Patna High Court
Income-Tax Officer vs Banarsilal Satyanarain. on 28 April, 1995
Equivalent citations: [1995]55ITD372(NULL)
ORDER
Per Shri Abdul Razack, Judicial Member - A very interesting question has arisen in this appeal filed by the Revenue for our consideration as to whether extended period of limitation laid down in section 153(1) (c) is available to the Assessing Officer (AO) when a return is filed by the assessee under section 139(5) revising a return which was originally filed in compliance to notice under section 148 of the Act. But before we decide the controversy a quick glance at the facts is necessary.
2. The assessment year involved is 1979-80 and the previous year is 31-10-1978. According to the provisions of section 139(1) as it stood then for that assessment year the assessee was obliged to file its return of taxable income on or before 30th June, 1979. No such return was filed. Thereafter, there were search and seizure operations in accordance with the provisions of section 132 of the Act on 21st/22nd March, 1980. This search operation resulted in seizure of account books and another documents/ materials. The assessee filed its return of income for the year under appeal on an estimate basis estimating and declaring the income in a sum of Rs. 1,35,000. The said return purported to be under section 139(4) of the Act was not accompanied by copy of any trading account, profit and loss account, balance sheet or any other paper or documents in support of the return filed. A letter was, therefore, issued to the assessee on 18-12-1980 to support the return by document required as per law. The last date for compliance for removing the deficiency/defects was given till 6th January, 1981. The assessee did not remove the defects/deficiency nor filed any papers or documents supporting the return so filed on 1-12-1980. Therefore, the said return filed on 1-12-1980 was invalid and non est and was lodged by the Assessing Officer. However, the Assessing Officer issued notice dated 28-6-1983 under section 148 of the Act which was served on the assessee on 2-7-1983 in compliance to which a return was filed on 10-3-1986 declaring a taxable income of Rs. 99,300. It appears from the record that the said return was processed. While the enquiry was still going on, the assessee filed another return on 30th March, 1988 revising its income in a sum of Rs. 1,29,730. This revised return was also processed and the subject matter of enquiry for the passing an assessment order. The assessee cooperated and participated with the enquiry in pursuance to the said revised return filed on 30th March, 1988. The assessment was finally completed on 15th March, 1989 computing the total income at Rs. 1,29,773.
3. The assessee preferred an appeal before the first appellate authority, viz., the Appellate Commissioner (A/C) challenging the framing of the assessment on 15th March, 1989 claiming it to be barred by limitation in accordance with the provisions of section 153(2) of the Act which stood then prior of its substitution by the Direct Tax Laws (Amendment) Act, 1987 which came into effect from 1-4-1987. The main bone of contention of the assessee before the A/C was that the assessment ought to have been completed by the Assessing Officer on or before 31-3-1988 since the return was filed in compliance with section 148 and the Assessing Officer did not get the extended period of limitation as provided in section 153(1) (c) of the Act as the assessee could not file any revised return in accordance with the provisions of section 139(5) because a revised return under that provision can be only filed where a return has been filed either under section 139(1) or under section 139(2). In short the assessees case has been that no revised return can be filed where a return has been filed in accordance with the provisions of section 153(2) governing the period of limitation for the purpose of making assessment where notice has been issued under section 148 and a return has been filed in compliance thereto by any assessee. The A/C got convinced with this line of argument and annulled the assessment holding that the assessment completed on 15-3-1989 was barred by limitation as per provisions of section 153(2) of the Act. The Revenue is not satisfied with this view taken by the A/C and, therefore, the present appeal has been filed in this Tribunal.
4. Smt. Lekha Kumar, representative appearing for the department submitted that the A/C had grossly erred in taking the view that the assessment framed by the Assessing Officer on 15-3-1989 is barred by limitation in accordance with the provisions of section 153(2) of the Act. According to her the case is governed by the provisions of section 153 (1) (c) and not by section 153(2) because the assessee filed a revised return on 30th March, 1988 and, therefore, the Assessing Officer got extension of time till 29th March, 1989 for framing of the assessment as laid down in section 153(1) (c) of the Act. Our attention was invited to the provisions of section 153(2), 153(1) (c), 148 and 139(5). In view to these section the departmental representative submitted that the impugned order of the A/C deserves to be reversed. On the other hand, Shri B. P. Khetan, the ld. representative appearing for the assessee fully supported the reasoning of the A/C and submitted that the decision rendered by the A/C is fully justified and the departmental appeal, having no merits deserves to be dismissed. The assessees counsel also relied on the Judgment of the Madras High Court in the case of CIT v. Simson & Mc Conechy Ltd. [1989] 177 ITR 526 and decision of the Ahmedabad Bench A of this Tribunal in the case of Maneklal Sakarchand v. ITO [1994] 50 TTJ (Ahd.) 370 which has considered the decisions for and against the controversy and also the CBDTs Instruction No. 388 dated 1st October 1975.
5. We have given our anxious consideration to the facts of the case and to the submissions made by representative of both sides before us. The orders of both the lower authorities have been perused by us. We have also studied the Judgment of the Madras High Court as well as of different High Courts, reference of which has been made by Ahmedabad Bench A of this Tribunal in the case of Maneklal Sakarchand (supra). In our view the assessment does not deserve to be annulled as has been done by the A/C in the impugned order.
6. The provisions of sub-section (1) of section 148 (as it stood then) speak thus :-
"(1) Before making the assessment, reassessment or recomputation under section 147, the Income-tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 139; and the provisions of this Act shall, so far as may be apply accordingly as if the notice were a notice issued under that sub-section."
The phraseology used in section 148(1) and the provisions of this Act shall, so far as may be applied apply accordingly as if the notice issued under that sub-section that is to say section 139 are very significant. It, therefore, clearly emerges that when a notice is issued in terms of section 148 of the Act then it shall be deemed that such a notice is a notice issued under section 139(2) of the Act and, therefore, all the provisions of this Act shall apply accordingly. The provisions of sub-section (5) of section 139 lay down that "if any person having furnished a return in sub-section (1) or sub-section (2) discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the assessment is made". A combined reading of section 148 and section 139(5) amply brings out that an assessee can file a revised return under section 139(5) if a return has been filed by him in compliance to notice under section 148 because the provisions of section 148 as we have extracted above clearly lay down that the said notice issued under section 148 shall be deemed as one issued under section 139(2) and if that is the case then all the provisions of the Act including the provisions of section 139(5) and section 153(1) (c) shall apply accordingly. The provisions of section 148(1) authorise an Assessing Officer to issue notice calling upon a person to file a return upon satisfaction of conditions laid down in section 147 about escapement of income and such notice shall contain and include all requirements as are contained in a notice under section 139(2) of the Act. Thus, such a notice under the enabling provisions of section 148(1) shall be deemed for all the intents and purposes of the Act as one issued under section 139(2) of the Act. It, therefore, follows and means, as a logical corollary that any return filed in compliance to a notice issued under-section 148(1) shall be deemed as one filed in compliance to notice under section 139(2) then the assessee is permitted under section 139(5) to file a revised return if any, omissions, mistakes or wrong statements are discovered in the original return. The assessee in the instant case found that the income was incorrectly returned originally in compliance to notice under section 148(1) which in law, we repeat is deemed as a notice under section 139(2), it so filed a revised return showing an upward income of Rs. 1, 29,730. No doubt this return was filed on 30th March, 1988 i.e. a. day before the normal limitation period was to expire in accordance with the provisions of section 153(2) of the Act. But no sooner the return got filed on 30th March, 1988 in terms of section 139(5), the Assessing Officer in our view statutorily got the benefit of extension of time, for making the assessment, by a period of one more year from the date of filing of the revised return i.e. upto 29th March, 1989 in accordance with the provisions of section 153(1) (c) of the Act.
7. We have studied the decision of the Madras High Court in the case of Simson & Mc Conechy Ltd. (supra) and in our view the same is distinguishable on facts of the present case because the Madras High Court was not confronted with the controversy with which we are concerned. There can be no doubt that once a notice under section 148(1) is issued the assessment has to be completed mandatorily in accordance with the provisions of section 153(2) of the Act. But the question here is what happens when the assessee suo motu files a revised return under section 139(5) showing an upward income ? Can it be said that the limitation expires as per section 153(2) and the Assessing Officer does not get any extension of time as provided in section 153(1) (c) of the Act. In the case of Simson & Mc Conechy Ltd. (supra) the Madras High Court has not examined the controversy with the facts with which we are confronted viz., whether the notice issued under section 148(1) shall be deemed as issued under section 139(2) of the Act and, therefore, provisions of the Act shall apply accordingly as if the notice was issued under section 139(2) of the Act. It is on account of these reasons that the Madras High Court decision cannot bail out the assessee. The assessee also cannot derive much support from the decision of the Ahmedabad Bench A of this Tribunal in the case of Maneklal Sakarchand (supra) because the return filed in the instant case is one under section 139(2) as per the deeming provision language used in section 148 of the Act. The return which has been filed by the assessee in the instant case is not one filed under section 139(4) of the Act. It is filed under section 139(2) of the Act as deemingly laid down in section 148(1) of the Act. In the case to Maneklal Sakarchand (supra) the return was filed suo motu and voluntarily by the assessee under section 139(4) of the Act and, therefore it was held that no revised return could be filed under section 139(5) of the Act. In the present case we are dealing with a situation where return has been filed in compliance to provision of section 148(1) of the Act which equates it with the provisions of section 139(2) of the Act and section 139(5) authorises an assessee to file a revised return if the original return is filed either under section 139(1) or 139(2).
8. Form the facts of the case we are firmly of the view that the return filed by the assessee though in compliance to a notice issued under section 148(1) of the Act is, in fact, a return filed in compliance to notice under section 139(2) as per language contained in section 148 of the Act which we have extracted above. The provisions of section 153(1) (c) clearly lay down that extended period of one year of limitation will be available to an Assessing Officer from the date of filing of a return or a a revised return under sub-section (4) or (5) of section 139. If we are to agree with the A/C that the extended period of limitation is not available to Assessing Officer upon filing of a revised return under section 139(5) where return has been filed in compliance to notice under section 148(1) then we will be doing injustice to those assessees who in reality have less income but due to mistake or inadvertence have filed a return filed originally in compliance to notice under section 148 declaring higher income. Let us illustrate by giving a hypothetical case. Assume that an assessee due to inadvertence and mistake instead of declaring an income of Rs. 15,000 files a return declaring income at Rs. 1,50,000. Now before the assessment is completed the assessee realises this mistake and files a revised return deleting the additional zero and declaring the income correctly at Rs. 15,000. It will not only be preposterous but travesty of justice on the part of the Assessing Officer to contend that he will not take cognizance of the revised return filed showing an income of Rs. 15,000, which is the correct income, because the assessee cannot under section 139(5) file revised return for the simple reason that the original return has been filed in compliance to notice under section 148(1) of the Act. In the instant case on hand since there is more income in the revised return this plea, which suits the assessee, regarding the expiry of limitation period is canvassed; whereas had the income been less than the original figure then the assessee, we are sure, would not have taken such a plea of limitation because taking such a plea would be to his detriment and he would have been obliged to pay tax on an income which has not been earned by it.
9. There is no ambiguity in the provisions of section 148(1) of the Act as contended by the assessees counsel. In fact, the language used therein is very plain and simple and the intention of the Legislature is amply clear and transparent. No interpretation or construction whatsoever is required. If the section is interpreted or understood otherwise or in any other manner it would lead to in equity, injustice and absurdity also. We wish to avoid this. It is worthwhile to quote from out of several Judgments of the Apex Court, the very pertinent observations of their Lordships of the Honble Supreme Court in two very illuminating and landmark judgments one in the case of CIT v. J. H. Gotla [1985] 156 ITR 323 and the other in the recent case of C. W. S. (India) Ltd. v. CIT [1994] 208 ITR 649. In J. H. Gotlas case (supra) it is observed as under :-
"If a strict and literal construction of the statute lead to an absurd result, i.e., a result not intended to be subserved by the object of the legislation ascertained from the scheme of the legislation then, if another construction is possible a part from the strict literal construction, then that construction should be preferred to the strict literal construction. Where the plain literal interpretation of a statutory provision produced a manifestly unjust result which could never have been intended by the Legislature, the Court might modify the language used by the Legislature so as to achieve the intention of the Legislature and produce a rational result."
In the case of C. W. S. (India) Ltd. (supra), it is observed as under :-
"Literal construction may be the general rule in construing taxing enactments, but that does not mean that it should be adopted even if it leads to a discriminatory or incongruous result. When a literal interpretation leads to an absurd or unintended result, the language of the statute can be modified to accord with the intention of Parliament and to avoid absurdity."
10. We, therefore, for the reasons given above unhesitatingly reverse the view taken by the A/C and hold that the assessment is not time-barred by limitation.
11. In the result, the revenues appeal is allowed.