Income Tax Appellate Tribunal - Chandigarh
Nishan Singh vs Income-Tax Officer on 29 November, 1985
Equivalent citations: [1986]16ITD154(CHD)
ORDER
F.C. Rustagi, Judicial Member
1. The only ground raised in this appeal, by the assessee reads as under :
That the order under Section 250(6) passed by the learned AAC is against law and facts on the file inasmuch as he erred in holding that the case fell under Section 153(1)(6) and as such assessment made even on 28-1-1983 was within the time prescribed. Return in the instant case had been filed on 8-9-1975 under Section 139(4) and that assessment could have been made in the ordinary course only by 31-3-1977. Provisions under Section 153(1)(b) in the facts and circumstances of the case were not attracted. Assessment made on 28-1-1983 being barred by limitation should have been annulled. The learned AAC was not justified to set aside the same for being done de novo.
2. On 17-7-1985, a petition from the learned counsel for the assessee, Shri Mohan Lal, was received in which a request was made for modification of the said ground and he had come forward with the three grounds, which are placed on the file. However, when it was pointed out to him that the modified grounds are nothing but different aspects of the main ground raised in the appeal, he could address the Bench on all aspects of the original ground, therefore he elected not to press for admission of the modified grounds.
3. As is apparent from the above said ground, the contention of the assessee is that the assessment framed on 28-1-1983 is barred by time as the original return was filed under Section 139(4) of the Income-tax Act, 1961 ('the Act') and the same could not be revised. In order to appreciate the issue, the facts may be briefly stated as under :
Return of income was filed under Section 139(4) for the assessment year 1974-75 on 8-9-1975 and the said return was revised on 31-3-1977, purporting it to be returned under Section 139(5). The ITO considering the revised return, completed the assessment under Section 144 of the Act proceedings vide his order dated 14-3-1978, which was reopened under Section 146 of the Act vide his order dated 20-3-1978. Afterwards, assessment proceedings went on and under Section 143(3) of the Act on 28-1-1983 assessment was framed on 'protective basis', as the addition on account of investment in godowns was also made in the case of Smt. Jyoti Dhillon [IT Appeal No. 361 (Chd.) of 1981, dated 11-10-1982], the assessee's daughter.
4. When the case came before the AAC, he though accepted the assessee's contention that the said assessment was barred by time, up to para 5 of his order, but further dealing with the issue of limitation, held that in the light of Section 153(1)(b) assessment was in order and, therefore, set aside the same to be made de now, as he observed in para 8 of his order that the addition of Rs. 58,333 was made on the ground that no evidence had been produced by the assessee. It is this action of the AAC which is disputed by the assessee.
5. The learned counsel for the assessee submitted before us that looking to the dates and following the decision of the Tribunal in the case of Smt. Jyoti Dhillon {supra) a copy of which he placed on the assessee's compilation, assessment deserves to be quashed and annulled and the action of the AAC setting aside the same is erroneous. He submitted that initially Section 153(1)(b) provisions were never invoked by the ITO nor a mention of concealment was made in the assessment or before it. Of course, it was after the assessment was framed that notice under Section 271(1)(c) of the Act was mentioned to be issued. He relied on the cases of S. Kanwal Tej Singh v. ITO [1966] 60 ITR 23 (Punj.), Jyoti Prakash Mitter v. Union of India [1978] 112 ITR 378 (Cal.), T.B. Hanumantharaj v. CIT [1978] 111 ITR 414 (Mad.), CIT v. Surajpal Singh [1977] 108 ITR 746 (All.) and ITO v. Bohra Film Finance [1983] 4 ITD 247 (Jp.) (SB). Besides, he placed before us another decision from the Bangalore Bench in the case of Gowdar Jayadevappa v. First ITO [1985] 11 ITD 216 in the form of a photostat copy from the Tribunal decisions.
6. The learned senior departmental representative, Mr. R.K. Bali, on the other hand, besides relying on the order of the AAC, submitted that besides the decision in the case of Mrs. Jyoti Dhillon {supra), there is another Tribunal's decision in the case of Madan Mohan Lal Aggarwal [IT Appeal No. 317 of 1983 dated 7-2-1984] which instead supports the contention of the revenue. He relied on the cases of Prakash Yarn Trading Co. v. ITO [1985] 11 ITD 442 (Hyd.), Nanjappa Textiles v. CIT [1985] 153 ITR 109 (Mad.), H.G. Gupta & Sons v. CIT and Kumar Jagadish Chandra Sinha v. CIT [1982] 137 ITR 722 (Cal.).
7. After taking into consideration the rival submissions and looking to the uncontroverted facts, we are unable to uphold the finding of the AAC setting aside the assessment and hold that the assessment is to be annulled. As a matter of fact, in the instant case, it was only protective assessment which was made. The question of concealment before assessment, which is a condition precedent for application of Section 153(1)(b) provisions, was absent nor there was no mention of the said section by the ITO in the assessment order. We will be dealing with the case law cited by both the parties and in case all the decisions are carefully gone through, the assessee's contentions get a support not only from the decisions relied upon by the learned counsel but even from some of the decisions which are relied upon by the learned senior departmental representative looking to the clear aspect that it was in the case of Smt. Jyoti Dhillon {supra) that assessment was anulled by us, the facts in the background are absolutely the same, with the only difference, that in the instant case assessment was made on protective basis which places the instant case in better footing still on the other hand, it was in respect of same investment of the godowns made in the name of Smt. Jyoti Dhillon, and also on the basis of two opinions thereon both from different High Courts and from the Tribunal, since there is a decision in favour of the revenue also in Prakash Yarn Trading Co.'s case (supra) the assessee succeeds. We had occasions to deal with similar aspects of the matter in detail in the case of Smt. Jyoti Dhillon (supra), even in respect of the issue agitated by the learned senior departmental representative regarding Section 153(1)(b) and the instant case being on a better footing because in this case it was only protective assessment which was made, the assessee succeeds.
8. As stated above, return in this case was filed under Section 139(4), which was revised subsequently. It was considering the revised return that the ITO completed the 'best judgment assessment' under Section 144. In other words, the assessment proceedings after the ex parte assessment was reopened, went on and, ultimately, assessment was framed on 28-1-1983. As a matter of fact, about this aspect, we may not even dwell at length because the AAC himself has accepted the assessee's contention in para 5 of his order, which is placed below, in which on the basis of two views theory, he held the contention of the learned counsel for the assessee to be correct :
I have carefully considered the rival submissions. There are differences of opinion among various High Courts as to whether in a case where the first return filed under Section 139(4), revised return filed after that gives the extended time to complete the assessment under Section 143(3) or not. But in view of the Supreme Court judgment in CIT v. Naga Hills Tea Co. [1973] 89 ITR 236, the view that favours the assessee has to be adopted. Therefore, the decisions of the Delhi and the Allahabad High Courts favouring the appellant have to be adopted in this case.
9. Now what survives to be dealt with is the issue pertaining to dragging the instant case under Section 153(1)(b). Our attention was also invited in this regard to Instruction No. 888 dated 1-10-1975, as per which extension by limit of one year under Section 153(1)(b) was not available in respect of revised returns filed under Section 139(5) where original return was filed under Section 139(4). In support of this contention, we have a Special Bench decision in Bohra Film Finance's case (supra), in addition to our own decision in the case of Smt. Jyoti Dhillon (supra) and also the Delhi and the Allahabad High Courts decisions, which are referred to by the AAC in his order, which finds place above. In a way, in this regard, the Supreme Court decision in the case of CIT v. Naga Hills Tea Co. Ltd. [1973] 89 ITR 236 on the two views theory that one favouring the assessee is to be adopted, supports the contention of the assessee.
10. Undoubtedly, coming to the issue whether this assessment could fall under Section 153(1)(b), there cannot be two opinions about the fact that in case it fell under Section 153(1)(b), it could be completed on or before 31-3-1983. In this regard, it will be better if we reproduce herebelow Section 153(1)(b), which is also extracted and placed by the AAC in his order :
(1) No order of assessment shall be made under Section 143 or Section 144 at any time after --
** ** **
(b) the expiry of eight years from the end of the assessment year in which the income was first assessable, in a case falling within Clause (c) of Sub-section (1) of Section 271;
In this regard, what is required before is the finding regarding concealment of income. We are unable to appreciate the observations made by the learned AAC that merely because Section 271(1)(c) notice was issued after the assessment was framed could give the benefit of extended period under Section 153(1)(b). This could not take the place of condition precedent according to us. Moreover, in this case even penalty under Section 271(l)(c) could not be justified because it was framed on protective basis. We are in agreement with the learned counsel for the assessee to this effect that there should have been a finding recorded by the ITO. Though this issue has also been considered by us in the case of Smt. Jyoti Dhillon (supra), i.e., daughter of the assessee, according to the ITO, she was the full owner of the godowns and the entire investment was made by her. As above said, in the assessee's case that is under consideration, it was merely protective. According to us, even in that view of the matter, the case is not saved from limitation as it does not fall under Section 153(1)(b).
11. Now it is apparent from the Bangalore Tribunal's decision in the case of Gowdar Jayadevappa (supra), in which case the facts were identical, it was held under Section 139(4)/139(5) read with Section 153(1)(c) that the return which was filed under Section 139(4) and subsequently revised, could not be entitled to further lease of life. It was also held in that case that the assessment was since completed after limitation and the first return could have been acted upon and the assessment should have been completed before the stipulated time. Then, we have Special Bench decision in Bohra Film Finance's case (supra) which supports the assessee's contention both in respect of the first aspect that the extended time could not be available under Section 153(1)(c) and also it is held therein that in order to avail the standard time limit under Section 153(1)(b) the facts of the case should justify levy of penalty under Section 271(1)(c) and a specific finding to that effect should be recorded. It is further held therein that a formal notice issued under Section 271(1)(c) beyond the extension of time limit would amount to harassment. It is further held in that case that since the ITO could as a matter of routine issue such a notice in each and every case and get the benefit of the extended period of limitation. The instant case is in closer proximity with the case of Smt. Jyoti Dhillon (supra) than that of Madan Mohan Lal Aggarwal's case (supra), relied upon by the learned senior departmental representative, though of this very Bench. The learned senior departmental representative had relied on para 20 of the said order but reading of that alone shows how far it is from the facts of the instant case. The Calcutta High Court decision, however, supports the contention of the revenue but again in this case what was dissented was the Delhi High Court decision and that makes a case of two opinions. Looking to another the Delhi High Court decision in H.G. Gupta & Sons' case (supra), this case is under the Indian Income-tax Act 1922 ('the 1922 Act') but, however, mentions that Section 28(1)(c) of the 1922 Act, which is in pari materia with Section 271(1)(c), nowhere makes it mandatory that the ITO is required to record any reason before applying this provision. But at the same time, instant case still on the basis of two opinions and also on the basis that it is protective assessment, the revenue could not get any support from this case also.
Hyderabad Bench decision in Prakash Yarn Trading Co.'s case (supra), to some extent, supports the contention of the revenue, but, against that, we have already mentioned, there is a Special Bench decision and also a decision of this very Bench. Similarly, the Madras High Court decision in Manjappa Textiles' case (supra) also cannot carry the revenue's case any further. To summarise, mainly on our decision in the case of Smt. Jyoti Dhillon (supra), in which all these matters are discussed at length, the assessee's contentions are accepted and the assessment is annulled. Since we have reversed the finding of the learned AAC, the assessee succeeds.
12. In the result, the appeal is allowed.