TMI Blog1981 (6) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... ere within the time-limit prescribed in s. 153(1)(b) of the I.T. Act, 1961 ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the cases for the assessment years 1964-65 and 1965-66 were such as falling within clause (c) of sub-section (1) of section 271 ? " On question No. 1, the Tribunal has held in favour of the assessee. This question has been referred at the instance of the Revenue. On the other two questions, however, the Tribunal's view was against the assessee and these have been referred at the instance of the assessee. It appears that the facts lie within a short compass and the point involved is also short. We are concerned with two assessment years, viz., the assessment years 1964-65 and 1965-66. For the first year, the last date on which the return could be filed under s. 131(1) of the I.T. Act, 1961, was 30th June, 1964. In this case, no notice under s. 139(2) of the Act had been served so as to enable the assessee to file the return within the time under that sub-section. According to the assessee, 13th August, 1964, was the date for filing the original return, which was indisputably accepted as a retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r on 15th January, 1970, for the assessment year 1964-65. He narrated the facts as we have mentioned before and thereafter dealt with the different heads of income and observed that there were capital gains, taking into consideration the so-called return, which was called a "revised return ", and added a sum of Rs. 24,000 on that score. The total income was computed at Rs. 3,17,205. On that date penalty proceedings were initiated. Similarly, for the subsequent assessment year, i. e., for the assessment year 1965-66, order in respect of which was passed on 6th July, 1970, the ITO noted the facts regarding the filing of return as we have mentioned before and proceeded to compute the income and added long-term capital gains of Rs. 14,82,387 on account of capital gains on sale of land. Before the Tribunal, these facts were adverted to and assessments were referred to by both sides and, referring to the aspects, the Tribunal observed that the following issues arose for a determination of the controversy in the instant case : " (i) Whether a return filed voluntarily before the completion of an assessment but after the end of the relevant assessment year, can be treated to be a return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of s. 139 of the I.T. Act, 1961. After this splitting, it would appear clear enough that the Legislature did not provide the benefit of furnishing a revised return under s. 139(5) to persons who had not filed returns under sub-s. (1) or sub-s. (2) of s . 139 of the Act. In their view, this benefit did not extend to any return u/s. 139(4) which, for certain purposes, would be deemed to be a return u/s. 139(1). Regarding issue No. (v), the Tribunal was of the view that the wordings of s. 153(1)(c) suggest that it is possible to file both a return and a revised return under sub-s. (4) as well as under sub-s. (5) of s. 139. But such an interpretation would offend a reasonable interpretation of s. 139(5), which referred only to " a revised return ". The Tribunal was of the view that it was not possible to file an original return u/s. 139(5) nor could the revised return be permitted to be filed u/s. 139(4). If a revised return had been filed by an assessee who had earlier filed a return u/s. 139(4) and not u/s. 139(1) or 139(2), the latter had to be treated as invalid and ignored. This position, in the opinion of the Tribunal, followed from the ratio of the decision of CIT v. Ranchhodda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to issue such a notice for this year had been recorded on 3rd July, 1970, before the completion of assessment for this year. The Tribunal observed that the penalty proceedings for both these years were pending with the AAC. Then the Tribunal considered the two gets of penalty notices issued under s. 274/271(1)(c) for the assessment years 1964-65 and 1965-66. The Tribunal was of the view that it could not be said that the said notices had been issued frivolously without there being a prima facie case of concealment of income by the assessee and the notices were not issued mala fide solely for the purpose of saving limitation. If it was otherwise, the penalty notices would not have saved the Revenue the limitation beyond the period of four years from the end of 1964-65 and 1965-66 in which the income first became assessable. If any, the period of limitation would get extended to 8 years from the end of the assessment year in which the income first became assessable. In this respect, the Tribunal felt that they could ignore the first set of notices under s. 274/271(1)(c) issued for the assessment years 1964-65 and 1965-66 on 29th September, 1967, because there was no material on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not in law, be considered to be revised return. The next aspect that was emphasised was that if in subsequent return the particulars of the capital gains had been disclosed then there was no question of any concealment of income and accordingly there was no scope for the application of the provisions of s. 271(1)(c) of the I.T. Act, 1961, and the initiation of the penalty proceedings was without jurisdiction. In order to appreciate these contentions it would be necessary to refer to s. 139 of the Act of 1961. Section 139, which is in Chap. XIV, deals with the procedure for assessment and sub-s. (1) enjoins that every assessee, whose total income reaches the taxable income, is obliged to file his return in case no notice has been served upon him by 30th June, in the case of an assessee like the petitioner. We need not deal with the proviso which deals with an extension of time nor need we pause to consider the provisions of sub-s. (1A) of s. 139. Sub-section (2) of s. 139 deals with cases where notices are issued by the ITO calling upon the assessee to file a return within 30 days from the date of service of the notice. Sub-section (3) states that an assessee can file a retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made under s. 143 because the revised return filed upon which the purported assessment had been made could not be a valid return. He contends, as was contended before the Tribunal and the authorities below, that if a person had not complied with the provisions of either sub-s. (1) or sub-s. (3) of s. 139 he could file a return at any time before the assessment being made under sub-s. (4) of s. 139, as the assessee has done in this case, and having done so he could not exercise the option of sub-s. (5) of s. 139 because, according to learned advocate for the assessee, the express language of sub-s. (5) of s. 139 enjoins that if any person having furnished a return under sub-s. (1) or sub-s. (2) discovers any omission or any wrong statement therein, he could file a revised return but it did not provide for an opportunity to an assessee in the case of return having been filed under sub-s. (4) of s. 139 of the Act. Therefore, it was contended that, in view of this specific provision of sub-s. (5) of s. 139 and the absence of the mention of sub-s. (4) in sub-s. (5), the return filed was invalid and the action taken subsequently was invalid. We are, however, unable to accept this con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Act contemplates the filing by the assessee of a correct and complete return. The law gives him a right to substitute and bring on record a correct and complete return if he discovers any omission or wrong statement in the return originally filed by him. The law cannot contemplate the making of an assessment on the basis of a return which even the assessee claims contains wrong statements. When an assessee files revised return, he in fact admits that the original return filed by him was not correct or complete and substitutes the same by a revised return which according to him is correct and complete. The effective return for purposes of assessment is thus the return which is ultimately filed by an assessee on the basis of which he wants his income to be assessed. Learned counsel for the assessee, to support his contention to the contrary, urged that, as penalty proceedings under section 28(1)(c) of the 1922 Act or under section 271 (1)(c) of the 1961 Act are permissible if the assessee conceals the particulars of his income or deliberately furnishes inaccurate particulars of such income in the original return even though he may subsequently file a correct and complete revis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate for the assessee, this was not the position in the instant case before us. According to learned advocate for the assessee, the assessee was disputing this position subsequently. In our opinion, this is not the true ratio upon which the Calcutta High Court proceeded to deliver its judgment. The very fact that the assessee filed return subsequently goes to indicate that the assessee wanted that subsequent return to be acted upon. His purpose was, however, to get capital losses carried forward for which he filed the subsequent return. But then when he found that the result of his filing this return has exposed himself to the offence under s. 271(1)(c) he sought to retract the position taken by him prior thereto. This conduct on the part of the assessee, in our opinion, does not in any way affect the principle upon which the subsequent revised return should be treated as a substituted return. Learned advocate for the assessee drew our attention to the judgment of the Delhi High Court in the case of 0. P. Malhotra v. CIT [1981] 129 ITR 379. There, for the assessment year 1960-61, the assessee had filed return on 30th March, 1965, disclosing an income of Rs. 1,720. On March 28, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to agree. It appears that in the previous two decisions of the Allahabad High Court and the decision of the Calcutta High Court, which were rendered prior to this date, the attention of the Delhi High Court was not drawn to this aspect of the matter. Nor do we find that the true scope and meaning of the revised return was adverted to by the Delhi High Court. Learned advocate for the assessee laid a good deal of emphasis on the observation of the Tribunal dealing with the case of the Allahabad High Court in the case of Mir Suba Hari Bhakta v. ITO [1960] 39 ITR 617, where the Tribunal observed that the Allahabad High Court had observed that there was a valid return. The observation at p. 621 did not use the expression "valid return " in the sense it was sought to be urged by learned advocate for the assessee. We are unable to accept the position that the return filed was invalid or could not be treated for the purpose of assessment and that the assessment made on the return subsequently filed was an invalid assessment. The second aspect of the matter was that there was a concealment, because there was disclosure by the second return. The offence or the act of concealment is complet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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