9911796707
TMI Blog1980 (12) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, it filed a revised return admitting an income of Rs. 27,900. The assessment was completed on September 22, 1969. In the appeal filed by the assessee before the AAC, it was contended that the return filed on December 14, 1964, having been filed beyond the time permitted under s. 139(2), it could only be treated as a return under s. 139(4), that the second return filed on October 5, 1968, could not be considered as a return under s. 139(5) since s. 139(5) is applicable only when the original return was filed within the time allowed under s. 139(1) or s. 139(2) and that the assessment made on September 22, 1969, was, therefore, barred by limitation tinder ss. 153(1)(a) and 153(l)(b). The AAC did not accept these submissions and, on further appeal, the Tribunal held that the return filed on December 14, 1964, could only be treated as belated return under s. 139(1) or s. 139(2), that the revised return filed on October 5, 1968, furnished a starting point of limitation and that the assessment is required to be completed only within a period of one year from the revised return and was, therefore, valid. Thus, the assessee having failed before the Tribunal, the matter has been brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n at any time before the assessment is made It is now necessary only to refer to s. 153(1), which provides the time limits for making assessments, which runs as follows: " No order of assessment shall be made under section 143 or section 144 at any time, after (a) the expiry of four years from the end of the assessment year in which the income was first assessable; 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 subsection (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 subsection (5) of section 139, whichever is latest. " The contention of Mr. Srinivasan (Bangalore Bar) for the assessee was that the return filed on December 14, 1964, being itself a belated return could only be treated as a return under s. 139(4) and that the subsequent return filed on October 5, 1968, could not revise such a return, as a revised return is contemplated only in cases where a return is filed under subs. (1) or sub-s. (2) of s. 139. In other words, his point was that the return filed under s. 139(4) canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , thereby emphasising that these are the only categories in which s. 139 is addressed. Even where the errant assessee avails himself of this provision, how or in what form the return has to be furnished has to be gathered only from sub-s. (1) or subs. (2), as the case may be. Sub-s. (4) is not an independent provision by itself and cannot be taken to have any existence separate from sub-ss. (1) and (2). Thus, the form in which the return is to be filed and the prescribed particulars have all to be ascertained only from sub-s. (1) and subs. (2). It is not, therefore, possible to accept the contention that a return under sub-s. (4) falls into a separate category. In this view, it would follow as a consequence that sub-s. (5) of s. 139 would enable an assessee to furnish a revised return if he discovered any omission or any wrong statement in the return filed under sub-s. (1) or sub-s. (2), as the case may be, read with sub-s. (4). In CIT v. Kulu Valley Transport Cu. P. Ltd. [1970] 77 ITR 518 (SC), to be referred to in more detail later, the Supreme Court construed s. 22(3) of the 1922 Act corresponding to s. 139(4) of the 1961 Act to be in the nature of a proviso to s. 22(1) or s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en before the ITO started investigation of the first return on the question of the bogus character of certain transactions, there was no question of concealment of income and for that purpose, relied on decision of this court in CIT v. Ramdas Pharmacy [1970] 77 ITR 276 (Mad). The question before this court in CIT v. Subramania Chettiar [1977] 110 ITR 602 was thus whether the assessee was liable to be penalised for concealment despite the return filed under s. 139(5) not appearing from such a charge. It was pointed out, that s. 139(5) would apply only to those cases where, out of an inadvertent omission or unintended wrong statement, error had crept in the return filed by the assessee. If the assessee had filed a return originally with figures which could not be traced to inadvertence or bona fides, then s. 139(5) could not apply, as that provision would apply only to a case of omission or wrong statement and not to a case of concealment or false statement. This decision did not have to consider the question that is now before us of the legal character of the returns under ss. 139(4) and 139(5). At any rate there is nothing in this case which supports the assessee here. Reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file the return in time could be levied. The assessee claimed that by reason of the return having been filed under s. 139(4) before the assessment, the ITO had no jurisdiction to levy penalty. It was held that the return under s. 139(4) did not set at naught the jurisdiction to levy penalty. It was pointed out that return under s. 139(4) was a permissive return in the sense that the statute permitted the furnishing of such a return beyond the time prescribed under s. 139(1) and that the question whether the delay in filing such return was liable to be penalised had to be adjudicated upon under the independent provision of s. 271 and that this jurisdiction was not lost merely because the statute permitted the acceptance of a return beyond the prescribed time-limit subject to its being filed before the assessment. The attempt of the learned counsel for the assessee was to show that in the said case, the return under s. 139(4) was not treated as a return under s. 139(1). We do not consider that the learned counsel is justified in reading this decision in this manner. The scope of enquiry in that case was whether by reason of the return having been filed before the assessment under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e do not think it necessary to go through them over again here. For the reasons stated therein, we answer the question referred in the present case in the negative and in favour of the Revenue. There will be no order as to costs. T.C. No. 291 of 1975 : SETHURAMAN J.-In this reference under s. 256(1) of the I.T. Act, 1961, the following question has been referred: " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessment made on October 8, 1969, for the assessment year 1964-65 is not barred by limitation ?" The assessee filed a return on February 3, 1965, for the assessment year 1964-65 and thereafter filed a revised return on March 20, 1969. The assessment was completed on October 8, 1969. The assessee contended without success before the AAC and the Tribunal that the said assessment was barred by limitation. The Tribunal has referred the question set out above at the instance of the aggrieved assessee. In disposing of the appeal, the Tribunal followed its earlier order in I.T.A. No. 586/MDS/1971-72 and this order is the subject-matter of reference in Nanjappa Textiles v. CIT (T.C. No. 230 of 1975). Thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn under s. 139(5). The statutory scheme is, therefore, to calculate a four year period from the end of the assessment year, an eight year period from the end of the assessment year and a one year period from the date of the return under s. 139(4) or a revised return under s. 139(5) of the Act and then institute a comparison between the workings under the three different sets of computation and after comparison find out which yields the date which expires last. That date provides the bar of limitation for making an assessment. The assessee in the present case is a registered partnership firm carrying on business in art silk yarn. The ITO served a notice on the assessee-firm under s. 139(2) of the I.T. Act calling upon the assessee to file return on or before August 19, 1964. The assessee did not file the return within that time; nor did the assessee apply to the ITO for extension of time. Instead, the assessee filed a belated return on December 14, 1964. In that return, the assessee admitted an income of Rs. 26,593. Nearly four years thereafter, the assessee filed a revised return in which it offered for assessment a further sum of Rs. 1,307. The ITO, however, did not accept the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is that return can properly be regarded as having been furnished under s. 139(2) only where it is filed within the time allowed under s. 139(2). In the present case, it was pointed out that the due date for filing the return under s. 139(2) expired by August 19, 1964, and the assessee-firm did not obtain any extension of time but merely filed the return of income on December 14, 1964. This return, which was filed belatedly and beyond the time allowed under s. 139(2), could not be regarded as a return furnished under s. 139(2) of the Act. If the return is not filed under s. 139(2), then any revision thereof cannot render the subsequent return a revised return within the meaning of s. 139(2) because a revised return is a revised return only where an assessee has filed earlier a return under s. 139(2) of the Act. The argument of the assessee in this case involves a double self-stultification. In the first place, the assessee had repudiated its original return and characterised it as not being a return under s. 139(2) although it was filed in response to a notice under s. 139(2). Secondly, the assessee while it had filed a revised return on October 5, 1968, in supersession of its e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded as returns filed s. 139(2). Any return filed beyond that time-limit but in accordance with the provisions of s. 139(4) cannot be regarded as a return filed under s. 139(2) but must be regarded as a return falling under a separate category, namely, return filed under s. 139(4). This proposition cannot be accepted on a consideration of the scheme of the Act. In CIT v. Ranchoddas Karsondas [1959] 36 ITR 569 (SC), a case arising under the Indian I.T. Act, 1922, the question was whether a voluntary return filed by an assessee belatedly, that is to say, beyond the time specified in the general notice issued by the government under s. 22(1) of the Act, can be regarded as a valid return. It was held that while no return was filed by the assessee in that case within time, yet the return filed by the assessee was before the assessment and such a return could be filed under s. 22(3) of the Act. In that case, the return filed by the assessee was of income below the taxable limit. But the Supreme Court held that it was nevertheless a valid return. Two questions were argued before the Supreme Court in that case-one was whether the return was a valid return even though the person who filed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed under s. 22(2A) having regard to the provisions of s. 22(3) of the Act. In State of Assam v. Deva Prasad Barua [1970] 75 ITR 18, the Supreme Court bad to deal with a voluntary return filed by an assessee under the Assam Agricultural Income-tax Act, 1939. Section 19 of the Act was almost on the same terms as s. 22 of the Act of 1922. Section 19(1) provides for a general notice calling upon the assessees having agricultural income above the exemption limit to file a return within thirty days of the notice. Section 19(2) provides for the ITO serving individual notices on the assessees calling upon them to furnish their returns of income. Section 19(3) provided that if any person had not furnished a return within the time allowed by or under s. 19(1) or s. 19(2), he may furnish a return at any time before the assessment is made. Section 19(3) made it clear that where an assessee furnishes a return at any time before the assessment is made, any return so made shall be deemed to be made in due time under this section. On a construction of the provisions of s. 19(3) and also following their previous decision in CIT v. Ranchhoddas Karsondas [1959] 36 ITR 569, the Supreme Court held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or s. 139(2). I am unable to agree with this submission. As pointed out by the Supreme Court in CIT v. Ranchhoddas Karsondas [1959] 36 ITR 569, what s. 23(1) and s. 23(2) did was to impose a time-limit for filing the return. But s. 22(3) gave to an assessee a locus penetentiae within which to file return even though the time fixed under a general notice under s. 22(1) or an individual notice under s. 22(2) had expired. The courts have thus regarded the provision of s. 22(3) not as a provision revolving on an axis of its own but merely as an appendage to the provisions of s. 22(1) and s. 22(2). In other words, while a period is fixed by the statute itself for return to be filed under s. 139(1), the period can be extended on application to the ITO and likewise while a period is fixed by the notice under s. 139(2) which on application can be extended by the officer on sufficient cause being shown, s. 139(4) provides for a further extension of the period under force of the statute. In this view, the filing of a return under s. 139(4) must be regarded as the filing of a return under s. 139(1), or, as the case may be, under s. 139(2) of the Act. It may be observed that the provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... December 14, 1964, although belated, must be regarded as return filed under s. 139(2) of the Act, then the subsequent revised return dated October 5, 1968, must necessarily be regarded as a revised return filed under s. 139(5) of the Act. If a comparison is made between the four year period from the end of the assessment year 1964-65, and the one year period from the date of filing the revised return, then the one year period must be regarded as the one which expires later. That period expired only after the assessment was made in the present case, namely, September 22, 1969. Hence, on a comparison between the two, it must be regarded as later in point of time on the basis of which the assessment must be upheld as within time. The Tribunal in its order had observed in the present case that a comparison of the periods set out in cl. (a), cl. (b) and cl. (c) of s. 153(1) of the Act yielded the result that the period under cl. (c) alone gave the latest point of expiry. The Tribunal was not justified in making this observation because the Tribunal had not really gone into the question of the applicability of the fact situation bearing on the application of s. 153(1)(b) of the Act on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn filed under s. 139(4) of the Act. The assessee's case all along had been that his revised return should not be taken note of for one reason or the other. But it has always stood by its earlier return dated December 14, 1964. It stood by the validity of that return as the return properly filed under s. 139(4) of the Act and all it said was it was not a return under s. 139(2) but it never cared to deny that it was not the return under s. 139(4) of the Act. If so much is granted, namely, if the return dated December 14, 1964, is a return under s. 139(4), but that return was proved to be false by the assessee's own subsequent so-called revised return dated October 5, 1968, then the necessary ingredients for the application of s. 153(1)(b) would be present in this case. It is in view of this fact that while doing the assessment, the ITO has clearly mentioned that he was taking separate action for levy of penalty for concealment of income under s. 271(1)(c) of the Act. It is now well settled and that is the law laid down by a Division Bench in CIT v. Subramania Chettiar [1977] 110 ITR 602, that the mere filing of a revised return will not absolve an assessee of liability to penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing consequential to the fate of the concerned assessments. In almost all cases, penalty follows the assessment. In these circumstances, to say that the question of time limit for making an assessment would depend upon the actual levy of penalty would be a topsy turvy way of understanding the whole scheme of the I.T. Act. It would place a court of construction in an impossible situation if we were to accept the argument of learned counsel which may be reduced to this proposition. We cannot say whether the extended time limit of eight years would apply unless there is actual levy of penalty for concealment and we cannot levy a penalty for concealment until the assessment is completed. The result of this argument would take us moving on the surface without any sense of direction. As has been observed by Division Bench to which we have referred, all that s. 153(1)(b) requires is that the assessment in question must involve a case of concealment of income under s. 271(1)(c) of the Act, and that what the provision contemplates is that the assessment must involve a case of penalty. If this is present, it is unnecessary to project our mind further and find out if subsequent to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t cut to the conclusion which both 1 and my colleague had arrived at on the other question, namely, whether the revised return filed by the assessee in this case is a revised return within the meaning of ss. 139(5) and 153(1)(c) of the Act. For all the above reasons, I concur with the answer rendered by my learned brother on the question of law, namely, that the assessment is not barred by limitation. I also agree with my learned brother's direction as to costs. T. C. No. 253 of 1975: The question of law for our consideration in the present case is as follows: " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessment made on September 22, 1969, for the assessment year 1964-65 is not barred by limitation ?" The above question of law differs in language from the question of law found in T.C. No. 230 of 1975 which we have disposed of by our separate judgments earlier today. The difference in language, however, does not make for any difference in treatment. I and my colleague have considered a similar question, viz., whether a belated return filed under s. 139(4) can be regarded as a return under s. 139(2) so as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of his shares from the two firms for the assessment year 1964-65 under the provisions of s. 143 of the I.T. Act, 1961. In the connected tax cases of the two firms in which the assessee is a partner, namely, T.C. Nos. 230 of 1975 and 253 of 1975, we have held that the assessments made on those firms on September 22, 1969, for the assessment year 1964-65 were not barred by limitation. A similar argument was addressed in the case of the present assessee for the assessment made on him individually for the same assessment year. The facts in the assessee's case are almost similar to those in the two assessments of the two firms for the same assessment year. In this assessee's case, the ITO issued a notice under s. 139(2) of the Act calling for a return from the assessee. The assessee did not file the return within time but filed it belatedly on February 3, 1965. Subsequently, on March 20, 1969, he filed revised return. The ITO did not accept either the original return or even the enhanced figure of income offered in the revised return but adopted the same income from the partnership as assessed in the two registered firms in which the assessee was a partner. The assessment order passed b ..... 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