Madhya Pradesh High Court
Commissioner Of Income-Tax vs Dr. N. Shrivastava on 8 January, 1988
Equivalent citations: [1988]170ITR556(MP)
Author: N.D. Ojha
Bench: N.D. Ojha
JUDGMENT N.D. Ojha, C.J.
1. The Income-tax Appellate Tribunal, Indore Bench, Indore, has referred the following question to this court for its opinion under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"):
" Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessment order dated November 23, 1981, made by the Income-tax Officer, was made after the expiry of the period of limitation and was, therefore, invalid ? "
2. The facts in brief necessary to answer the aforesaid question are that with regard to the assessment year 1978-79, the accounting year of which ended on March 31, 1978, the assessee filed his return under Section 139(4) of the Act on March 22, 1979, he not having filed a return under Section 139 (1) or (2), Subsequently, the assessee filed another return on March 11, 1981 purporting to be a revised return. The assessment order was passed on November 23, 1981, i.e., within one year from March 11, 1981, the date on which the revised return was filed.
3. The case which was set up by the assessee was that since the return under Section 139(4) of the Act had been initially filed on March 22, 1979, the order of assessment could have been passed only within one year from that date, namely, up to March 22, 1980, in view of Section 153(1)(c) of the Act and the same not having been passed by that date, but having been passed only on November 23, 1981, the assessment was barred by time.
4. The case of the Department, on the other hand, was that since the revised return had been filed by the assessee on March 11, 1981, the starting point of limitation of one year would be March 11, 1981, in view of Section 153(1)(c) of the Act and the order of assessment, as passed on November 23, 1981, was thus within limitation. The plea raised by the Department was ultimately repelled by the Tribunal and the plea of the assessee that the assessment was barred by time, was accepted. However, at the instance of the Department, the Tribunal referred the aforesaid question to this court for its opinion.
5 . It has been urged by Shri Rawat, appearing for the applicant, that the view taken by the Tribunal that the assessment was barred by time is erroneous inasmuch as in the instant case, the starting point of limitation would be March 11, 1981, when the revised return was filed. Reliance in support of this submission has been placed on a decision of a Division Bench of the Calcutta High Court in Mst. Zulekha Begum (Khatoon) v.
CIT, [1981] 129 ITR 560, where after a conspectus of the authorities on the point and the statute law, it was held (p. 568):
" On a consideration of the sections and the decisions cited, it appears to us that if an assessee after having filed a return under Section 139(4) files another return subsequently, it is to be assumed that he has given a go-by to the return filed previously and that so far as he is concerned, the return filed subsequently is the correct and the proper return. Where the Income-tax Officer accepts the return filed subsequently, allows it to be filed and proceeds to assess thereunder without any objection from the assessee, it would not be open to the assessee to contend later that the return filed subsequently was invalid."
6. One of the cases relied on was a decision of the Allahabad High Court in Dhampur Sugar Mills Ltd. v. CIT, [1973] 90 ITR 236. In this case, Mr. Justice H. Swarup, explaining the meaning of a revised return, observed, at pages 240-241 of the report, as follows:
" The question, however, remains as to whether this return will continue to form the basis for purposes of assessment even after it was substituted by a revised return. Section 22(3) of the 1922 Act as also Section 139(5) of the 1961 Act permit an assessee to file a revised return if he discovers any omission or wrong statement in the return filed by him. The Income-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 assessment on the basis of a return which even the assessee claims contains wrong statements. When an assessee files a 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 revised return, it must be held that the original return is also the effective return. I am not inclined to accept the contention. A person is penalised for the wrong act that he does and the offence becomes complete as soon as the act is done. It cannot be cured by subsequent mending.
It is on this principle that an assessee can be penalised for concealing the particulars of his income or deliberately furnishing inaccurate particulars of such income. But, when an assessment has to be made, the assessee is given a right to file a correct and complete return if he discovers an error or omission in the return filed earlier. The assessment can be completed only on the basis of the correct and complete return. The earlier return, after a revised return has been filed, cannot form the basis of assessment although it may be used to indicate the conduct of the assessee. Hence, for the purpose of assessment of income, the effective return must be the revised return filed by the assessee ultimately.
There is a distinction between a revised return and a correction of the return. If the assessee files some application for correcting a return already filed or making amends therein, it would not mean that he has filed a revised return. It will still retain the character of an original return, but once a revised return is filed, the original return must be taken to have been withdrawn and to have been substituted by the fresh return for the purpose of assessment. The same view has been taken in Gopaldas Parshottamdas v. CIT, [1941] 9 ITR 130 (All)."
7. Mr. Justice R.S. Pathak, as his Lordship then was, agreed with the aforesaid expression of views, though he expressed some doubt on some other aspect of the matter with which we are not concerned in the instant case.
8. Relying on the decision in the case of Dhampur Sugar Mills Ltd. [1973] 90 ITR 236 (All) and Mst. Zulekha Begum [1981] 129 ITR 560 (Cal), another Division Bench of the Calcutta High Court in Kumar Jagadish Chandra Sinha v. CIT, [1982] 137 ITR 722 (Cal), repelled the contention that in view of the specific provision of Sub-section (5) of Section 139 and the absence of the mention of Sub-section (4) in Sub-section (5), the revised return filed was invalid and the action taken subsequently was invalid. It was held that keeping in view the meaning of the revised return, it was obvious that Sub-section (5) of Section 139 gives an opportunity to correct the omission or mistake done on the part of the assessee and under Sub-section (4) of Section 139, the Legislature has given specifically the right to the assessee to file a return at any time before the assessment is made. In case a return is filed before the assessment is made, the Revenue cannot ignore the return and proceed to make the assessment. Same was the view taken by yet another Division Bench of the Calcutta High Court in Balish Singh and Co. v. CIT, [1987] 165 ITR 575.
9. For the assessee, on the other hand, it has been urged by Shri Nema that the view taken by the Tribunal that Sub-section (5) of Section 139 was confined to a return filed under Sub-sections (1) and (2), and could not be applied to a case where a return had been filed under Sub-section (4) thereof, was apparently correct in view of the plain language of Section 139(5) inasmuch as Sub-section (4) is conspicuous by its absence in Sub-section (5). Reliance in support of this submission has been placed on the decision of a Division Bench of the Allahabad High Court in Dr. S.B. Bhargava v. CIT, [1982] 136 ITR 559, where relying, inter alia, on a decision of the Delhi High Court in O.P. Malhotra v. CIT, [1981] 129 ITR 379, it was held that a return under Sub-section (4) stands in a category different from that provided in Sub-section (1) or (2) of Section 139 and such a return cannot be revised under Sub-section (5). Consequently, a revised return, being an invalid return, cannot extend the period of limitation for completing the assessment.
10. Reliance was also placed by learned counsel for the assessee on a decision of a Division Bench of the Rajasthan High Court in Vimalchand v. CIT, [1985] 155 ITR 593, where it was held that the extended time limit of one year under Section 153(1)(c) of the Act for completing the assessment will not be available in spite of a revised return purported to have been filed under Section 139(5) where originally a return was filed under Section 139(4) of the Act. Reliance therein has, inter alia, been placed on the decision of the Allahabad High Court in the case of S.B. Bhargava [1982] 136 ITR 559.
11. Learned counsel for the assessee also brought to our notice a Division Bench decision of the Kerala High Court in Eapen Joseph v. CIT, [1987] 168 ITR 26, where a similar view was taken relying on the decisions of the Delhi High Court in the case of O.P. Malhotra [1981] 129 ITR 379, of the Allahabad High Court in the case of S.B. Bhargava [1982] 136 ITR 559, and of the Rajasthan High Court in the case of Vimalchand, [1985] 155 ITR 593.
12. Lastly, reliance was also placed by learned counsel for the assessee as a part of his argument on a decision of a Special Bench of the Income-tax Appellate Tribunal, Jaipur Bench, in ITO v. Bohra Film Finance,. Here too the view taken by the Special Bench was that Sub-section (5) of Section 139 would not apply to a return filed under Sub-section (4) of Section 139.
13. As seen above, the leading case laying down the principle contended for by learned counsel for the assessee is that of the Delhi High Court in the case of O.P. Malhotra [1981] 129 ITR 379. In our opinion, on a scrutiny of the law laid down even in the aforesaid case and on the facts and circumstances of the instant case, the view taken by the Tribunal cannot be sustained. It is true that in the case of O.P. Malhotra [1981] 129 ITR 379 (Delhi), it has been held that Sub-section (5) of Section 139 was not attracted to a case where a return had been filed under Sub-section (4) of Section 139. In our opinion, however, that is not all that was decided therein. At page 386 of the report, it was held:
" In principle also, we do not find any incongruity in the above construction. It will not create any hardship, injustice or illogicality as suggested by Shri Verma. Sub-section (5) was intended to provide a locus penitentiae to assessees, who had filed their returns of income in compliance with the requirements of Sub-sections (1), (2) and (3) and within the time allowed thereunder to revise the same when they discovered an omission or wrong statement therein. But where a person has not filed such a return and is availing himself of the provisions of Sub-section (4) which enable him to file a return after a delay which might extend up to four years, it could well be that the Legislature thought that no such opportunity of revision was needed to be provided for. In this context, it should be remembered that such an assessee can, within the period of four years provided for in Section 139(4) (which has been reduced subsequently to two years conformably to amendments in Section 153 reducing the time-limit for completion of assessments), file as many returns as he wants. In view of this also, there was no necessity to provide a further opportunity to such an assessee to revise a return filed already after considerable delay by taking advantage of the fact that the assessment has not been completed by then. On these considerations, we are not impressed by the argument of Shri Verma that it would not be logical to hold that a person who has originally filed a return could revise it as many times as he likes before the assessment is made but that such an opportunity would not be available to a person who files his first return only under Section 139(4). "
14. Even after laying down the law with regard to the return filed under Section 139(4) of the Act, the subsequent return filed in that case was held to be invalid, because of the peculiar circumstances of that case. Proceedings in the aforesaid case were with regard to the assessment year 1960-61. The assessee had filed his return on March 30, 1965, and it was treated as a return under Section 139(4) of the Act. A revised return was filed by the assessee on March 28, 1966. The period of limitation for filing the return under Section 139(4) of the Act for the assessment year 1960-61, at the relevant time, was 4 years from the end of the assessment year concerned. Viewed from this angle, even though the return filed on March 30, 1965, was within limitation, the subsequent return purporting to be a revised return filed on March 28, 1966, was beyond the prescribed period of limitation, which really constituted the basis for holding that the said revised return to be invalid. This circumstance is apparent from the following observations (p. 381 of 129 ITR):
" It was pointed out that under the provisions of the 1961 Act, the return dated March 30, 1965, had been correctly treated as a return filed under Section 139(4) of the 1961 Act. The subsequent return dated March 28, 1966, could not be treated as a revised return under Section 139(5) as the assessee had not furnished a return under Sub-section (1) or (2) of Section 139 of the 1961 Act. It could not also be treated as a voluntary return under Section 139(4) as it had been filed after the expiry of four years from the end of the assessment year."
15. The principle of law quoted above, as laid down in the case of O.P. Malhotra [1981] 129 ITR 379 (Delhi) and the distinction aforesaid, does not seem to have been brought to the notice of the hon. judge who placed reliance on the decision of the aforesaid case of O.P. Malhotra [1981] 129 ITR 379 (Delhi) in the cases referred to above relied on by learned counsel for the assessee. At this place, it may be pointed out that the Special Bench of the Tribunal in the case of Bohra Film Finance, which has been referred to by learned counsel for the assessee, has taken the following view :
" All the same, whether another return under Section 139(4) again can be filed or not is the question. This is where, we want to say that there can be possibly two views. One view is that there can be successive returns filed under Section 139(4) but subject to the limit prescribed under Section 153 for completing the assessment. This view is fully supported by the observations of the Delhi High Court in Malhotra's case [1981] 129 ITR 379. Now, take for instance this very case. The assessee could file another return under Section 139(4) as long as the period for completing the assessment under Section 153 is not completed. The other view may be that so far as the return under Section 139(4) is concerned, there can be no subsequent return under Section 139(4). To hold that there should not be any subsequent return under Section 139(4) even within the period of limitation is not warranted by the scheme of the Act. If such a view is taken, it will lead to practical difficulties. If an assessee who has filed a return under Section 139(4) finds an obvious mistake or omission which is not intended, he cannot correct it by filing another return under Section 139(4) within the period prescribed. We do not think that the Legislature intended such a situation to arise. It is, therefore, proper to hold that successive returns under Section 139(4) can be filed so long as they are ultimately within the prescribed time.
There is another aspect also to be considered. Suppose there is an obvious mistake or an arithmetical error in the return filed under Section 139(4), should not the assessee be allowed to correct that mistake ? It is not necessary for him to file a revised return as such. He may still ask for a correction by means of a letter. There is definitely some distinction between a correction of return and a revised return. This concept is noticed by the Allahabad High Court in Dhampur Sugar Mills Ltd.'s case [1973] 90 ITR 236. "
16. In our opinion, the reason for not including Sub-section (4) of Section 139 in Sub-section (5) thereof is obvious. As has been noticed in some of the cases referred to above, whereas returns filed under Sub-sections (1) and (2) of Section 139 are obligatory returns, a return filed under Sub-section (4) thereof is a voluntary return which is filed by an assessee in order to save himself from an ex parte assessment or from penalty proceedings. The principle of permitting a revised return being filed in those cases where the original return had been filed under Sub-section (1) or (2) of Section 139, has already been enunciated above in the case of Kumar Jagdish Chandra Sinha [1982] 137 ITR 722 (Cal). If it is held that even though a person who has been compelled to file a return by a notice issued under Sub-section (2) of Section 139 of the Act can file a revised return under Sub-section (5) thereof if he discovers any omission or any wrong statement therein, but the same benefit is to be denied because of the plain language of Sub-section (5) to a person who has come forward voluntarily to have his income assessed by filing a return under Sub-section (4) of Section 139, it would create an anomalous situation. It would indeed be putting a person filing a voluntary return in a disadvantageous position compared to a person who has been compelled under Section 139(2) of the Act to file a return. The possibility of an inadvertent error or omission being committed even by a diligent and honest person cannot be ruled out. In making a provision in Section 139(5) permitting a revised return to be filed where the assessee discovers any omission or wrong statement in the original return filed under Sub-section (1) or (2) of Section 139, the Legislature seems to have taken notice of this aspect of the matter. To say that the Legislature became oblivious of this aspect of the matter with regard to a person who has filed a return voluntarily under Sub-section (4) of Section 139 would be imputing unreasonableness to the Legislature. We find nothing in Section 139 which may justify such imputation. Since a return under Sub-section (4) of Section 139 of the Act is a voluntary return, the view that within the period of limitation prescribed for the purpose, successive returns can be filed, seems to be the correct view inasmuch as it takes notice of the aforesaid aspect of the matter. Keeping in view the circumstances in which a voluntary return is filed under Section 139(4) of the Act, it seems to us to be implicit in the very nature of things that subsequent return or returns under Section 139(4) are permissible provided they are filed within the period of limitation. Filing of a subsequent return or a revised return, as the case may be, stands on a footing different from a case where only an application is made for correction in the original return. In the latter case, the original return continues to be the valid return and is to be read subject to the corrections made, whereas in the case of a subsequent or a revised return being filed, the earlier return gets substituted by the subsequent or revised return and it is the subsequent or the revised return which has to be taken into consideration for purposes of assessment and computation of the period of limitation. Section 153(1)(c) of the Act prescribes the period of limitation with reference to the date of filing of the return under Section 139(4) and of the revised return under Section 139(5) of the Act. In the case of a revised return filed under Section 139(5) of the Act, the starting point of limitation is the date on which the revised return is filed. The starting point of limitation with regard to a return filed under Section 139(4) of the Act would be the date of the filing of the return and if subsequently return or returns have been filed, the date of the filing of the last of such of the returns, provided the same had been filed within the period of limitation.
17. Applying the aforesaid principle of law to the facts of the instant case, it would be seen that even though the subsequent return which was filed on March 11, 1981, may not be treated as a revised return within the meaning of Section 139(5) of the Act, it had to be treated as the substituted return under Section 139(4) of the Act, the same having been filed within the prescribed period of limitation. This being so, the Tribunal committed an obvious error in cancelling the assessment on the ground that it was barred by time.
18. In view of the foregoing discussion, our answer to the question referred to us is that on the facts and in the circumstances of the case, the Tribunal was not right in holding that the assessment order dated November 23, 1981, made by the Income-tax Officer was made after the expiry of the period of limitation and was, therefore, invalid. In other words, our answer to the question aforesaid is in the negative, in favour of the Department and against the assessee. In the circumstances of the case, however, there shall be no order as to costs.