TMI Blog1987 (8) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... ded on March 31, 1976, the petitioner filed a return declaring an income of Rs. 8,990 on June 1, 1979. The Income-tax Officer held that the return filed by the assessee on June 1, 1979, could not be considered as a return under section 139 of the Act, inasmuch as it was not filed within the time limit specified in section 139. The Income-tax Officer, therefore, issued a notice under section 148 on the basis that the petitioner failed to file its return of income within the time allowed under section 139. Responding to the notice under section 148, the assessee informed the Income-tax Officer that the return already filed on June 1, 1979, might be treated as one filed in response to the notice by the Income-tax Officer issued under section 148. That is how the Income-tax Officer regularised the assessment proceedings as observed by him in the assessment year. The Income-tax Officer made an addition to the income returned of Rs. 11,800 on account of deficiency in gross profit and completed the assessment on a total income of Rs. 20,790. Tax was demanded treating the assessee as an unregistered firm. The Income-tax Officer also claimed interest of Rs. 884 under section 139 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15, it is nevertheless a part of the process of assessing the tax liability of the assessee. Inasmuch as the levy of interest is a part of the process of assessment, it is open to an assessee to dispute the levy in appeal provided he limits himself to the ground that he is not liable to the levy at all ". In the present case, the assessee claimed that he is not liable to the levy of interest under section 139(8) and section 217 of the Act at all. According to him, these provisions do not authorise the levy of interest in the facts and circumstances of the assessee's case. Thus, there is a total denial of liability to interest. In the circumstances, the assessee is entitled to dispute the levy of interest in the appeal filed by him. The Revenue's contention that the appeal filed by the assessee is not maintainable cannot be accepted. We accordingly answer the second question in the affirmative, that is to say, in favour of the assessee and against the Revenue. As regards question No. 1, learned standing counsel for the Revenue initially stated that this question is covered by a decision of this court in Nizam's Religious Endowment Trust v. ITO [1981] 131 ITR 239, on which the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 143(3) but is an assessment under section 143(3) read with section 147 of the Act. It is urged that no interest can be levied for the above reason. As already indicated, this contention of the assessee was accepted by the Appellate Assistant Commissioner of Income-tax as well as by the Tribunal. Learned standing counsel for the Revenue, Sri M. Suryanarayana Murthy, basically urged that the so called " regularisation " of the assessment proceedings by the Income-tax Officer by issue of a notice under section 148 was unnecessary and the Income-tax Officer could very well have completed the assessment under section 143(3) on the basis of the return filed on June 1, 1979, without taking recourse to section 148. Learned standing counsel, therefore, urged that the assessment made by the Income-tax Officer must be regarded as one made under section 143(3) only, notwithstanding the superfluous exercise by the Income-tax Officer of issuing a notice under section 148 after receiving the return on June 1, 1979. According to standing counsel, an assessee can file his return at any time and based on such a return, the Income-tax Officer can always make an assessment. Learned standing counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee on June 1, 1979, as an invalid return and rightly took proceedings under section 148 for regularising the assessment proceedings. Learned standing counsel, however, contends that even though the return is filed after the time limit enunciated under section 139(4)(b)(iii), still the return filed by the assessee is a valid return and there was no need for the Income-tax Officer to ignore the existence of such a return when once it is filed. Without taking recourse to section 148 of the Act, contends learned standing counsel, the Income-tax Officer could have made the assessment on the basis of the return filed on June 1, 1979. The proposition made by learned standing counsel is wholly unacceptable and has no support either in law or in the decision of any court. Indeed, we have not come across any case where such a startling proposition of law has been canvassed by the Revenue. A return filed by an assessee after the expiry of the time limit specified in section 139 is non est in law and it is not open to the Revenue to take note of such a return and proceed to make an assessment. We may refer to the decision of the Calcutta High Court in CIT v. Smt. Minabati Agarwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 31, 1972. The last date for filing the return under section 139(4) was March 31, 1975. Inasmuch as the return was filed on May 12, 1975, after the expiry of the time limit specified in section 139(4), the Income-tax Officer ignored that return and issued notice to the assessee under section 147(a)/148 of the Act. The assessee filed a writ petition challenging the notice on the grounds, inter alia, that the return had already been filed and was pending and that the assessment for 1972-73 had become time-barred. The High Court held that the return filed on May 12, 1975, having been filed beyond time, the Income-tax Officer was not unjustified in treating the same as non est. The High Court rejected the ground that notice under section 147 could not be issued because the return filed already by the assessee was pending. The facts of this case clearly fit into the facts obtaining in the case of the assessee before us and demonstrate the fallacy in the argument of learned standing counsel. We may refer to another decision of the Calcutta High Court in CIT v. Bissessar Lal Gupta [1976] 105 ITR 684, which provides authority for the proposition that where an assessee files a return, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order under section 153(1)(c) of the Act. The assessment itself would be beyond limitation. " In the case before us, the voluntary return was filed beyond the period specified in section 139(4) and no assessment could be made on the basis of that return. Finally, we may refer to the decision of the Supreme Court in CIT v. Kulu Valley Transport Co. P. Ltd. [1970] 77 ITR 518. We do not wish to refer in detail to the facts of this case. It is enough if we refer to the finding of the Supreme Court at page 530 : " Moreover, it is common ground that a voluntary return cannot be filed beyond the period specified in section 34(3) of the Act. " (Indian Income-tax Act, 1922) The analogous provision in the 1961 Act is section 153(1)(a)(iii) which specifies the two year period from the end of the assessment year as the period in which an assessment could be made for the assessment year commencing on or after 1969-70. Thus, any return filed after March 31, 1979, for the assessment year 1976-77 would be a return filed beyond the period specified in section 153(1)(a)(iii) and it is not open to the assessee to file such a return. We do not consider it necessary to multiply authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention that the words " at any time " occurring in sub-section (3) of section 19 should be given limited meaning and should be confined to the year of assessment. The Supreme Court rejected the contention that if a return was not filed before the expiry of the relevant assessment year, it would be imperative on the part of the Agricultural Income-tax Officer to initiate assessment proceedings under section 30 (analogous to section 148 of the Income-tax Act, 1961). As the return could be filed under section 19(3) before the expiry of three years from the end of the assessment year, the Supreme Court held that the return filed by the assessee on March 31, 1958, was a valid return and the assessment made on the basis of that return was valid. We are unable to see how the facts of this case support the Revenue. Undoubtedly, the return in the case before the Supreme Court was filed before the expiry of the time specified in section 19(3) of the Act (analogous to section 139(4) of the Act) and it is perfectly valid to make an assessment based on that return. The facts in the case of the assessee are altogether different as the return was not filed within the time limit specified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hree cases which shed light on this point. We may first refer to the decision of the Punjab and Haryana High Court in Smt. Kamla Vati v. CIT [1978] 111 ITR 248. In the case before the Punjab High Court, an identical contention was raised by the Revenue, that an assessment under section 143(3) read with section 147 should be regarded as an assessment under section 143(3) alone satisfying the requirements under section 2(40) of the Act and, therefore, the charge of interest was proper. Rejecting the Revenue's contention, Chinnappa Reddy 0. (Acting Chief justice, as he then was) observed as under at pages 251 and 252 : " We find it difficult to accept the submission of Shri Awasthy in the face of the definition of the expression 'regular assessment' in section 2(40) of the 1961 Act. It is true that in Deviprasad Kejriwal v. Commissioner of Income-tax [1976] 102 ITR 180, the Bombay High Court considered the expression 'regular assessment' occurring in sections 18A(5), 18A(6) and 18A(9) of the 1922 Act, to include assessment under section 34 of that Act but we notice from a perusal of the decision that there were two earlier decisions under the 1922 Act, one of the Bombay High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be usefully referred to : " It will be noticed that in section 273 also the words 'regular assessment' have been used. It is clear from the various provisions of the 1922 Act as well as the 1961 Act that a penalty can be imposed for non-furnishing of the estimate of advance tax only in connection with the regular assessment under section 23 of the 1922 Act or regular assessment under section 143 or section 144 of the 1961 Act. As the proceeding for assessment or reassessment under section 34 of the 1922 Act or under section 147 of the 1961 Act is not a proceeding in connection with the regular assessment, no penalty can be imposed for non-furnishing of an estimate of the advance tax payable by the assessee. I am fortified in my view, by a Bench decision of the Kerala High Court in Gates Foam Rubber Co. v. Commissioner of Income-tax [1973] 90 ITR 422." In the view taken as above, the High Court held that an assessment made under section 143(3) read with section 147 cannot be regarded as " regular assessment". Reference may also be made to the Allahabad High Court in CIT v. Smt. Jagjit Kaur [1980] 126 ITR 540. The following observations at page 542 are instructive : " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Religious Endowment Trust's case [1981] 131 ITR 239. The Tribunal relied on the above decision of this court as concluding the matter in dispute against the Revenue. In that case before this court, the same question regarding the scope of " regular assessment " had arisen for consideration. This court held that only assessments made by the Income-tax Officer under section 143 or section 144 are regular assessments and it is not permissible to expand the scope of the expression to include appellate orders and consequential orders passed by the Income-tax Officer. The principle applies with equal force to orders passed by the Income-tax Officer under section 143 read with section 147. The Tribunal quoted extensively from the judgment of this court in order to bring home to the Revenue that matters stood concluded by the decision of this court against the Revenue. On a careful consideration of the decision of this court, we hold that the Tribunal is correct in holding that the above decision of this court is a direct authority to support the proposition that only orders passed by the Income-tax Officer under sections 143 and 144 could be considered as regular assessments within the m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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