9911796707
TMI Blog1983 (10) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... from the ITO. The ITO issued a notice under s. 148 of the I.T. Act requiring the trustees to file a return for the assessment year 1962-63. The assessee filed a return on July 3, 1970, in compliance with the notice given under s. 148 declaring that the amount of Rs. 6,26,200 is a long-term capital gain. The Department accepted it and made the assessment on July 3, 1970, under s. 143(3) read with s.147. After receiving the assessment order, the assessee wrote on July 13, 1970, to the ITO that the return filed by the assessee along with refund application on April 2, 1964 was still pending and, hence, the proceedings initiated under s. 147 are invalid. The assessee also claimed that the assessment made pursuant to the notice made under s. 148 on July 3, 1970, was equally invalid. Then the ITO gave a reply to the trustee on July 16, 1970, stating that the return filed on April 2, 1964, was disposed of on November 10, 1965, by a note recorded by the ITO in his file. The assessee then filed an appeal before the AAC questioning the validity of the reassessment made on July 3, 1970. The AAC took the view that the ITO has not passed final orders and it was not disposed of. He, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 147 for the assessment year 1962-63 was quite valid and the AAC was not correct in cancelling the assessment. The judicial member, on the other hand, took the view that the return filed on April 2, 1964, was a valid return and the ITO has erred in ignoring it. According to him, s. 234 of the I.T. Act and rules 41(1) and 41(2) of the I.T. Rules deal with the claim for refund of tax paid in excess. Under s. 237, the assessee is entitled to grant of refund if the tax paid by the assessee exceeds the amount with which he is properly chargeable under the Act for that year. The ITO cannot pass such an order unless he is satisfied that the return was filed properly and assessment was correctly made and if a return was not filed, the assessee should be required to furnish a return before the refund is granted to him in order to enable the ITO to reach satisfaction, that where a refund claim is filed under s. 237 read with rule 41(2) accompanied by a return in the form prescribed under s. 139, the ITO is bound under law to take cognizance of such a return and has to finalise the assessment on the basis of the same and the learned judicial member, therefore, held that the return filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r s. 139 of the I.T. Act, but he filed an application for refund under s. 237 of the Act on April 2, 1964, for the assessment year 1962-63 claiming refund. Accompanying the refund application, a return disclosing nil income for that year was filed. The assessee was not previously assessed to income-tax and, hence, nil income was stated in the return. The learned standing counsel for the Revenue contends that the return filed along with the refund application cannot be treated to be a return that can be filed under s. 139 of the Act and, hence, a valid return was not filed on April 2, 1964. Sri Y. V. Anjaneyulu, the learned counsel for the assessee, on the other hand, contends that since sub-rule (2) of rule 41 of the Rules requires filing of a return in the form prescribed under s. 139, the return filed along with the refund application should be treated to be the same as one required to be filed under s. 139 of the Act. It is true that the return filed along with the refund application under sub-rule (1) of rule 41 of the Rules is for the purpose of refund, but that does not make any difference between a return filed under s. 139(1) or (2) of the Act and a return filed un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Rules along with a refund application. The ITO is, therefore, bound under the law to take cognizance of such a return and has to finalise the assessment on the basis of the particulars given in the said return. The return filed under sub-rule (2) of rule 41 is, therefore, a valid return. Sri M. Suryanarayana Murthy, the learned standing counsel for the Revenue, relies upon the observations made by Balakrishna Ayyar J. in Udaya Ltd. v. CIT [1959] 36 ITR 469 (Mad) [FB], in support of his contention that the return filed under s. 237 read with sub-rule (2) of rule 41 cannot be treated as a return filed under s. 139(1) or (2). The assessee in that case derived income from three sources, viz., interest on securities, dividends and business. During the years 1948-49 and 1949-50, its losses in business far exceeded its income from the other two sources. During the year 1950-5 1, the company derived a net aggregate income of Rs. 13,611. In March, 1951 the assessee submitted for the first time its returns of income for three years, showing losses for the years 1948-49 and 1949-50, and in November, 1951, submitted a fourth return showing income for 1951-52. The ITO accepted the returns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... krishna Ayyar J., show that the scrutiny of the ITO is limited to the extent necessary to determine what the tax properly chargeable on the assessee is in respect of the return filed along with the refund application. Thus it is clear that for determining the assessment in the case of a return filed under s. 139, the ITO may follow the procedure prescribed under s. 142 or under s. 143, as the case may be, and in the case of refund, the ITO may scrutinise the return to the extent necessary to determine what the tax properly chargeable on the assessee is. While determining so, he need not follow the procedure prescribed under s. 142 or under s. 143, but can determine what the tax properly chargeable on the assessee is on the basis of the material furnished in the return. But because of this difference in the procedure to be followed for determining the assessment under s. 139 or for determining what the tax properly chargeable on the assessee is for the purpose of refund of the excess paid by the assessee, the return filed under sub-rule (2) of rule 41 cannot be said to be invalid. Hence, the contention of the learned standing counsel for the Revenue cannot be accepted. We have, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judicial member, on the other hand, did not treat it as an order of disposal. The Vice-President on reference also agreed with the judicial member and did not treat it as an order of disposal and, hence, they held that the reassessment proceedings are barred. A careful reading of the order (note) clearly shows that it is a complete order which amounts to a final order disposing of the refund application. Whether it is a correct order or not, we need not examine. But the question is whether it is an order terminating the assessment proceedings or not. The answer is that it is an order terminating the assessment proceedings. The first part of the order gives reasons and the second part of the order clearly speaks of the conclusion when it reads as follows : " Hence no credit for tax deducted at source is to be allowed here. We, therefore, hold that the order dated November 10, 1965, on the note (sheet) is an order of disposal. Having regard to the above discussion, we hold that the return filed by the assessee on April 2, 1964, along with the refund application was one filed under s. 139 of the I.T. Act and it is, therefore, valid. As the refund application was disposed of by ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
