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"For the asst. yr. 1960-61, the assessee filed a return on 30th March, 1965, disclosing an income of Rs. 1,720. On 28th March, 1966, he filed a revised return declaring an income of Rs. 4,295. The ITO made an assessment treating the revised return filed on 28th March, 1966, as invalid in law as the return filed on 30th March, 1965, had not been filed either under sub-s. (1) or under sub-s. (2) of s. 139 of the IT Act, 1961. On appeal, the assessee claimed that the return filed on 28th March, 1966, was a valid return and also raised other grounds on the merits of the assessment. The AAC held that the revised return was a valid return under s. 22(3) of the 1922 Act and set aside the assessment and directed the ITO to complete the assessment afresh taking note of the revised return. The assessee preferred a further appeal contending that the AAC ought to have annulled the assessment and not set it aside for being redone. The Tribunal held that in view of s. 297(2)(b) of the 1961 Act, the assessment had to be completed under the 1961 Act and the return dt. 30th March, 1965, had been correctly treated as a return filed under s. 139(4) and the subsequent return could not be treated as a revised return under s. 139(5) as the assessee had not furnished a return under sub-s. (1) or sub-s. (2) of s. 139. Nor could the earlier return be treated as a voluntary return under s. 139(4), as it had been filed after the expiry of four years from the end of the assessment year. The Tribunal then held that the ITO had acted legally in ignoring the second return and that, therefore, the order of assessment could not be cancelled. Without modifying the AAC's order the Tribunal dismissed the appeal observing that it would not cancel the assessment order.

20. The assessee filed another return declaring income of Rs. 2,20,116 on 16th March, 1995. This return was processed by the ITO under s. 143(1)(a) and selected it for scrutiny. The AO, therefore, issued a notice under s. 143(2) of the IT Act on 26th September, 1995. The AO for the detailed discussions made in the assessment order assessed the enhanced compensation as well as the interest received totalling to Rs. 20,72,506.82 in the order passed under s. 143(3) on 29th March, 1996. The assessee in the additional ground raised before us has challenged the validity of the assessment on the ground that the return filed on 16th March, 1995, being the revised return is not valid and the further proceedings taken by issue of notice under s. 143(2) based thereon and the assessment made is not legally tenable. The controversy so raised thus centres on the question of validity of return filed on 16th March, 1995. The validity of this return is therefore, to be examined in light of the relevant provisions of the Act.

23. The reading of this section would show that as per sub-cl. (a) an assessment has to be made within a period of two years from the end of the assessment year in which the income was first assessable or as per sub-cl. (c) assessment is to be made within one year from the end of the financial year in which the return or a revised return is filed. The revised return when filed, thus gets the extended period of one year for completion of assessment.

24. Admittedly the first return filed by the assessee on 31st August, 1994, was under s. 139(4) of the IT Act and no revised return thereon could validly be filed under s. 139(5) of the IT Act. The assessee, however, after filing the first return realised that the interest income declared in the first return is not full and true. The assessee therefore, filed another return on 16th March, 1995, declaring an income at Rs. 2,20,116. This return was also filed in the prescribed form and filed in the prescribed manner so as to avoid any penal action for concealment of income. By filing the second return the assessee has admitted that the original return filed was not correct or complete and the subsequent return filed is claimed to be correct and complete. The assessee has thus given a gobye to the return originally filed and wanted the Department to complete the assessment based on the return subsequently filed which according to the assessee, was correct and proper return. We also note that during the course of assessment proceedings the assessee at no stage made a claim that the second return filed is not valid and assessment should be completed based on the return originally filed. After having got the assessment completed based on the second return it would not be and should not be open to the assessee to contend at this stage that the return subsequently filed was invalid.

28. The Hon'ble Supreme Court in the aforesaid case approved the decisions in the following cases :

(i) O. P. Malhotra vs. CIT (1981) 129 ITR 379 (Del) case.

In this case the assessee filed a return on 30th March, 1965, for the asst. yr. 1960-61 disclosing an income of Rs. 1,720. On 28th March, 1966 the assessee filed another return declaring an income of Rs. 4,295. The AO made the assessment treating the revised return filed on 28th March, 1966, as invalid in law as the return filed on 30th March, 1965 had not been filed either under sub-s. (1) or under sub-s. (2) of s. 139 of the IT Act. The AAC held that the revised return was a valid return under s. 22(3) of the 1922 Act and set aside the assessment and directed the AO to complete the assessment afresh taking note of the revised return. The Tribunal held that in view of s. 297(2)(b) of the 1961 Act the assessment had to be completed under the 1961 Act and the return dt. 30th March, 1965, had been correctly treated as a return filed under s. 139(4) and the subsequent return could not be treated as a revised return under s. 139(5). The Tribunal further held that the AO acted illegally in ignoring the second return and therefore the order of assessment could not be cancelled. The Hon'ble High Court affirming the decision of the Tribunal held that s. 139(5) applies only in a case where the assessee having furnished a return under sub-s. (1) or sub-s. (2) discovered any omission or wrong statement therein. This sub-section does not refer sub-s. (4) and therefore, it does not entitle an assessee to rectify or revise a return filed under s. 139(4). The return filed on 30th March, 1965 being under s. 139(4) a revised return could not be filed under s. 139(5) on 28th March, 1966 and the same was invalid in law. The second return filed here is beyond the period of four years available under s. 139(4) for filing a return.