TMI Blog1998 (9) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed under proviso to section 143(2) of the I. T. Act, 1961 would have to be considered from3-1-1992ignoring the return filed on30-3-1990. 2. That the ld. CIT(A) erred in agreeing with the ld. Assessing Officer that the transactions recorded in document No. 10 seized on17-1-1989pertained to the assessee firm and not to Sh. Chander Prakash and thus advising an addition of Rs. 5,240 in the Income of the assessee firm in this regard. 3. That the ld. CIT(A) erred in not adjudicating upon the issue of disclosure of Rs. 50,000 made under section 132(4) read with Expln. 5 to section 271(1)(c) of the I.T. Act, 1961 and rejecting and dismissing ground No. 7 taken by the assessee against not taking cognizance of disclosure of Rs. 50,000 made by the assessee during the course of search and seizure proceedings. The ld. CIT(A) erred in holding that the acceptance of disclosure is an administrative matter and therefore not taking into consideration in the appellate proceedings." 3. We shall first take up assessee's cross objection. The first ground of cross objection relates to challenge regarding dismissing ground No. 1 of assessee's appeal by holding that the order of Assessing Officer i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter and since return of income was filed on 30-3-1990, at the most notice under section 143(2) could be issued in this case, as per relevant provisions as applicable at the relevant time up to 30-9-1990 and not later than that and in this case though earlier two notices issued on 30-3-1990 and 29-8-1990 were stated to be issued but the same were not validly served because these two notices were stated to have been served on one Shri Harish Chander, son of Smt. Om Wati, partner who was not authorised to receive notices and moreover it was argued before the first appellate authority that this was a case of firm and valid service of notice could only be either on Smt. Om Wati or Shri Mahinder Goel and ld. CIT(A) while considering this aspect has opined that valid service of notice can be regarded only if the notices have been served on the partners or persons authorised by the partners through Power of Attorney to receive notice etc. on their behalf and it was further observed that notices issued on 30-3-1990 and 29-8-1990 under section 143(2) cannot be regarded as proper notices as they have been issued in consonance of an incomplete defective return. Thus it was observed that sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances and clear position of law as discussed by the ld. CIT(A) in the impugned order his action deserves to be confirmed. 9. To counter these arguments of the ld. DR assessee's counsel submitted that since asstt. has been made on the basis of return filed on30-3-1990for one action the time period cannot be reckoned from the date when defects were removed and for other action return filed is to be considered. It was also submitted that in no circumstances date of filing of return could be taken as having been filed when profit and loss account and balance sheet were filed. To support all these contentions as raised by assessee's counsel reliance was placed on CIT v. Bharat Refineries Ltd. [1986] 162 ITR 652 / 26 Taxman 255 (Cal.), Smt. Sova Sarkar v. ITO [1983] 139 ITR 386 (Cal.), Mohindra Mohan Sirkar v. ITO [1978] 112 ITR 47 (Cal.), CIT v. Garia Industries (P.) Ltd. [1983] 140 ITR 636 / 12 Taxman 84 (Cal.) and Circular No. 281, dated 22-8-1980 reported in 131 ITR (Statute) 29 at page 31 and it was pleaded that since no valid notice was issued within the time limit prescribed, asstt. order is liable to be quashed. 10. We have heard rival submissions, perused the record, gone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectified within the said period of fifteen days . . . then, notwithstanding anything contained in any other provision of this Act, the return shall be treated as invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return." Provided that where the assessee rectified a defect after the expiry of the said period of 15 days .... but before the asstt. is made, the Assessing Officer may condone the delay and treat the return as valid return.Explanation to section 139(9) lists the various conditions in which the return of income shall be regarded as defective and clause(d) of the Explanation mentions the non-filing of profit and loss account and balance sheet as one of the defects. 12. A perusal of the above sub-section indicates that- (1) the intimation is to be given if a return is defective, (2) the giving of this intimation is "discretionary" as the use of the word 'may' suggests ("he may intimate the defect"). (3) if defect is not removed, return has to be treated as 'invalid', as if the return had never been filed. (4) contra-wise if the defect is removed within the given time, the return would be treated as a 'valid re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in para 27.7- "(iii) The provision makes a distinction between a defective return and an invalid return. A defective return is not ipso facto to be regarded as an invalid return. It is only when a return contains any of the specified defects and the ITO . ... in his discretion intimates the defect to the assessee and the assessee fails to rectify the same within the stipulated period .... that the return shall be treated as an invalid return.... (v) where there is a default in rectifying the defect intimated by the ITO, the return of income has to be treated as an invalid return and further proceeding shall have to be taken on the footing that the assessee has failed to furnish the return." 15. May it be noted that nowhere did the Board take the stand that a defective return is deemed to have been re-filed on the date when the defect is removed and that it becomes legally efficacious from the said date. It is a gloss put by the ld. CIT(A), it has no mandate in the language used in section 139(9). It is a well-established principle of interpretation of taxing statute that nothing is to be added to its language nor has any wording to be omitted. In the words of Rowlatt, J. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return could not be treated as invalid." 17. The difference in a valid return and invalid return, as stressed earlier, is that a valid return had its legal consequences, e.g. the running of limitation and charging of interest etc. An invalid return has no legal existence and, as such, no legal consequences would follow from it. A return filed without profit and loss account and balance sheet has been held by the Hon'ble High Court to be a valid return in the sense that it will have to be taken cognizance of for the purpose of charging interest for the duration of the delay etc. It would not be correct to deem the return as having been filed only on the date when the defects were removed and to start counting legal consequences with reference to the latter date. It was for this reason that the charging of interest by the CIT upto the date of filing of the profit and loss account and balance sheet was held to be erroneous in law. The return filed on6-10-1971was" the return" (i. e. a valid return, though defective). Therefore, it had legal efficacy. 18. In the setting of the above proposition, the order of the ld. CIT(A) holding that the return dated 30-3-1990 had no legal effica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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