TMI Blog1985 (1) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... of the I.T. Act, 1961 (No. XLIII of 1961) (for short " the Act "), to the assessees. Subsequently, the assessee-firm filed a return on March 11, 1974, declaring an income of Rs. 34,560. The assessment of the assessee-firm was completed on October 10, 1974, on a total income of Rs. 43,117. Laxmichand, one of the partners of the firm, filed a return under s. 139(4) on August 29, 1971 declaring an income of Rs. 32,292. Subsequently, another return (the alleged revised return) was filed on March 13, 1974, declaring a total income of Rs. 32,348. The assessment was completed on November 6, 1974, on an income of Rs. 40,119. Vimalchand, the other assessee (partner of the firm), filed a return under s. 139(4) of the Act, on August 29, 1971, in which an income of Rs. 17,265 was shown. Another return (the alleged revised return) was filed on March 13, 1974, declaring an income of Rs. 17,327. The Income-tax Officer (ITO) completed the assessment, vide order dated November 6, 1974, on a sum of Rs. 17,327. The assessees went in appeal. The Appellate Assistant Commissioner (AAC) held that the returns filed by the assessee were no returns in the eye of law and that the period of limitation could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t aside and it was held that the assessments were completed by the ITO within time. The Tribunal, therefore, remanded the appeals to the AAC to decide them on merits after hearing both the parties. Reference applications under s. 256(1) of the Act were filed by the assessees. According to the Tribunal, a question of law arose out of its order, and, therefore, it has referred the aforesaid question for our opinion. Before we proceed to answer the question, we may notice the facts which are found mentioned in the statement of the case and regarding which there is no dispute. 'The relevant assessment year under consideration in respect of the assessees is 1971-72, the corresponding previous year ending on October 31, 1970. The returns of the assessee under s. 139(1) of the Act could be filed by June 30, 1971. Neither returns under s. 139(1) of the Act were filed nor notices were issued to the assessee under s. 139(2) of the Act. However, returns under s. 139(4) of the assessee-firm, M/s Manakchand Laxmichand, were filed on August 9, 1971. The partners, Laxmichand and. Vimalchand, filed their returns under s. 139(4) on August 29, 1971. The assessment could have been completed of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y time before the assessment was made, while under s. 139(4), the right of the assessee to furnish a return voluntarily does not extend beyond the period of time normally available to an Income-tax Officer to make regular assessment. Kulu Valley Transport Co.'s case [1970] 77 ITR 518 (SC) was a case under ss. 22(1), (2A), (3) and 24(2) and (3). It was held per majority (Shah J., as he then was, dissenting) that s. 24(2) confers the benefit of loss being set off and carried forward and there is no provision under s. 22 of the Act of 1922 under which losses have to be determined for the purpose of s. 24(2). It was further held that s. 22(2A) simply lays down that in order to get the benefit of s. 24(2), the assessee must submit his last return within the time specified in s. 22(1) and that that provision must be read with s. 22(3) for the purpose of determining the time within which a return has to be submitted. In other words, the majority view was that s. 22(3 is merely a proviso to s. 22(1). On the basis of the aforesaid findings, it was held that a return submitted at any time before the assessment is made is a valid return and for considering whether a return filed is within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round that in that case no question of imposition of penalty arose for consideration and it was held that a return filed beyond time prescribed by s. 22(2A) of the Act of 1922 was a valid return. In that connection, the learned judges referred to Santosh Industries' case [1974] 93 ITR 563 (Guj), Vedadri's case [1973] 87 ITR 76 (Mad), Gangaram Chapolia's case [1970] 103 ITR 613 (Orissa) [FB] and CIT v. Seth Devichand Sons [1978] III ITR 724 (All). It was held that a return of income filed under s. 139(4) cannot be treated as a return filed within the time prescribed under s. 139(1) of the Act. It may be mentioned that this was the view taken by this court in Addl. CIT v. Noor Mohd. Co..[1974] 97 ITR 705 (Raj) and CIT v. Indra Co. [1971] 79 ITR 702 (Raj). The question relating to s. 139(1), (2), (4) and (5) of the Act directly arose before a Division Bench of the Allahabad High Court in Bhargava v. CIT [1982] 136 ITR 559. The question referred was whether, on the facts and in the circumstances of the case, the assessment made by the ITO is barred by limitation as prescribed under s. 153 of the I.T. Act of 1961. In that case, the assessment year involved was 1971-72 and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time which the ITO may extend within his discretion. Failure to comply with these provisions renders an assessee liable to penalty under s. 271(1)(a) and prosecution under s. 276CC of the Act whereas no such penalty is leviable in regard to a return filed under sub-s. (4). For charging of interest under sub-s. (8), there is a specific mention of returns filed under these three separate provisions. In other words, an assessee filing a return under sub-s. (4) is equally liable to pay interest as is chargeable in respect of returns filed under sub-ss. (1) and (2). The Legislature is thus conscious of the three different types of returns and since sub-s . (5) does not give a right to an assessee to revise a return filed under sub-s. (4), we cannot intend such a provision therein by equating the return filed under sub-s. (4) with a return filed under sub-s. (1)." The question was examined from another aspect also, namely, that different time-limit for completion of assessment was provided in respect of the cases where a return has been filed under sub-s. (4) or a revised return has been filed under sub-s. (5). In that connection, it was observed as under (p. 564): " Sub-section (5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revised return, which the Department has been accepting consistently. Now, we advert to 0. P. Malhotra's case [1981] 129 ITR 379 (Delhi), on which reliance was placed by the learned counsel for the petitioner-assessee. For the assessment year 1960-61, the assessee filed a return on March 30, 1965, and a revised return was filed on March 28, 1966. 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-s. (1) or under sub-s. (2) of s. 139 of the Act. On appeal, the assessee claimed that the return filed on March 28, 1966, was a valid return. This contention was accepted by the appellate authority and the assessment was set aside and the case was remanded for completing the assessment afresh taking note of the revised returns. further appeal was preferred which was dismissed by the Tribunal. On a reference, the Delhi High Court held that the return filed on March 30, 1965, had to be treated as a return only under s. 139(4) of the Act and subs. (5) of s. 139 does not refer to sub-s. (4) and, therefore, does not entitle the assessee to rectify or revise a return filed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) unless the return so filed can be fully equated to a return under subs. (1) or sub-s. (2). It may be mentioned here that a Special Bench of the Income-tax Appellate Tribunal, Bench Jaipur, was constituted for considering, inter alia, the provisions of s. 139(1), (2), (4) and (5). In ITO v. Bohra Film Finance [1983] 34 CTR (Trib) 23, various decisions were taken note of by the Special Bench and it has recorded amongst others, the following conclusions : (1) that the return filed under s. 139(4) cannot be treated as one under s. 139(1) or (2); (2) that it is not possible to construe the returns filed under s. 139(4) as filed under s. 139(1) or (2) or that s. 139(4) can be read as a proviso to s. 139(1) or (2); (3) that the return provided for under sub-s. (4) of s. 139 stands in category different from those provided in sub-s. (1) or sub-s. (2) and such return cannot be revised under sub-s. (5) because such sub-section does not say so; (4) that a return filed under s. 139(4) cannot be revised under s. 139(5) so as to extend the period of limitation for making the assessment. A contention was raised in Mst. Zulekha Begum v. CIT [1981] 129 ITR 560 (Cal), that the subseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to rectify or revise a return filed under s. 139(4). A perusal of s. 139 shows that returns can be filed under sub-s. (1), sub-s. (2) and sub-s. (4) of s. 139. Thus filing of three returns is contemplated. The returns contemplated under sub-ss. (1A) and (3) are to be treated as a return under sub-s. (1) and so also a return required under sub-s. (4A). The obligatory returns are under sub-s. (1) and (2) of s. 139 whereas the voluntary return is under sub-s. (4). In other words, filing a return under s. 139(4) is permissive and voluntary. Section 139(4) is merely an enabling provision though three different types of returns are contemplated under s. 139, but the right of the assessee to revise the return is only in respect of the return filed either under s. 139(1) or s. 139(2), that is to say, the third type of return filed under s. 139(4) is not the same return as envisaged by s. 139(1) and (2). Section 153 provides the time-limit for the completion of the assessment. Sub-s. (1) of s. 153 is relevant for our purpose and it is in the following terms. " 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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