TMI Blog1994 (11) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... see is a private limited company carrying on business as transport contractors for the Tamil Nadu Dairy Development Corporation. It filed a nil return for the assessment year 1971-72, showing in the return the previous or accounting year ending with April 30, 1970. It filed a return thereafter for the assessment year 1973-74 showing nil as the income for the purpose of tax and disclosed the previous year ending with March 31, 1972. It filed, however, on September 20, 1973, a return for the year ended April 30, 1973, admitting a total income of Rs. 1,81,071. In the said return, the assessment year was shown as 1973-74. The Income-tax Officer took the said return as relating to the year 1974-75 as it was for the period ended April 30, 1973, and completed the assessment on a total income of Rs. 3,92,310 after making certain disallowances under section 40A(3) of the Act as relating to the assessment year 1974-75. The assessee appealed and contended before the Appellate Assistant Commissioner that its return was for the assessment year 1973-74 as noted by it and not for 1974-75 as taken by the Income-tax Officer and since it was a return for the assessment year 1973-74, the order of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the four corners of section 66(1), that the jurisdiction of the High Court to hear references is limited to questions which are properly referred to it under section 66(1), and that such jurisdiction is purely advisory and extends only to deciding questions referred to it. The narrow ground over which the High Courts differ is as regards the question whether it is competent for the Tribunal to refer, or the High Court to decide, a question of law which was not either raised before the Tribunal or decided by it, where it arises on the facts found by it.' The Supreme Court noticed that one view was that the words 'any question of law arising out of' the order of the Tribunal signify that the question must have been raised before the Tribunal and considered by it, and the other view was that all questions of law arising out of the facts found would be questions of law arising out of the order of the Tribunal. The Supreme Court summed up as follows : '(1) When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order. (2) When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal. Where the question itself was under issue, there is no further limitation imposed by the section that the reference should be limited to those aspects of the question which had been argued before the Tribunal. It will be an over-refinement of the position to hold that each aspect of a question is itself a distinct question for the purpose of section 66(1) of the Act. That was the view taken by this court in CIT v. Ogale Glass Works Ltd. [1954] 25 ITR 529 and in Zoraster and Co. v. CIT [1960] 40 ITR 552, and we agree with it. As the question on which the parties were at issue, which was referred to the court under section 66(1), and decided by it under section 66(5) is whether the sum of Rs. 9,26,532 is liable to be included in the taxable income of the respondents, the ground on which the respondents contested their liability before the High Court was one which was within the scope of the question, and the High Court rightly entertained it.' The Supreme Court thus clarified that a question of law in issue should not be taken to be inhibited by the grounds or contentions which are raised before the Tribunal. If the question framed by the Tribunal has got the effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, the Appellate Tribunal was right in holding that the return filed on September 20, 1973, for the assessment year 1974-75 was non est in law and, therefore, the assessment made on such invalid return is not sustainable in law ?" to reread as, "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the return filed on September 20, 1973, for the assessment year 1974-75 was non est in law and, therefore, the assessment made on such invalid return is not sustainable in law and whether having found that the assessment was non est in law", the Tribunal ought to have decided whether the assessment was barred by limitation and whether a fresh assessment for the assessment year 1973-74 as well as 1974-75 is permissible ? " Section 4 of the Income-tax Act enables to charge for any assessment year at any rate or rates, income-tax subject to the other provisions thereof only where any Central Act enacts that income-tax shall be charged for any assessment years. Income-tax thus is chargeable for any assessment year only when the Central Act generally called the Finance Act of a particular assessment year creates the charge and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IV. in the case of a business or profession newly set up in the said financial year, the period beginning with the date of the setting up of the business or profession, and-- (1) ending with the said financial year, or (2) if the accounts of the assessee have been made up to a date within the said financial year, then, at the option of the assessee, ending on that date, or (3) ending with the period, if any, determined by the Board or by authority authorised by the Board in this behalf, as the case may be ; V. in the case of a business or profession newly set up in the twelve months immediately preceding the said financial year-- (i) if the accounts of the assessee have been made up to a date within the said financial year and the period from the date of the setting up of the business or profession to such date does not exceed twelve months, then, at the option of the assessee, such period, or (ii) if any period has been determined by the Board or by any authority authorised by the Board in this behalf, then the period beginning with the date of the setting up of the business or profession and ending with that period, as the case may be ; VI. where the assessee is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated as a fact that the assessee had filed a nil return disclosing the previous year ended April 30, 1972, followed by another return for the said year of assessment on September 20, 1973, it was only proper and correct for the Income-tax Officer to accept the return for the assessment year 1973-74 for the previous year 1972-73. In any case, there was no law under which any impost existed for the assessment year 1974-75. The Finance Act in operation on September 20, 1973, was relevant and applicable for the assessment year 1973-74 only. For the late or default in filing the return by the assessee or any apprehension of suppression of income or misrepresentation in the return filed by him for the assessment year 1973-74, other actions could be taken in accordance with law. In no case, however, the return filed on September 20, 1973, could be treated as a return for the assessment year 1974-75. The Tribunal for that reason has correctly decided that the order of assessment for the reason of a fundamental mistake on the part of the Income-tax Officer was/is void. It is on record that the assessee had first filed a nil return for the assessment year 1971-72 as well as for the year 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, make a fresh assessment of the total income or loss of the assessee, and determine the sum payable by the assessee or refundable to him on the basis of such assessment. There are other provisions in the Act for best judgment assessment or for assessment of the income escaping assessment, time limit for notice where income had escaped assessment, etc., and section 153 of the Act has contemplated the time limit for completion of assessments and reassessments in these words : " (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) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a partner of the firm in consequence of an assessment made on the firm under section 147. Explanation 1.-- In computing the period of limitation for the purposes of this section. (i) the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee to be reheard under the proviso to section 129, or (ii) the period during which the assessment proceeding is stayed by an order or injunction of any court, or (iii) the period commencing from the date on which the Income-tax Officer directs the assessee to get his accounts audited under sub-section (2A) of section 142 and ending with the date on which the assessee furnishes a report of such audit under that sub-section, or (iv) the period (not exceeding one hundred and eighty days) commencing from the date on which the Income-tax Officer forwards the draft order under sub-section (1) of section 144B to the assessee and ending with the date on which the Income-tax Officer receives the directions from the Inspecting Assistant Commissioner under sub-section (4) of that section, or, in a case where no objections to the draft order are received from the assessee, a period of thirty days ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the taxing authorities, as to the correct meaning of the word "assessment". It flows clearly from the scheme of the law as we have seen that for computing the period of limitation, the meaning of assessment will be one where after assessment, a notice of demand is served upon the assessee under section 143(2)(a) of the Income-tax Act and another in a case falling under section 144, clause (b) of sub-section (2) of section 143 and yet another in a case falling under some other provisions of the Act including section 144B of the Act. It will be a mistake to accept for all purposes, the return as one filed by the assessee under sub-section (1) of section 139 of the Act as the starting point of limitation for the completion of the assessment as a return, which is not complete in all respects and as regards the return furnished by the assessee, doubts exist whether a return filed under sub-section (4)(a) of section 139 may be the relevant return and in case any omission in the return furnished is discovered by the assessee and a revised return is filed, the same may be the relevant return. In section 153 in this behalf, a mention of section 143 clearly reckons a return on which assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 139(1) or 139(4) or 139(5) and issued notice of demand under section 143(2)(a) of the Act. In such a case, the assessment will be deemed to have been completed before the notice is issued by the Income-tax Officer. In such a situation, any enquiry under sub-section (3) of section 143 of the Act on the objections of the assessee will not postpone the making of the order of assessment and the enquiry will be only for the purpose of examining whether there was any mistake in the order of assessment. (2) In a case where the Income-tax Officer has issued notice to the assessee for verification of the correctness and completeness of the return without making any assessment and enquiry is held under sub-section (3) of section 143, it may be legitimate for the assessee to say that the order of assessment should be made within the period of limitation after such enquiry and verification, but in all cases where the assessment is required to be made under sub-section (3) of section 143, section 144B is required to be complied with and the time consumed for the purpose as envisaged under sub-section (4) of section 144B not exceeding 180 days will get added to the period of limitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also not made any order of remand to the Income-tax Officer to treat the return as filed by the assessee for the year of assessment 1973-74. This mistake has benefited the assessee in more than one way. It has almost escaped the assessment for the year 1973-74 in spite of taxable income, which it has itself admitted and which it had not disclosed in its first return. This has confused altogether whether there was any income which could be taxed in the assessment year 1974-75. We have recorded this with concern because the interest of the Revenue in all respects is the interest of the public. Every person chargeable to income-tax is expected to honestly disclose his income and pay the tax. It is only in a case where doubts are raised or returns are filed in irregular manner as in the instant case, the assessee filed a nil return for the same financial year for which later it filed a return of taxable income, public interest is affected and officers are required to exercise this jurisdiction for the certification of the correctness or completeness of the return or best judgment assessment, etc. No honest taxpayer should be asked to pay more, but no one else should be allowed to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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