts the Tribunal determined the income at nil for the assessment year 1969-70 and therefore there was no question of penalty for that year. For the assessment year 1971-72 again on identical facts penalty was levied by the ITO under section 271(1)(c) but the same was cancelled by the AAC by his order dated 17-3-1978. The revenue has not filed further appeal before the Tribunal. Though technically the penalty proceedings have been initiated for the year under appeal, this is a clear case where no penalty can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the part of the assessee. The scope of the Explanation has been the subject-matter of innumerable decisions. Without going into catena of decisions on the point, we would like to refer to the two decisions of the Rajasthan High Court. The first one is reported in Smt. Chandralata Bahuji. In that case their Lordships approved the comment of the learned author Kanga and Palkhivala, Seventh Edition, Volume I at page 1212 to the following effect : ". . .There are two ways of approaching this question, both of which converge on the same conclusion : (a) As is established by the cases cited above, in order to justify the levy of a penalty two factors must co-exist : (i) there must be some materials or circumstances leading to the reasonable conclusion that the amount does represent the assessee's income, it being not enough for the purposes of penalty that the amount has been assessed as income ; and (ii) the circumstances must show that there was enimus, i.e. conscious concealment or conscious furnishing of inaccurate particulars on the part of the assessee. The Explanation has no bearing on (i), but it has a bearing only on (ii). The Explanation does not make the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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