TMI Blog2000 (6) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... and even on receipt basis the same cannot be taxed during the period under assessment. 4. That the learned Assessing Officer as well as learned CIT(Appeals) have also failed to appreciate that the lands under reference are agriculture lands and do not come within the definition of the term "capital asset" as defined under section 2(14) of the Income-tax Act, 1961. The learned ITAT, Delhi Bench 'A' has clearly held on the similar facts in the case of ITO v. Surjan Singh in ITD volume 3 page 438, that the lands in question are agriculture lands and do not come within definition of the term of the capital assets. 5. That the learned Assessing Officer, as well as learned CIT(Appeals) have erred while treating the entire additional compensation as capital gain in spite of the fact that even otherwise the additional compensation awarded does not result in gain to the assessee. 6. That alternatively the amount of alleged capital gain if any cannot be taxed during the period under assessment as the same was received on17-5-1993. 7. That the entire assessment order as well as order of ld. CIT(A) are wrong, arbitrary, illegal, unjust, against the facts as well as against the law." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C). 2. Jute Corpn. of India Ltd. v. CIT [1990] 53 Taxman 85 /[1991] 187 ITR 688 (SC). 3. Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 (SC). 4. CIT v. Ram Sanehi Gian Chand [1972] 86 ITR 724 (Punj. Har.). 5. CIT v. Mohd Ayyub Sons Agency [1992] 197 ITR 637 (All.). 3. Copy of this application under rule 11 was given to the department and DR was heard on admission of additional grounds of appeal raised by the assessee during the course of hearing. Since these grounds are found to be legal grounds and go to the root of the matter as they raised the question of assessment in law and no further investigation to the facts was necessary to adjudicate upon them. So keeping in view the nature of grounds raised as additional grounds and case law as relied upon by the assessee in the said application, we are of the considered opinion that these grounds should be allowed to be raised and as such alleged and would form part of grounds in memorandum of appeal. 4. We first take up ground Nos. 1 2 of additional ground which relate to challenge by the assessee about order of assessment as bad in law as it has been passed in pursuance of notice under section 143(2) which was serve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther appeal was filed before the Tribunal. Assessee's counsel took legal plea before us that first notice in this case under section 143(2) was issued to the assessee on26-9-1995and this notice was beyond the period of 12 months from the end of the month of August, 1994 when original return was filed by the assessee. Return filed on31-8-1994was a belated return as due date for filing the return for the assessment year under consideration being30-6-1993. As it was a belated return under section 139(4), it was incapable of being revised under section 139(5) as per the ratio of the judgment of the Hon'ble Supreme Court in the case of Kumar Jagdish Chandra Sinha v. CIT [1996] 220 ITR 67/86 Taxman 122. The return filed on16-3-1995was, thus, a nullity in the eye of law and the period of limitation prescribed in the proviso to sub-section (2) of section 143 could not be counted therefrom. As per this proviso, no notice under section 143(2) "shall be served on the assessee after the expiry of 12 months from the end of the month in which the return is furnished." The said notice having been served on the assessee on26-9-1995, was beyond the period of 12 months, and was thus, invalid in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference to provisions of section 159 of Income-tax Act, 1961. The interpretations of provisions of section 143(2) as in force w.e.f.1-4-1989, was not the issue before their Lordships. There was no built in limitation under section 143(2) prior to1-4-1989. This has been introduced by the Legislature for the first time w.e.f.1-4-1989. The introduction of limitation and this right cannot be violated except as provided by law. It is a substantive right. Any other order passed in its violation on will be 'void' and not 'irregular'. Assessee relied upon Supreme Court judgment in this regard in the case of J.P. Jaini, ITO v. Induprasad Devshanker Bhatt [1969] 72 ITR 595. It was prayed that assessment in question deserves to be quashed. 9. Besides these legal objections and pleas, it was pleaded that assessment in question is bad in law for non-joinder of all the legal heirs. There are 3 legal heirs to the deceased Shri Bhika Ram, namely, his sons, Bhagat Singh and Virender Singh and his daughter Smt. Om Biri Devi. Smt. Om Biri Devi has not been joined as a legal representative. The assessment is therefore, irregular and deserves to be set aside in view of the law laid down by the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which the return is filed, could the return subsequently filed on 16-3-1995 be taken and treated as revised return as per section 139(5) of the Income-tax Act, when original return filed is belated return, because revised return substitutes, the original return and time period of 12 months could only be counted from the date of filing of revised return if legally a belated return could be revised. For this we would refer to sections 139(1), 13 9(4) and 13 9(5) which read as under :--- "139(1) : Every person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed: Provided that a person, not furnishing return under this sub-section and residing in such area as may be specified by the Board in this behalf by a notification in the Official Gazette, and who at any time during the previous y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support from the ratio of the judgment as laid down in the case of Kumar Jagdish Chandra Sinha wherein the Hon'ble Supreme Court has held as under :--- "For the years 1964-65 and 1965-66, the assessee did not file his returns within the period prescribed by sub-section (1) of section 139 of the Income-tax Act, 1961. No notice under sub-section (2) of section 139 was also issued to him. The assessee filed returns for both the assessment years under sub-section (4) of section 139. The assessee thereafter filed revised returns for the two assessment years, onJanuary 18, 1969andJuly 17, 1969, respectively, declaring the total income at figures lower than those declared in the original returns. The ITO, by orders dated January 15, 1990 and July 6, 1990, respectively, completed the assessments for the two assessment years in question, and also initiated penalty proceedings under section 271(1)(c) of the Income-tax Act. The High Court, on a reference, held that even in the case of a return filed under section (4) of section139, arevised return was permissible, and that, therefore, the assessment orders in question must be deemed to have been made within the period of limitation of one y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn onMarch 30, 1965, disclosing an income of Rs. 1,720. OnMarch 28, 1966, he filed a revised return declaring an income of Rs. 4,295. The ITO made an assessment treating the revised return filed on March 28, 1966, as invalid in law as the return filed on March 30, 1965, had not been filed either under sub-section (1) or under sub-section (2) of section 139 of the Income tax Act, 1961. On appeal, the assessee claimed that the return filed on March, 28, 1966, was a valid return and also raised other grounds on the merits of the assessment. The AAC held that the revised return was a valid return under section 22(3) of the 1922 Act and set aside the assessment and directed the ITO to complete the assessment afresh taking note of the revised return. The assessee preferred a further appeal contending that the AAC ought to have annulled the assessment and not set it aside for being redone. The Tribunal held that in view of section 297(2)(b) of the 1961 Act, the assessment had to be completed under the 1961 Act and the return dated March 30,1965, had been correctly treated as a return filed under section 139(4) and the subsequent return could not be treated as a revised return under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid and as such quashed. Since the assessment order is being quashed on legal grounds, other grounds are not being adjudicated upon. As a result, appeal of the assessee gets accepted and assessment order as well as the order of CIT(A) get quashed. Per Nathu Ram, A.M. --- I. have gone through the order proposed by Brother Judicial Member and on having considered all relevant facts and the decisions relied upon I have not been able to persuade myself to agree with the conclusion reached in the proposed order, cancelling the assessment made. 2. For proper appreciation of the controversy involved I recapitulate the relevant facts in brief : 2.1 The assessment relates to the year 1993-94. The assessee was required to file a return on or before31st August, 1993as per provisions of section 139(1) of the Income-tax Act. The assessee failed to file the return within the stipulated period. The Assessing Officer had also not issued any notice under sub-section (1) of section 142 of the Income-tax Act requiring the assessee to file the return. The assessee, however, suo motu filed a return declaring income of Rs. 84,821 on31st August, 1994. The return so filed is obviously under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome to know that such person had taxable income and the return as required has not been filed, would issue a notice under section 142(1) of the Income-tax Act requiring him to file a return of income within the stipulated period. Where no such notice is issued to the assessee having taxable income for filing a return, the assessee could suo motu furnish a return of income for the relevant year at any time before the expiry of one year from the end of the assessment year or before the completion of assessment whichever is earlier as per provisions of sub-section (4) of section 139 of the Income-tax Act, sub-section (5) of section 139 provides that if any person having furnished the return under section (1) or in pursuance of a notice issued under section 142(1) discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. But there is no corresponding provision for revising the return filed under section 139(4) of the Income-tax Act. 3.1 Section 153 provides time limit for completion of assessments and rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n subsequently filed was invalid. 3.4 We also find that as per proviso to section 143(2) no notice under that section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished. In the present case the second return was filed on16th March, 1995and notice under section 143(2) was issued on26th September, 1995. The notice under section 143(2) was thus issued within the requisite time with reference to the second return. The assessment made on29th March, 1996was also within the period of two years from the end of the assessment year and so far as the time limit provided in section 153(1) of the Income-tax Act is concerned the assessment made was within the time prescribed. 3.5 According to the assessee the time limitation for issue of notice under section 143(2) should have been reckoned from the date of filing of the first return under section 139(4) on 31st August, 1994 and the notice having been issued under section 143(2) beyond the period of one year from the date of filing of the original return it was not valid and the assessment made on issue of such notice under section 143(2) is without jurisdiction. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, 1990for the assessment year 1965-66. The Hon'ble Calcutta High Court in its judgment reported in Kumar Jagdish Chandra Sinha v. CIT [1982] 137 ITR 722 held the view that even in the case of a return filed under section 139(4) a revised return was permissible and that therefore the assessment orders passed must be deemed to have been made within the period of limitation of one year from the date of the revised return as provided in the then section 153(1)(c) which was pari materia with sub-clause (b) of sub-section (1) of section 153. The Hon'ble Supreme Court held allowing the appeal of the assessee that no revised return can be filed under sub-section (5) of section139 ina case where the return is filed under section 139(4) and once this is so the revised returns filed by the assessee for both the assessment years were invalid in law and could not have been treated and acted upon as revised returns as contemplated by section 139(5). Consequently provisions of section 153(1)(c) was not attracted. The Hon'ble Supreme Court in the aforecited case approved the decisions in the following cases : (i) O.P. Malhotra's case. In this case the assessee filed a return on30th March, 1965 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period for making the assessment beyond two years from the end of the assessment year involved. The assessment made was thus beyond time. The Hon'ble High Court held the view that the revised return being an invalid return cannot extend the period of limitation for completing the assessment. (iii) Vimal Chand v. CIT [1985] 155 ITR 593/23 Taxman 236 (Raj.) In this case the assessee filed a return on11th March, 1974declaring an income of Rs. 34,560 for the assessment year 1971-72 under section 139(4) of the Income-tax Act. The Hon'ble High Court held that extended time limit of one year under section 153(1)(c) for completing the assessment will not be available in respect of a revised return purported to have been filed under section 139(5) where originally the return was filed under section 139(4). (iv) Eapen Joseph v. CIT[1987] 168 ITR 26/35 Taxman 213 (Ker.) In this case the assessee filed a return on10th May, 1974for the assessment year 1972-73 under section 139(4). The assessee filed a revised return on11th March, 1975and the assessment was completed on6th March, 1976. The Hon'ble High Court held that return under section 139(4) having been filed on 10th May, 1974 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of the case the notice issued under section 143(2) based on the second return is valid and assessment made in consequence thereof is in conformity with law ?" Questions as framed by the ld. J.M.: "Whether, in view of facts and circumstances of the case:--- (a) second return filed as revised return subsequent to original belated return could still be treated as return under section 139(4) of the Income-tax Act and the same can be acted upon ? (b) notice could be issued under section 143(2) within time period allowed on the basis of such revised return and assessment completed thereafter on the basis of said notice could be held to be valid assessment ? 2. I have heard the rival submissions in the light of material placed before me and precedents relied upon. Admittedly, the assessee filed belated return. Original return was filed on31-8-1994. In this return the assessee declared an income of Rs. 84,821. On16-3-1995the assessee filed revised return. In this return the assessee declared the income of Rs. 2,20,116. Even in the assessment order, the Assessing Officer referred this return as 'Revised Return". 3. Shri Abhay Tayal, learned Departmental Representative vehe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.R. Bhargava's case ; Vimal Chand's case and Eapen Joseph's case . This decision of theApex Courtwas followed in the case of Suram Chand Ralhan v. CIT [1997] 226 ITR 927 (Delhi) and in CIT v. Smt. Jyoti Dhillon [1998] 231 ITR 102 (Punj. Har.). 6. Adverting to the facts of the present case, I find that the assessee filed the return under section 139(4). Subsequently, he did not file corrected return, but a revised return. The fact of filing the revised return was admitted by the Assessing Officer in the assessment order. As such, the case of the assessee is squarely covered by the decision of theApex Courtrendered in the case of Kumar Jagdish Chandra Sinha. Respectfully following the decision of the Hon'ble Supreme Court, I am inclined to agree with the view taken by the learned Judicial Member, on this point. 7. Once it is decided that the return dated16-3-1995filed by the assessee was a non est return, the next question in regard to the issuance of notice under section 143(2) becomes insignificant. However, I am inclined to agree on this aspect with the view taken by the learned Judicial Member. In the ultimate analysis, I uphold the view taken by the learned Judicial Membe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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