TMI Blog1994 (11) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... Form No.6 is that audit is in progress and finalisation of account was not complete'. The second application for extension of time in Form No. 6 was filed on 10-11-1987 requesting the extension of time up to 28-2-1988. No specific ground was given in Form No.6 as to why the extension of time for filing the return was sought for. 4. As no return was filed till 25-10-1988 a notice under section 148 was issued on the same day and was served on the assessee on 26-10-1988, requesting the assessee to file the return of income as income chargeable to tax has escaped assessment due to failure on the part of the assessee to file the return. Ultimately, the return of income was filed on 30-3-1989, along with two audit reports--first dated 24-7-1987 and the second dated 16-9-1987 and the total income was declared at Rs. 49,65,690. The assessment was completed on 22-8-1990 by the Assessing Officer (in short 'AO') under section 143(3) read with section 147(a) and the total income was determined at Rs. 56,86,760. 5. Being aggrieved by the assessment order the matter was carried in appeal to the CIT(A). Before the CIT(A) it was submitted that the AO was not competent to issue notice under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act only section 6 is mentioned and not section 6(1), section 6(2) etc., the same will include all the sub-sections and penalty cannot be imposed since return was filed under section 6(3) and section 6 also includes section 6(3). Sri Surana also relied on another Calcutta High Court decision in the case of Presidency Medical Centre (P.) Ltd. v. CIT [1977] 108 ITR 838 (Cal.), wherein it was held that section 80 speaks only of section 139, hence loss is to be carried forward. He further argued that failure to file the return under section 139 means section 139 as a whole including sections 139(1), 139(2), 139(3), 139(4) etc. and, therefore, notice under section 148 could be issued only when the assessee had failed to submit the return under section 139(4). According to the learned counsel, the notice under section 148 prior to due date of filing of return under section 139(4) ie., 31-3-1990 was bad in law. Sri Surana further contended that any return for the assessment year 1987-88 filed before 31-3-1990 even if filed after issue of notice under section 148, has to be treated as a return under section 139(4). The learned counsel relied on the following decisions as per Annexure-A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable to the instant case. He also relied on para-2 of page 2 of the order of the ClT(A) particularly on the decisions cited by the CIT(A). In order to support the stand taken by the CIT(A) the learned DR also placed reliance on Calcutta High Court decision in the case of Balish Singh Co. v. CIT [1987] 165 ITR 575. 10. We have carefully considered the rival contentions, relevant facts and material placed on the record. We have also gone through all the decisions on which reliance has been placed by contending parties. On analysing the facts and the legal position of this case we find that following main issues are involved in these grounds: (i) Whether the notice issued under section 148 on 25-10-1988 is a valid notice ? (ii) Whether the return filed on 30-3-1989 is a return to be treated as a return furnished under section 148 or under section 139(4) ? (iii) Whether re-assessment completed in this case on 22-8-1990 is barred by limitation? 11. For the sake of convenience we will take up these issues one by one. As regards the validity of notice issued under section 148 the first condition laid down in section 148(1) for issuance of notice is that it should be issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore 31-3-1990 and it is a belated return, It cannot be treated as a return furnished under section 139(4), as it is not filed voluntarily by the assessee, In our opinion, there is no clash between the provisions of sections 139(1) and 139(4) on the one hand and section 139(2) on the other. For the sake of convenience sub-section (4) of section 139 is extracted as under: "139(4). (a) Any person who has not furnished a return within the time allowed to him under sub-section (1) or sub-section (2) may, before the assessment is made, furnish the return for any previous year at any time before the end of the period specified in clause (b), and the provisions of sub-section (8) shall apply In every such case. (b) The period referred to in clause (a) shall be-- (i) Where the return relates to a previous year relevant to any assessment year commencing on or before the 1st day of April, 1967, four years from the end of such assessment year; (ii) Where the return relates to a previous year relevant to the assessment year commencing,on the 1st day of Aprll, 1968 three years from the end of the assessment year; ((iii) Where the return relates to a previous year relevant to any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn is filed within the time prescribed in the general notice issued under section 22(1), section 34(1)(a) would be attracted if (i) no return was filed before the expiry of four years or (ii) a return is filed before the expiry of four years and the assessment order was passed on it and later found that on account of the assessee not disclosing true and full facts Income had escaped assessment. It was further held that if a return is filed within four ars of the end of the proper assessment year and before an assessment is made, the ITO would have nojurisdiction to proceed under section 34. Thus, we find that the Allahabad High Court's decision does not favour the assessee, rather it favours the case of the deparrtment. In the case of the assessee as no return was filed under section 139(4) the AO had legal and valid jurisdiction to proceed under section 147(a)/148 Then in the case of K.S. Ratnaswanmi v. AddL ITO [1963] 48 ITR 568, the Madras High Court held that if with a valid return filed by the assessee before it, the department fails to complete the assessment within the period of four years, the department would lose the right to send a notice under section 34(1) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the present issue regarding notice under section 148 raised in question No. 3 in that case was not decided and answered by the Hon'ble High Court. The main issue involved in that case was carry forward of loss in the case of belated return and, therefore, the High Court followed the Supreme Court decision in the case of CIT v. Kulu Valley Transport Co. (P.). Ltd. [1970] 77 ITR 518 and allowed carry forward of loss disallowed by the AO. So is the case with the Calcutta High Court decision in the case of Calcutta Chromotype (P.) Ltd. This case law pertains to Super Profits Tax Act, 1963 and the imposition of penalty under that Act and, therefore, this decision is also not applicable to the instant case. In the case of Presidency Medical Centre (P.) Ltd. the Calcutta High Court decided that if a return is filed within time specified by sub-section (4) of section 139 it would be deemed to be in accordance with the law and loss has to be determined and carried forward as a matter of course under section 72(1) read with section 80 of the Act, even though the return was not filed within time provided by section 139(1). This case law has nothing to do with the present case and it is just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice under section 148 was served on 26-10-1988, the limitation for assessment expires on 31-3-1993 i.e., four years from the end of assessment year 1988-89. We find that the assessment in this case is completed on 22-8-1990 and, therefore, it is well within limitation prescribed in the Act. Under no circumstances and under no provisions of Act, it can be said that the assessment is barred by limitation as contended by the learned counsel for the assessee. In this view of the matter we reject the contentions of the assessee and hold that the assessment made in this case is within prescribed limits of time and is a valid assessment. 22. Thus, after critical analysis of the facts and correct application of law and judicial pronouncement we come to the conclusion and hold that the notice issued under section 148 is a valid notice, the return furnished in compliance with the notice under section 148 is a return to be treated as furnished under section 139(2) and the assessment made is within limitations and, therefore, is a valid assessment. In this way ground Nos. 1. 2 3 fail and the order of the CIT(A) is upheld. 23 to 31. [These paras are not reproduced here as they involv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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